Reviewing the Utility of Notices of Security Interests in the Context of Rampant Fraud
The recent wave of predatory lending schemes targeting the elderly and vulnerable in Canada is worthy of attention. We first wrote about this in August,[1] highlighting the notice to the professions released by the Law Society of Ontario (“LSO”), alerting Law Society licensees to the risks of acting for clients in the registration of Notice of Security Interests (“NOSIs”), or, while completing mortgage loan transactions in cases involving vulnerable people. As the number of scams have only increased, we covered this again in last month’s newsletter.[2]
To recap, two lawyers who have acted for older clients in these circumstances have already received interlocutory suspensions while the Law Society’s disciplinary panel conducts hearings on the merits.[3] In October, the Financial Services Regulatory Authority of Ontario (“FSRA”) initiated enforcement action against a common brokerage connected to several cases of alleged predatory lending fraud.[4]
This scheme has also been reported by CBC’s Marketplace since as early as March of this year. Since then, the CBC has identified a company who they believe is a major player in a door-to-door scheme targeting vulnerable homeowners—Alternative Finance Group (“AFG”). The CBC has recently reported that the Ontario Provincial Police (“OPP”) executed a search warrant at the Mississauga home of AFG’s sole director, Anas Ayyoub.[5]
Mr. Ayyoub has caught the ire of several older adults in Canada who have accused him of defrauding them to support his lavish lifestyle which he flaunted on social media.[6] Through his lawyer, Mr. Ayyoub denied all allegations and said his company has no connection to any door-to-door scheme and that all mortgages were signed voluntarily. Astonishingly, the company also claimed that “it may be a victim of a concerted group of seniors who are refusing to pay back their loans.”[7]
Lawyer Greg Weedon, a real estate litigation lawyer based in Toronto who represents many of the alleged victims told the CBC that, as far as he knows, despite the warrant, Ayyoub is no longer in Canada.[8]
Reviewing the Utility of NOSIs
An OPP spokesperson with the Serious Fraud Office told the CBC that “enhancing awareness and education on this fraud is paramount to prevent or limit further victimization.”[9] But is this enough?
Greg Weedon argues that the Ontario government should get rid of NOSIs altogether, stating that “[t]hey’re completely useless…only being used for these types of situations for these fraudulent schemes.”[10]
Government of Ontario’s Public Consultation
On October 17th, the Ontario government launched a public consultation of ways to address and reduce the harmful and inappropriate use of NOSI’s against unsuspecting consumers. Todd McCarthy, Minister of Public and Business Service Delivery stated that, “[o]ur government will not stand by and allow bad actors to take advantage of hardworking Ontarians for their own financial gain.”[11] The consultation closed on December 1st and asked for input on such topics as the requirement to notify a homeowner when a NOSI is registered, the types of goods or fixtures for which a company can register a NOSI, and restrictions on the duration of a NOSI.
Quick Facts
- The Consumer Protection Act, 2002,[12] governs most personal and household consumer transactions and sets out the rules for consumer contracts in Ontario to which a NOSI may be tied.
- The Personal Property Security Act,[13] allows for NOSIs to be registered. It includes remedies to be applied to cases where a consumer has fulfilled their obligations related to the NOSI (or if obligations related to the NOSI are forgiven) but a business has not discharged the NOSI.
- You can use Ontario’s land registry system to search NOSIs on the title of your property.
The Foreseeable Future
It remains to be seen what kind of action the government of Ontario will take in response to an alarming and overwhelming increase in the amount of predatory lending schemes targeting vulnerable homeowners. We can only hope that the response will produce viable solutions that protect vulnerable homeowners from these destructive and highly inappropriate business practices.
One thing is for certain, the use of NOSI’s in the context of fraud and unfair business practices targeting older adults and vulnerable homeowners not only alarming but also worthy of a closer look.
—
[1] See Brett Book, “Notice to the Professions: Exploitative Loan Agreements” (August 31, 2023), WEL Newsletter, accessed online: https://welpartners.com/blog/2023/08/notice-to-the-professions-exploitative-loan-agreements/
[2] See Brett Book, “The Alarming Rise of Scams Targeting Older Adults” (November 30, 2023), WEL Newsletter, accessed online: https://welpartners.com/blog/2023/11/the-alarming-rise-of-scams-targeting-older-adults/
[3] See Law Society of Ontario v. Harrison, 2023 ONLSTH 80; see also, Law Society of Ontario v. Jain, 2023 ONLSTH 132.
[4] See Financial Services Regulatory Authority of Ontario, “FSRA issues notice of proposal against Ranjit Dhillon, Aid Almusri, Kamal Dhillon and Mortgage Smart Inc.” (October 10, 2023), Newswire, accessed online: https://www.newswire.ca/news-releases/fsra-issues-notice-of-proposal-against-ranjit-dhillon-aid-almusri-kamal-dhillon-and-mortgage-smart-inc–817716730.html.
[5] Stephanie Kampf, David Common & Katie Pedersen, “Man alleged to be behind high-interest mortgage scam living large on social media” (November 24, 2023), CBC News, accessed online: https://www.cbc.ca/news/business/man-alleged-to-be-behind-high-interest-mortgage-scam-living-large-on-social-media-1.7036852 [Kampf et al.].
[6] Ayyoub’s social media accounts, which are now private, showcased his Lamborghini which he says is worth $1.4 million.
[7] Kampf et al., supra.
[8] Ibid.
[9] Kampf et al., supra.
[10] Ibid.
[11] Government of Ontario, Ministry of Public and Business Service Delivery, “Ontario Strengthening Protections for Homeowners” Government of Ontario Newsroom, accessed online: https://news.ontario.ca/en/release/1003656/ontario-strengthening-protections-for-homeowners.
[12] S.O. 2002, c. 30, Sched. A.
[13] R.S.O. 1990, c. P.10.
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Written by: WEL Partners
Posted on: December 23, 2023
Categories: Commentary, WEL Newsletter
The recent wave of predatory lending schemes targeting the elderly and vulnerable in Canada is worthy of attention. We first wrote about this in August,[1] highlighting the notice to the professions released by the Law Society of Ontario (“LSO”), alerting Law Society licensees to the risks of acting for clients in the registration of Notice of Security Interests (“NOSIs”), or, while completing mortgage loan transactions in cases involving vulnerable people. As the number of scams have only increased, we covered this again in last month’s newsletter.[2]
To recap, two lawyers who have acted for older clients in these circumstances have already received interlocutory suspensions while the Law Society’s disciplinary panel conducts hearings on the merits.[3] In October, the Financial Services Regulatory Authority of Ontario (“FSRA”) initiated enforcement action against a common brokerage connected to several cases of alleged predatory lending fraud.[4]
This scheme has also been reported by CBC’s Marketplace since as early as March of this year. Since then, the CBC has identified a company who they believe is a major player in a door-to-door scheme targeting vulnerable homeowners—Alternative Finance Group (“AFG”). The CBC has recently reported that the Ontario Provincial Police (“OPP”) executed a search warrant at the Mississauga home of AFG’s sole director, Anas Ayyoub.[5]
Mr. Ayyoub has caught the ire of several older adults in Canada who have accused him of defrauding them to support his lavish lifestyle which he flaunted on social media.[6] Through his lawyer, Mr. Ayyoub denied all allegations and said his company has no connection to any door-to-door scheme and that all mortgages were signed voluntarily. Astonishingly, the company also claimed that “it may be a victim of a concerted group of seniors who are refusing to pay back their loans.”[7]
Lawyer Greg Weedon, a real estate litigation lawyer based in Toronto who represents many of the alleged victims told the CBC that, as far as he knows, despite the warrant, Ayyoub is no longer in Canada.[8]
Reviewing the Utility of NOSIs
An OPP spokesperson with the Serious Fraud Office told the CBC that “enhancing awareness and education on this fraud is paramount to prevent or limit further victimization.”[9] But is this enough?
Greg Weedon argues that the Ontario government should get rid of NOSIs altogether, stating that “[t]hey’re completely useless…only being used for these types of situations for these fraudulent schemes.”[10]
Government of Ontario’s Public Consultation
On October 17th, the Ontario government launched a public consultation of ways to address and reduce the harmful and inappropriate use of NOSI’s against unsuspecting consumers. Todd McCarthy, Minister of Public and Business Service Delivery stated that, “[o]ur government will not stand by and allow bad actors to take advantage of hardworking Ontarians for their own financial gain.”[11] The consultation closed on December 1st and asked for input on such topics as the requirement to notify a homeowner when a NOSI is registered, the types of goods or fixtures for which a company can register a NOSI, and restrictions on the duration of a NOSI.
Quick Facts
The Foreseeable Future
It remains to be seen what kind of action the government of Ontario will take in response to an alarming and overwhelming increase in the amount of predatory lending schemes targeting vulnerable homeowners. We can only hope that the response will produce viable solutions that protect vulnerable homeowners from these destructive and highly inappropriate business practices.
One thing is for certain, the use of NOSI’s in the context of fraud and unfair business practices targeting older adults and vulnerable homeowners not only alarming but also worthy of a closer look.
—
[1] See Brett Book, “Notice to the Professions: Exploitative Loan Agreements” (August 31, 2023), WEL Newsletter, accessed online: https://welpartners.com/blog/2023/08/notice-to-the-professions-exploitative-loan-agreements/
[2] See Brett Book, “The Alarming Rise of Scams Targeting Older Adults” (November 30, 2023), WEL Newsletter, accessed online: https://welpartners.com/blog/2023/11/the-alarming-rise-of-scams-targeting-older-adults/
[3] See Law Society of Ontario v. Harrison, 2023 ONLSTH 80; see also, Law Society of Ontario v. Jain, 2023 ONLSTH 132.
[4] See Financial Services Regulatory Authority of Ontario, “FSRA issues notice of proposal against Ranjit Dhillon, Aid Almusri, Kamal Dhillon and Mortgage Smart Inc.” (October 10, 2023), Newswire, accessed online: https://www.newswire.ca/news-releases/fsra-issues-notice-of-proposal-against-ranjit-dhillon-aid-almusri-kamal-dhillon-and-mortgage-smart-inc–817716730.html.
[5] Stephanie Kampf, David Common & Katie Pedersen, “Man alleged to be behind high-interest mortgage scam living large on social media” (November 24, 2023), CBC News, accessed online: https://www.cbc.ca/news/business/man-alleged-to-be-behind-high-interest-mortgage-scam-living-large-on-social-media-1.7036852 [Kampf et al.].
[6] Ayyoub’s social media accounts, which are now private, showcased his Lamborghini which he says is worth $1.4 million.
[7] Kampf et al., supra.
[8] Ibid.
[9] Kampf et al., supra.
[10] Ibid.
[11] Government of Ontario, Ministry of Public and Business Service Delivery, “Ontario Strengthening Protections for Homeowners” Government of Ontario Newsroom, accessed online: https://news.ontario.ca/en/release/1003656/ontario-strengthening-protections-for-homeowners.
[12] S.O. 2002, c. 30, Sched. A.
[13] R.S.O. 1990, c. P.10.
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