Judge looks at papers
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An Ontario court has approved a $3-million class-action settlement on behalf of syndicated mortgage investors who lost much of their money in a failed investment scheme.

The Superior Court of Justice granted a motion approving a proposed settlement with several of the defendants in a class action, including FMP Mortgage Investments Inc., involving a syndicated mortgage loan promoted by Fortress Real Developments Inc. and Fortress Real Capital Inc. for the Orchard Calgary Inc. real estate project.

When the loan went into default, the investors lost most of their money.

According to the court’s decision, among other things, investors alleged that they were “misled about the value of the property” underlying the syndicated mortgage, the risks involved with the investment and how the mortgage proceeds would be used by developers and the mortgage administrators.

Under the settlement, the defendants will pay $3 million, including $750,000 in legal fees, along with disbursements and other expenses.

The court ruled that the proposed settlement is a “fair and reasonable one,” and it approved the deal as being in the “best interests” of the investors.

This marks the fourth class action involving syndicated mortgage investments connected with Fortress Real, which allegedly raised more than $900 million from retail investors for various projects between 2008 and 2017. Three previous settlements were reached in 2023, totalling $28.7 million.

In 2020, the Financial Services Regulatory Authority of Ontario entered a settlement with Fortress Real, which included a $250,000 in administrative penalty for contraventions of mortgage rules.

Following an investigation by the RCMP’s Integrated Market Enforcement Team, in 2022, the company’s founders were charged with fraud in connection with a series of failed syndicated mortgage investments. That proceeding remains underway, and the allegations have not been proven.