Federal prosecutors decided not to present positions derived from an investigation of the five -year Canada Revenue Agency on an alleged case of half billion mortgage fraud due to “technicalism”, according to the documents obtained by the CBC.
The documents, published through the freedom of information, detailed attempts of the BC financial regulator to interest the law enforcement agencies in a so -called ‘shadow’ mortgage corridor and the more than two dozen real estate professionals who helped him.
The investigators of the BC Financial Services Agency spoke with the Vancouver Police and the RCMP about their investigation into Jay Kanth Chaudhary. The documents say that the CRA finally followed accusations that the unregistered corridor had not paid almost $ 1 million in taxes.
But last summer, a principal investigator of the Criminal Investigations Division of the western region of the CRA wrote to a legal manager of the BC Financial Services Agency to tell him that the investigation was over.
“Unfortunately, due to a technicalism, the Canada Public Processing Service has decided not to present positions for this research,” Aaron Alatows wrote in an email.
“However, not everything is lost, since I referred this case to the civil side of CRA, where the evaluations were completed. This was an excellent derivation and much appreciated to come from your agency. Continue to send us references in the future.”
Available ‘amazing’ of activities
The documents provide a new vision of several years investigation into Chaudhary and the network of real estate agents and mortgage corridors that led their efforts to ensure $ 500 million in financing for buyers of unqualified homes through altered tax and bank statements.
The nature of “technicalism” that annulled the placement of positions even related to taxes is not explained in the FOI documents, and the public prosecution service said that “it would not comment on the investigations that it may or may not be undertaking.”
BCFSA’s Director of Research, Raheel Humayun, has called the scope of the unregistered activities of Chaudhary “amazing”, not to mention the number of licensed professionals who violated ethical and professional codes to help him.
But beyond the suspensions of licenses, cancellations and fines up to a maximum of $ 50,000, no one associated with the scheme seems to have faced criminal sanctions.
BCFSA’s documents show that it was not due to lack of attempt.
’30 possibly associated individuals’
A “case note” claims that the regulator investigators met with members of the Financial Crimes Unit of the Vancouver Police Department on April 3, 2019, “to discuss whether VPD would interteg in pursuing this file from a criminal perspective.”
Another “case note” for the same day says that the staff also met with RCMP “to discuss whether this investigation was aligned with the current mandate of the Financial Integrity Unit and if there would be any interest in taking this file from a criminal perspective.”
The documents show that RCMP senior researchers seemed to take a second look at the archive four years later, long after the case began to appear in the holders and after Chaudhary was summoned as a witness of a provincial commission on money laundering.
Humayun wrote a memorandum in January 2023 to two inspectors with the Federal and Serious Organized Crimes Unit, “describing the potentially criminal activity that we have observed during our regulatory investigations.”
“The names, bends and basic accusations against … These 30 possibly associated people are contained within an appendix of the letter,” he wrote.
“Our office is available to provide more details, including evidence or reports in our possession.”
But nothing happened.
In a statement, the VPD said the alleged violations were “mainly of a regulatory nature,” which means that BCFSA was the best body to investigate.
The RCMP did not explain its decision not to proceed, refusing to “confirm the identity of any person, company or entity that may or may not be subject to an investigation.”
‘Inform your income to CRA’
The Canada Income Agency began to show interest in the summer of 2019.
An email written as a “leading potential” by BCFSA Doug Brecknell for criminal investigations Sets the reasons for the regulator for suspicion.
“From the evidence and the documents produced by real estate graduates, it seems that real estate licenses may have been low or falsely informing their income to CRA,” Brecknell wrote.
“Both were obtained false and it is believed that genuine fiscal documents were obtained for real estate licensing. A review of tax documents … indicates that it would be unlikely that the reported income of real estate graduates are sufficient to pay the mortgage payments.”
In the months that followed, the CRA obtained an order to confiscate records that the Mortgage runner registrar had already taken from Chaudhary and Shane Christopher Ballard, a former mortgage corridor who later admitted to facilitating 165 requests for Chaudhary.
Uncmitted tax accusations
The request to obtain the search warrant says that the CRA researchers believed that Chaudhary, also known as Mike Kumar or Jay Michaels, “won $ 5,283,347 of customer rates and $ 642,344 of reference fees” between 2009 and 2019.
“It is alleged that between 2012 and 2018 the Net Commercial Income not reported, the Income Tax not submitted and the non -unemployed goods and services tax/The harmonized sales tax is estimated at $ 2,967,915, $ 798,505 and $ 163,033, respectively,” says the registration order.
“It is also alleged that the estimated contributions of the Canada Pension Plan not submitted for this period are $ 23,623.”
The search warrant offers an example of a businessman who paid Chaudhary almost $ 5,000, one percent of the mortgage director, to organize the financing of the house for his son using false fiscal documents.
The documents say that Ballard then paid Chaudhary a rate of $ 1,250 for the mortgage reference that received the request to CMLS Financial.
Ballard allegedly paid Chaudhary a total of $ 282,900 in cash as reference rates for mortgage requests that he managed between 2015 and 2018.
Earlier this year, Ballard, who now works as a housing inspector, was prohibited from being a mortgage corridor and was ordered to pay a fine of $ 50,000.
At the time of the testimony of the Cullen Commission of Chaudhary in February 2021, his lawyer said that the investigation of the CRA was in “approval of charges.” “Technicalism” seems to have emerged between then and 2024.
Once the CRA left criminal investigation last summer, the agency returned the investigation archives to the regulator.
‘I don’t think it can be prevented’
Many of the real estate agents who brought customers to Chaudhary took advantage of their services themselves, including two people stripped of their licenses earlier this year in a series of actions that the regulator took against the “extensive network” of people around the shadow corridor.
One of them admitted having used false financial statements to buy a house a year after he declared a negative annual income of $ 459.
Chaudhary received a license as a mortgage corridor from 2007 to 2008, when he was suspended after an investigation that he found that he had submitted counterfeit records for a variety of customers.
He talked about his activities in the Cullen Commission for Money Laundering in 2021, maintaining that he helped clients who could not comply with the qualifications of an institutional lender to avoid the dangerous world of private lenders.
Chaudhary said that none of its customers breached a loan, none of the banks that gave them money suffered wounds, and a booming real estate market meant that it was always busy.
“Actually, I don’t think it can be prevented,” he told the commission at one time.
“Because there will always be a need for people like us and what we did, and because demand itself is there. The demand comes from the borrowers themselves. The demand comes from people who want a house and do not fit into traditional guidelines.”
