Two financiers who swindled hundreds of investors in a Winnipeg condo project and a Barrie, Ontario mixed-use development were sentenced on Monday to five years in prison each and hefty fines of $12.2 million each.
Jawad Rathore, 49, and Vince Petrozza, who is 50, were top executives at Fortress Real Developments Inc., a now-defunct Toronto-area mortgage company that gathered funds for an unsuccessful 45-storey tower in downtown Winnipeg named Sky City and a mixed-use project in Barrie called the Collier Centre.
The Ontario Court of Justice found in May that Rathore, the former CEO of Fortress, along with Petrozza, its ex-COO, defrauded nearly 800 investors out of $33.1 million over about four and a half years, leading to losses totaling $24.4 million.
Justice Daniel Moore handed down sentences of five years each on Monday, adding that they could face another five years behind bars if they don’t pay their $12.2 million fines within ten years after being released from jail.
Their attorneys informed on Monday that they have filed an appeal against the ruling.
Syndicated mortgages are loans from multiple investors intended to cover development costs while using the land as collateral. Investors typically receive interest along with a mortgage aimed at securing their initial investment.
Moore determined that the mortgages tied to the Sky City and Collier Centre properties exceeded their actual value by up to 300 percent, putting principal investments at risk since they weren’t properly secured.
“The overleveraging caused by the fraud virtually guaranteed there would be loss if the projects failed,” stated the judge in his sentencing explanation.
In his remarks, Moore also highlighted that the fraud related to both projects showed “a high degree of planning and complexity.”
The scheme primarily targeted small investors whose financial impact was significantly harsher than others; for many it proved financially devastating.
Most victims experienced psychological distress; some “suffered extremely serious deteriorations of their mental health,” which also affected their physical well-being.
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A billboard advertising Sky City, a 45-storey downtown Winnipeg condo tower that did not proceed. (Jaison Empson/CBC)
On another note, Moore pointed out that neither Rathore nor Petrozza had prior criminal records and both have “strong potential for rehabilitation given their roots in the community.”
Moore mentioned Rathore has six children-three with learning disabilities-and a wife dealing with an autoimmune disorder affecting her mobility alongside two elderly parents needing care.
He also noted Petrozza is married with three kids while supporting his parents and mother-in-law financially.
The judge remarked that both offenders would have gained financially if either Sky City or Collier Centre had succeeded and acknowledged they genuinely wanted these projects to move forward.
“This was not a pure scam or Ponzi-style scheme where the investment does not even truly exist,” wrote Moore.
The judge further expressed he did not see “any evidence of true remorse.”
The Crown had requested prison terms of ten years for both defendants.
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