Ontario judge sends SkyCity condo development fraudsters to prison for five years, fines each $12.2M

Two financiers who defrauded hundreds of people who invested in a Winnipeg condo tower development and an Ontario mixed-use project were each sentenced Monday to five years in prison and fined $12.2 million.

Jawad Rathore, 49, and Vince Petrozza, 50, worked for Fortress Real Developments Inc., a now-defunct Ontario syndicated mortgage company that raised money to build a 45-storey condo building on Graham Avenue in downtown Winnipeg, dubbed SkyCity when it was announced to much fanfare in 2013, as well as a development in Barrie, Ont. called the Collier Centre.

The projects never got off the ground and RCMP later investigated the executives in a lengthy probe, before laying charges in Ontario in 2022.

Rathore, the company’s former chief executive, and Petrozza, its former chief operating officer, were each found guilty last May of one count of fraud over $5,000 in the Ontario Court of Justice.

Justice Daniel Moore sent Rathore and Petrozza to prison for five years, plus an additional five years of potential prison time if they do not pay their hefty fines within a decade of their release, he said in a written decision delivered Monday.

But lawyers for Rathore and Petrozza have filed appeals of the verdict and both men were granted bail pending that process on Monday.

“Our appeal alleges that the trial judge seriously misapprehended the evidence related to the opinions of value used on all Fortress projects, including the two projects that were the focus of the trial, leading to an unreasonable verdict,” Rathore’s lawyer, Scott Fenton, said in a statement.

The men were found to have defrauded close to 800 investors in the two projects, for a combined $33.1 million, over the course of nearly 4 1/2 years by misrepresenting the value of the properties.

In the case of the Winnipeg project, investors were defrauded of at least $17.7 million.

Syndicated mortgages involve multiple investors pooling money to finance real estate projects. Investors are typically offered interest and a mortgage to keep their investment secure.

But Moore found the mortgages registered against the two projects far exceeded the value of the properties, by as much as 300 per cent, which placed investments at risk, as they were not sufficiently secured.

“That risk of loss became an actual loss when the projects did not go ahead, and the properties did not have sufficient value to protect their principal investment,” wrote Moore, noting actual losses were found to be $24.4 million.

He found the over-leveraging caused by the pair’s fraud “virtually guaranteed there would be loss if the projects failed.”

A major developer involved declared bankruptcy, leading to the collapse of the projects.

Moore said the fraud targeted “mom and pop” investors for whom the impact of the losses was significant and in some cases, financially catastrophic.

“Most victims suffered some degree of psychological harm, and some suffered extremely serious deteriorations of their mental health which in turn also impacted on their physical health,” wrote Moore.

Among the victims was Ontario resident Linda Bilorosek, now 73, who invested money from her retirement savings in 2015 in Winnipeg’s SkyCity project, as well as another project, expecting safe and significant returns.

“I really thought it was safe,” said Bilorosek, who attended Monday’s court proceedings.

“I was satisfied with it, but I certainly wish the jail term was longer. I’m disappointed they can be out of jail (on bail) while they’re appealing.”

Bilorosek, who said she attended much of the trial, noted some of the investors put in up to $1 million and “lost everything,” forcing them to return to work after having already retired.

She lost her full $30,000 investment in SkyCity, along with money she put into another project that wasn’t involved in the court case, amounting to all of her retirement savings. She said she luckily owned a condo in Toronto that she was able to sell afterward to put herself in a more financially stable position.

“You try and put your life back together and create some savings again — it’s tough,” she said.

The judge found that Rathore and Petrozza would have benefited financially if the projects had been successful and that they wanted the projects to go ahead.

“This was not a pure scam or Ponzi-style scheme where the investment does not even truly exist,” he wrote.

Moore noted the men have no prior records and have a good shot at rehabilitation, though he said he saw no evidence of true remorse for the fraud.

Petrozza is married with three children and supports his parents and mother-in-law. Rathore has six children, three of whom have learning disabilities, a wife with a disorder that limits her mobility and two elderly parents that require care, Moore wrote.

Crown prosecutors had sought 10 years in prison for the men.

erik.pindera@freepress.mb.ca

Erik Pindera
Reporter

Erik Pindera is a reporter for the Free Press, mostly focusing on crime and justice. The born-and-bred Winnipegger attended Red River College Polytechnic, wrote for the community newspaper in Kenora, Ont. and reported on television and radio in Winnipeg before joining the Free Press in 2020.  Read more about Erik.

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