Winnipeg Free Press - PRINT EDITION

Suspended broker to fight warrants

Says RCMP took files protected by privilege

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A suspended Winnipeg mortgage and real estate broker says he can't properly defend himself at an upcoming securities commission hearing because RCMP have seized documents and digital files relating to his business transactions.

David Douglas has put federal justice officials on notice he will ask a Court of Queen's Bench judge on April 24 to quash two search warrants executed in March.

Douglas claims his computer gear, files and other items Mounties took were off-limits to police because some of the materials are protected by lawyer-client privilege.

Douglas faces a hearing before the Manitoba Securities Commission (MSC), which recently suspended his licence as it examines alleged violations under the Real Estate Brokers Act (REBA) and the Mortgage Brokers Act (MBA).

The charges relate to real estate and mortgage transactions involving three Winnipeg homes: on Ash Street, Eugenie Street and Ellismere Avenue, the MSC has said.

The commission is inquiring whether it's in the public interest to cancel Douglas's registration under the REBA, and impose more sanctions under the MBA.

It's asking the same question about the registration of his company, Homelife Village Realty, and Geraldine Douglas, the company's authorized official -- Douglas's mother -- who is alleged to have failed to supervise business transactions and conduct.

"I am unable to fully or properly defend myself from the action of the Manitoba Securities Commission as many of my documents and all of my digital files are in the possession of the RCMP," Douglas states in a sworn affidavit.

Court records show RCMP seized computer equipment and paper documentation during a March 4 search at a home on Old River Road in the RM of St. Clements.

They also searched another location that day at 1745 Henderson Hwy. and seized documents, records show.

Douglas has not been charged with any crime and allegations levied by the securities commission and RCMP have neither been tested nor proved in court.

RCMP sought search warrants in late February, alleging they may find evidence on which to base criminal charges of theft over $5,000 and fraud over $5,000.

The allegations date back to 2010 and involve alleged victims, including the Royal Bank of Canada, Sun Mortgage Corporation and citizens, court documents disclose.

RCMP started an investigation into Douglas last May after a woman called them to allege she and her husband had been defrauded after investing $450,000 with him, according to a sworn police affidavit.

"David Douglas had promised them a return of 25 per cent interest per year, via monthly interest payments and to repay their principal amount at the end of a term," Const. Davide Masi of the RCMP commercial crime unit states in the affidavit.

"They were reporting this to police as the interest payments that had been coming from David Douglas had since stopped and that he has not been in contact with them," wrote Masi.

RCMP said they learned Douglas was the director of several numbered companies, ones which have registered business names the woman had disclosed.

The names she mentioned were: Option Home Finance, Abacus Mortgage Group, HomeLife Realty and Naked Design Homes, the affidavit states.

Several other people also came forward, alleging they had been defrauded by Douglas "under both similar and differing circumstances," stated Masi.

RCMP interviewed investors, former employees, bank personnel and people involved in real estate transactions with Douglas. The 43-page affidavit details an investigation examining five real estate deals.

Two of the homes identified by the securities commission are referenced, along with properties on Toronto Street, Collegiate Street and Stuart Avenue.

RCMP allege Douglas solicited people to act as "straw buyers" to buy homes he had financial interests in.

Straw buyers are people who agree to put their names on mortgage applications on behalf of someone else. They may be offered cash or promised big returns when the property is sold.

The Manitoba Securities Commission hearing involving Douglas and his mother is set to take place April 23.

 

james.turner@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 12, 2014 0

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