A Barrie, Ont.-based mortgage brokerage has been accused of fraud after $101 million in client investments has gone missing.
Sandford “Sandy” Sussman, the owner of Sussman Mortgage Funding Inc., is under investigation after allegedly misappropriating investors’ funds and not being able to pay them back.
The company has been placed in receivership, with the Ontario Superior Court of Justice appointing business advisory firm B. Riley Farber as receiver. B. Riley Farber has seized Sussman Mortgage Funding Inc.’s assets and is investigating the allegations of fraud.
According to B. Riley Farber’s first report, Sussman convinced investors to put their money into syndicated mortgages. A syndicated mortgage is an arrangement between multiple investors where they pool their money to fund a mortgage. Typically, it’s used to fund the building of larger commercial developments.
In the early 2010s, Sussman used syndicated mortgages to build single-family homes around cottage country. The appeal for investors was that they received between eight to 12 per cent in interest payments on their investment. Plus, the housing market was thriving, making it a safe investment.
But then Sussman transitioned into larger builds, specifically three housing developments: one in Bracebridge, Ont., one in Innisfil, Ont., and one in Ramara, Ont. The Bracebridge site had 34 residential building lots. The Innisfil site had a planned 248 units plus room for more. And the Ramara site had a planned 300 units.
To fund these builds, Sussman received money from 117 investors. B. Riley Farber has found that those investors paid Sussman $101 million. Unlike a single home, these developments were riskier investments because their success depended on a wider range of factors, including planning permissions, construction companies, pressing deadlines, and unit sales.
As the builds dragged into the 2020s, the housing market slowed. Suddenly, Sussman didn’t have enough money to pay the high interest rates back to investors. It didn’t help that between 2020 and 2024, he paid himself $4.2 million in salary. To cover the interest payments, he began bringing in new investors.
In several instances, Sussman asked these new investors to make out cheques in the specific amounts owed to other investors. These new investors also signed no documents and were told little about the investment, with Sussman saying he’d explain it later.
“I had no plan. I was signing—in such pressure, I was signing anything to keep everyone afloat,” Sussman said in a deposition about paying investors back.
On March 31, after receiving complaints from investors, the Financial Services Regulatory Authority of Ontario suspended Sussman’s licence. The case has been compared to Bernie Madoff’s ponzi scheme with friends and associates trusting Sussman’s investment advice.
Since investigating, B. Riley Farber has found that Sussman doesn’t have financial records prior to 2017 when many of the syndicated mortgage investments started, and he dumped all investments into a single bank account, making it difficult to track.
Because of the poor bookkeeping, B. Riley Farber theorizes that there may be more than $101 million owed. B. Riley Farber, along with law firm Aird and Berlis, which is representing the investors, is working to get the money back, but much of it may be lost.
Some money will be reclaimed from the developments. The Bracebridge development was nearly finished with the exception of eight units. B. Riley Farber estimates that the eight unfinished units could net between $1 million and $1.2 million when sold. In Innisfil, 111 of its initial 130 units were completed. The remaining units could net $14 million in profit when sold. And in Ramara, 87 of its initial 100 units were completed. The remaining units could net between $20.6 million and $26.5 million when sold.
While this isn’t enough to cover the missing $101 million, B. Riley Farber says it will continue to work with investors to see what claims they have against Sussman Mortgage Funding Inc.’s assets.
The case is ongoing in the Ontario Superior Court of Justice.
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