Canada: banks mortgage fraud claims won't be investigated!?

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BMO's mortgage fraud claims won't be probed

Last Updated: Sunday, May 9, 2010 | 11:13 PM MT Comments583Recommend245.
By Charles Rusnell, CBC News

Former RCMP officer Chris Mathers said he wasn't surprised by the police's decision and questioned whether public money should be spent to investigate an alleged fraud that he said the Bank of Montreal should have avoided. (CBC)

RCMP and the Calgary police have told the Bank of Montreal they won't investigate what could be the biggest mortgage fraud in Canadian history, CBC News has learned.

Both police forces stated last week they were reviewing the voluminous case — more than 35,000 documents — assembled by the bank's investigators to see if a criminal investigation was warranted.

But sources have told the CBC that top investigators from both forces recently met with the bank and told it they were not interested in pursuing a criminal investigation.

In an email Sunday, the bank's Calgary lawyer, Munaf Mohamed, declined comment.

The lack of police response does not surprise former RCMP officer Chris Mathers, who said police forces simply can't tackle alleged frauds of this magnitude.

"There just aren't enough police officers to investigate these crimes," said Mathers, a Toronto-based corporate crime consultant. Mathers said fraud is rampant in Canada and police forces are already swamped.

"If you double the number of investigators, you will just have double the number of crimes being investigated and still have a whole bunch stacked in a pile and waiting to go."

BMO launches lawsuit
As the CBC first reported on Tuesday, the Bank of Montreal has launched a massive lawsuit accusing more than 300 Albertans — including mortgage brokers, realtors and 17 lawyers — of being involved in a sophisticated scheme that generated $70 million worth of phony mortgages in one year.

The bank's investigators claim the scheme's organizers wired money from the alleged fraud to several countries, including Lebanon, India, Pakistan, Saudi Arabia and Dubai. Among those named in the suit is Calgary Conservative MP and lawyer Dervinder Shory.

The bank alleges he was negligent in his handling of five land title transfers. Shory has denied any wrongdoing and said he would vigourously defend himself in court. None of the allegations contained in the lawsuit have been proven.

The fraud allegations have sparked demands for a police investigation, including those from hundreds of people who have posted comments on CBC's website.

"So where is the police in all this? Will there be criminal investigations and possibly criminal charges," one reader asked. Another wrote: "The RCMP and CSIS should be investigating this."

But Mathers questioned whether public money should be spent to investigate an alleged fraud that he said the bank should have avoided by properly vetting mortgage applications. He blamed the banks for creating a climate in which mortgage fraud thrives.

"The banks are fighting tooth and nail with each other to get this kind of mortgage business," he said. "They are cutting corners and so because they cut corners, they become victims of fraud."

Toronto lawyer Sidney Troister, who has specialized in mortgage-fraud cases for the past 12 years, said they pose daunting legal challenges. It is difficult for prosecutors to prove beyond a reasonable doubt that a fraud is intentional.

"That is no mean feat when you probably don't have any witnesses. You are faced with solicitor-client privileges and obstacles in terms of getting information out of the lawyers," Troister said Sunday. "You are looking at reams and reams of paper that would be the basis upon which you would prove your case. It is no easy task."
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$70 million from 1 bank in 1 year!