The BC Financial Services Authority (BCFSA) is currently proceeding with at least 18 hearings against real estate agents and sub-mortgage brokers, alleging they worked with an unregistered broker and, in some cases, applied to lenders with fraudulent income documents, sometimes on their own behalf.
At least two cases had gone to a hearing as of press time. Those cases revealed that the respondents had conducted business with former sub-mortgage broker Jay Kanth Chaudhary, who, between 2009 and 2018, allegedly arranged over half a billion dollars in mortgage loans with lenders based on falsified income records as an unregistered, so-called “shadow” broker.
Last July, a BCFSA tribunal panel found realtor Rashin Rohani had bought five North Vancouver homes for herself using falsified income documents provided by Chaudhary.
Rohani is appealing that decision, with a new hearing date to be determined.
On September 25, realtor Qing Xing (Michael) He went before a tribunal to address allegations that he had submitted a mortgage application in July 2017 with falsified income information in relation to the purchase of his Surrey home.
BCFSA counsel alleged He knew of the false income documents submitted on his behalf by Chaudhary’s spouse Mana Erfani—a matter He contested at the hearing.
Ultimately, He was able to acquire a $900,000 loan in 2017 having reported just under $30,000 of income in 2016, according to BCFSA counsel.
As like Rohani, He has claimed he did not know Chaudhary provided lenders with false information, and said he did not know Chaudhary was unlicensed.
During testimony, counsel raised the name of sub-mortgage broker Shane Christopher Ballard as having worked with Chaudhary on He’s file.
Ballard was issued a hearing notice on October 8, 2019, and is finally scheduled to appear before a panel on January 27, 2025.
It is alleged by BCFSA that Ballard “submitted to lenders income and banking documents and employment information, including Notice of Assessments, T1 General Income Tax and Benefits Returns, Bank Account Statements, and Letters of Employment, in support of mortgage applications … when he knew or ought to have known that the documents and information were not genuine.”
BCFSA claims Ballard “permitted [Chaudhary] to direct the course of mortgage applications” by accepting income and banking documents from him without verifying their accuracy and authenticity. Ballard also did not meet with the long list of borrowers he sought loans for, according to the hearing notice.
In He’s notice of hearing Chaudhary is referred to as “Individual 1.”
It is only during the hearing that Chaudhary’s identity was verified.
Most of the proceedings against other licensed professionals also refer to allegations of working with “Individual 1,” also known as “[Alias 1].” (Chaudhary operated under aliases Mike Kumar and George DeSouna.)
In all of the cases, BCFSA is attempting to prove allegations of what appears to be widespread mortgage fraud conducted by realtors and sub-mortgage brokers, and on their own behalf.
The next such hearing is for realtor Ali Asi, scheduled for October 21. Like He, Asi is accused of submitting false income documents to purchase his home.
Previously scheduled hearings for realtors Molenia Golshani, Claudiu Capraru and Jin Luo have been adjourned for undeclared reasons. (One possibility is they seek more time, or they may have reached a “consent agreement” or settlement.)
For Chaudhary’s part, it is unclear what consequences he may face. Chaudhary was issued a cease-and-desist order by BCFSA in 2018, after nearly a decade of operating as an unregistered “shadow” broker.
Chaudhary was summoned to the Cullen Commission of Inquiry into Money Laundering in February 2021, where he admitted he systemically falsified mortgage applications.
Chaudhary told the commission he understood his clients to be able to afford their mortgages because they often had undeclared income to sustain the payments.
“Everyone wins and no one gets hurt,” Chaudhary said at the time, adding that his conduct could have been prevented if lenders (such as banks) were able to verify income with the ÎÚÑ»´«Ã½ Revenue Agency (CRA).
Chaudhary’s home was raided in 2018 by BCFSA investigators and police, where they found an Excel spreadsheet of his clients indicating he arranged $511 million in mortgages, generating $5.3 million in client fees from 875 files.
Chaudhary gave testimony under guidance from his criminal defence lawyer Joel Wyshall, who told the commission Chaudhary “is the subject of an ongoing investigation and there is a search warrant being executed on him and the CRA is investigating and that manner is in charge approval.”
To date, no charges appear in the province’s criminal court registry.
