The scenario may seem improbable: Using fake IDs, criminals pose as wealthy homeowners, obtain a loan on those properties, and immediately flee with the lender’s money as soon as the lender enters their home. account However, this is what a group of scammers achieved, revealed the Montreal Police Service (SPVM), which has just dismantled this well-organized network.
The Economic Crimes Section of the Montreal police force arrested 17 suspects, who appeared in court in Montreal on Wednesday in connection with real estate fraud totaling more than $5 million.
These arrests, which were carried out in several phases, are the result of a long-term investigation that began in the fall of 2021, Montreal police officers say. “It took a huge organization to manage to fool all the actors involved in this,” SPVM Detective Sergeant Karine Lessard said in an interview.
The police arrested seven women and ten men aged between 22 and 60. They were charged with various crimes, depending on their level of involvement in the scheme, including fraud, money laundering, receiving stolen property and conspiracy. Among the arrested suspects, some face prison terms of up to 14 years. The person with “the highest degree of involvement” in this real estate fraud, however, was not arrested – a warrant was issued for his arrest.
This is the largest investigation of this type of real estate fraud in SPVM history, Detective Sergeant Lessard stressed. He revealed that the network had targeted five mortgage-free properties: two opulent residences in Westmount and Beaconsfield, which were rented out, and three vacant lots located on Nuns Island.
The investigation began when one of the real owners contacted the police, who realized that their property was now encumbered with a mortgage of 1.75 million.
“The victim was really in a state of shock to see that there was such a large loan on his property,” reported Detective Sergeant Lessard, who is leading this major investigation with his colleague Detective Sergeant Mélissa Desautels.
The aggrieved homeowner immediately contacted the private lender who now had a mortgage on his property. The latter, with other members of a group of lenders, hired a private investigator to shed light on the situation. They then learned that mortgages had also been fraudulently obtained on four other properties by bogus owners.
They lost the entire amount of money borrowed.
A well executed ploy
By using fake identification documents, fraudsters were able to pass themselves off as owners of a targeted property. They practically appeared before a first notary in order to sign a power of attorney giving full powers of administration of the property to a person who was part of the criminal network.
The fraudsters also opened a bank account in the name of the real owners at a financial institution.
The power holder then obtained financing from a private lender and signed a mortgage deed with a different notary, the SPVM explained.
Once the borrowed money was deposited into the fraudulently opened bank account, the suspects would quickly withdraw it and disappear.
The homes in question were rented, the SPVM underlines: the fraudsters in the network had rented the property, thus having access to the physical premises, which facilitated the commission of criminal offences.
The transactions also took place during the COVID-19 pandemic. Virtual appointments with the notary, which became the norm at the time, also worked in favor of the scammers: their identity documents, required by the notary, were transmitted electronically. “It’s more difficult to verify a person’s identity virtually,” explains Detective Sergeant Lessard: receiving a photocopy of a driver’s license by email, for example, is not the same as receiving a photocopy of a driver’s license by email, for example. to have in hand and to be able to examine it from all angles”, he adds.
The SPVM offers advice to notaries, real estate brokers, mortgage brokers, private lenders and employees of financial institutions “who can play a key role in preventing identity fraud”. The police encourage them to be wary of customers in a hurry and those who insist on having virtual meetings, avoiding showing up in person at their offices. They are told to learn how to distinguish a real driver’s license from a fake one and to ask to see additional identification documents. They should also be wary of customers who don’t ask questions about the terms of a loan or the fees to be paid.
“It’s a type of crime that exists, and anyone can be affected,” Detective Sergeant Karine Lessard concludes.
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