TORONTO, Nov. 23, 2016 /CNW/ - Fortress Real Developments Inc. has served Notices of Motion in three proposed class actions brought against it, its founders Jawad Rathore and Vince Petrozza, as well as a number of other individuals and companies. The motions seek to strike out the Statements of Claim as being an abuse of process and/or disclosing no causes of action in law.
There is no basis whatsoever to these actions. The allegations made are untrue, misleading and aimed at damaging the reputation of Fortress and Fortress projects in an attempt to benefit companies trying to compete with Fortress.
One of the plaintiffs, David Martino, is in fact the CEO of a copycat company seeking to compete with Fortress and brokerages that offer loans to Fortress projects. Mr. Martino got his start and the idea for his copycat business as a mortgage broker at one of the brokerages he is now suing, and through which he personally recommended loans to lenders. In doing so, Mr. Martino received commissions for brokering those loans. Now he is trying to damage the reputation of Fortress and Fortress projects through abusive litigation.
Subsequent to brokering mortgages to Fortress projects, Martino left the brokerage he was with to establish Landmark Capital Ltd., a mortgage brokerage. Landmark attempts to compete with Fortress and the brokerages that offer syndicated mortgages to finance Fortress projects by offering syndicated mortgages to finance projects by companies attempting to compete with Fortress projects, including Tier 1 Transaction Advisory Services Inc. (a corporation which is subject to a cease and desist order of the Financial Services Commission of Ontario dated October 20, 2016), First Commonwealth Mortgage Corporation and Tier 1 Mortgage Corporation (mortgage brokerages which are subject to an interim suspension order by the Financial Services Commission of Ontario dated October 20, 2016). On October 27, 2016, the Superior Court granted an Appointment Order sought by the Superintendent of Financial Services that appointed Grant Thornton Limited as trustee of 11 companies developing Tier 1 projects.
The same lawyers who represent Mr. Martino in his proposed class action also represent individuals in the other two proposed class actions that name Fortress and others as defendants. Lenders to each of these projects have not suffered any losses. There is nothing to sue for.
Each of the three proposed class actions was commenced at the instigation of Martino, alone or in concert with one or more other individuals and/or companies, in an improper attempt to damage the reputation of Fortress, Fortress projects and the mortgage brokers and agents that offer syndicated mortgages to finance Fortress projects, in an attempt to gain a competitive advantage for Landmark and other businesses attempting to compete with Fortress.
The claims completely misrepresent Fortress's role in real estate development projects. Fortress is a real estate development and consulting company. Fortress identifies and develops real estate projects, primarily residential and commercial projects, either alone or as a partner with other developers or as a consultant to other developers.
The largest source of funding for Fortress projects is large institutional lenders such as banks and credit unions. Another source of funding is syndicated mortgage loans. Those loans are offered to members of the public in Ontario by licensed mortgage brokers and agents, not by Fortress or Fortress's employees. Brokers and agents offering syndicated mortgage loans are required to take steps to ensure that the syndicated mortgage loan is suitable for potential lenders and all specific risks are outlined to each lender.
Fortress did not and does not receive any commissions on syndicated mortgages on its projects, or at all. Where Fortress does real estate development consulting work, it is paid reasonable fees for that work – fees that are far less than the amounts that the class actions wrongly claim Fortress received.
The class actions wrongly assert that the valuations of projects provided to potential lenders are inflated. That allegation is false, and shows a fundamental misunderstanding of the valuation of real estate development projects. The valuations obtained for these Fortress projects, and all Fortress projects, are appropriate valuations from qualified independent professionals.
The development projects that Fortress has worked on have been tremendously successful. More than 14,000 individuals have participated in syndicated mortgage loans for over 75 projects, with payments to lenders totaling more than $91 million to date. The Fortress portfolio, has completed 15 projects with an additional 22 currently under construction and are estimated to create 24,229* jobs through their development cycle. Over 4,500 of the 12,000 residential units in the Fortress portfolio have been sold and are valued at over $2.1 billion. It is unfortunate that the success of Fortress and its projects have made Fortress, its development partners, and the independent brokers and agents who offer syndicated mortgage loans targets of abusive and opportunistic claims, like these three proposed class actions.
*Estimate based on labour forecasting tools developed in a study by Dundee University http://www.arcom.ac.uk/-docs/proceedings/ar2012-0317-0326_Forbes_El-Haram_Horner_Lilley.pdf
About Fortress Real Developments
Fortress Real Developments Inc. is a Canadian real estate development company that seeks out and analyzes real estate development opportunities in major Canadian markets. The company is focused on quality projects with recognizable alpha in residential low-rise, high-rise, commercial and industrial market segments. For more information visit: http://fortressrealdevelopments.com
SOURCE Fortress Real Developments
For further information: Natasha Alibhai, Fortress Real Developments Inc., natasha@Fortressrdi.com, Phone: (905) 787-9266 ext. 235