Statement on Behalf of Fortress Real Developments: October 2018
Friday October 19, 2018
Fortress maintains that neither Fortress nor its principals committed any criminal conduct in conducting the business affairs of Fortress, including any involvement in the marketing of syndicated mortgage-backed real estate development projects or the referral of potential lenders to licensed mortgage brokers for the purpose of the entering into syndicated mortgage loans respecting Fortress supported real estate development projects.
Over the past 10 years, Fortress has completed numerous real estate development projects throughout Canada using syndicated mortgages to finance early pre-construction or ‘soft’ costs, in which stakeholders, including syndicated mortgage investors have been repaid. Fortress has assisted in delivering over 2,000 residential units (almost 2 million square feet)with another 4.1 million square feet currently under construction. In multiple projects where Fortress has completed its role, stakeholders have substantially benefitted from value created. Fortress has already completed more than 30 successful projects, resulting in the repayment of nearly a quarter billion dollars ($250M) to syndicated mortgage investors. Beyond any question, these statistics reflect a track record of considerable success by Fortress in a competitive industry. Senior lenders, including banks and credit unions, have also been repaid another $500M.
Importantly, in all of these projects the syndicated mortgage investors were apprised, orally and in writing, of all of the material risks involved in the projects by the licensed mortgage brokers with whom they dealt. If any former mortgage broker has subsequently said otherwise to anyone, including the RCMP, they are being untruthful. For example, all investors were fully advised in writing of the assumptions and methodologies used by respected industry valuators in the development-based “opinions of value” for the projects as opposed to bare “as is” appraisals as incorrectly alleged by the RCMP. Further, the opinions of value were provided to the investors.
The RCMP failed to include in its search warrant applications any mention of the robust disclosures of risks and the true operational features of the syndicated mortgages that were made to all investors by the licensed brokers. In doing so, the RCMP presented a substantially misleading narrative to justify its investigative searches. The RCMP are also labouring under fundamental misconceptions of the most basic workings of syndicated mortgages.
Finally, it is false to suggest that any employee at Fortress in any way hid evidence or obstructed justice. Nothing could be further from the truth. Fortress is justifiably concerned that the RCMP are working with the type of confirmation bias and tunnel vision that the courts have long criticized should never take the place of objective fact finding.
Any further media questions should be directed to legal counsel Fortress:
Scott K. Fenton
Fenton Smith, Barristers