Ontario's deputy director of titles has released a series of decisions
ordering rectification of five property titles taken by fraud artists, and
re-registration of the same number of fraudulently discharged mortgages.
In addition, the Land Titles Assurance Fund has been ordered to pay more
than $2 million in damages and legal costs to pay off the bogus mortgages
signed by the fraudsters.
Last month, I wrote a column entitled Stolen dreams, which detailed how
fraud artist Emanuele Tesoro forged deeds and transferred the titles to five
Richmond Hill properties into his own name. He then forged and registered
discharges of the existing mortgages, allowing him to place new first
mortgages on houses he didn't own. In one case, he did it twice.
(The column is archived at http://www.thestar.com under Columnists, then
click on Bob Aaron.)
With the decision in one more case still to be released, Ontario taxpayers
have been hit, through the assurance fund, with repayment of a half-dozen
fraudulent mortgages to the tune of almost $1.8 million, and just shy of
$250,000 in legal costs for a platoon of lawyers to straighten out the mess.
Typical of the cases is that of Nimita and Ravinder Raina, who bought a
house on Alessia Ct. in Richmond Hill in 1999. Evidence at the Land Titles
hearing showed that the title to the Raina property was, without their
knowledge, transferred to Tesoro six months after they bought it.
Tesoro presented documents with the Rainas' forged signatures on a deed,
registered it, and paid land transfer tax on the bogus registration.
The existing mortgage to the Royal Bank was fraudulently discharged, and a
new mortgage for $350,000 was registered from Tesoro in favour of Ila Weiser
and Midking Investments Ltd. Within weeks, that mortgage was also
fraudulently discharged, and a new mortgage for $252,500 from Tesoro was
registered to Equitable Trust Company.
It's not difficult to imagine the effect on a homeowner of having his or her
house title stolen, and not knowing for more than two years if, or when, it
will be given back.
According to the decision, the Rainas had a thriving business exporting
computer hardware and software to Zambia. Having lost the title to their
house, they were unable to use the equity in it to finance large shipments
of equipment. As a result, they experienced lost business opportunities of
about $60,000 in potential profits.
They suffered badly from the stress of the situation, and Nimita Raina had
to undergo extensive medical treatments and physiotherapy, both in Zambia
and Ontario. They spent a small fortune in legal costs attempting to rectify
the title to their property.
When the compensation decision came out late last month, it ordered payments
from the assurance fund totalling about $743,000 to pay off and discharge
the Weiser/Midking and Equitable Trust mortgages.
In addition, the fund will cough up legal fees and expenses to three sets of
lawyers for almost $68,000 even after chopping one lawyer's $90,000 bill
in half. All this is, of course, taxpayers' money.
The director of titles also ordered that the forged deed to Tesoro be struck
off the title, and that Nimita Raina be shown as the registered owner of the
property. As well, the Royal Bank mortgage will be restored.
These results were not unexpected. The big question in this, and the other
four cases released last month, was whether the assurance fund would pay
other damages claimed by the owners due to Tesoro's fraud.
Under the provincial Land Titles Act, a person wrongfully deprived of an
interest in land is entitled to recover "what is just, by way of
compensation or damages" from the person who acquired title through fraud or
If the injured person is unable to recover "just compensation" for his or
her loss, that person is entitled to have the compensation paid out of the
Unfortunately for the owners, Jean C.H. Iu, the deputy director of titles,
ruled that "just compensation" for the loss only means indemnity for the
"pecuniary loss which has been suffered" and should only restore the
applicant to the position he or she would have enjoyed if there had been no
Restoration of the wrongful deprivation, Iu ruled, does not include more
remote damages resulting from the fraud.
Toronto lawyer Alan Direnfeld acted for the Rainas, and Bernard Gasee
represented the Royal Bank and the other owners in the five Tesoro cases in
which the decisions were released last week.
Gasee told me he is recommending the homeowners appeal the decision. The
legislation, he says, gives authority to award "just compensation." This, he
suggests, should include general damages, aggravated damages, punitive
damages and all out-of-pocket expenses. He feels his clients should also be
fully compensated for non-monetary damages, such as pain and suffering,
anxiety, stress and aggravation.
Why, for example, should the parties recover their legal costs but none of
their medical expenses?
I agree with Gasee.
The government has set up a land registry system that makes it ridiculously
simple to perpetrate frauds resulting in losses of millions of dollars to
The institutions who loaned money to Tesoro got every cent of their money
back, with compound interest. Why shouldn't the homeowners get damages like
any other injured plaintiff, even if it is from taxpayer funds?
Another interesting aspect of the case is the fate of Stewart Title, which
insured one of the Royal Bank mortgages. In her compensation decision, Jean
Iu said she had reviewed the title insurance from Stewart Title Guaranty
Company, and was satisfied that the insurance did not cover the fraudulent
activities of Tesoro.
The underlying legal concept is very complicated. Wayne Lipton,
vice-president of Stewart Title, explained this decision is based on the
fact Tesoro used his own name, and the lawyers dealing with the title had
the right to rely on the title page as a guarantee of the state of the
If a fraudster used a different name, Lipton told me, the lawyers could not
rely on the title abstract because of the false name on title. In that case,
he said, the loss would "likely" be covered by Stewart.
In either event, everybody gets paid the homeowner, the real mortgage and
the bogus mortgage either by the compensation fund, or the title insurer.
More on the land titles decisions next week.
FOOTNOTE: There are two local men named Emanuele Tesoro. One is in jail as a
result of his real estate fraud convictions. The other is married, and an
honest, religious man who has no connection or relationship to the fraud
artist. I regret that the publicity given to the former has embarrassed and
caused confusion among the friends and family of the latter.
Bob Aaron is a leading Toronto real
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