IN E THE MORTGAGE - FICOM - Home Page broker Staff. by Shankar; and Staff allege that public interest contrary a) facilitating b) compensating mortgage on not registered Staff allege

IN E

DENN

Appearances:

Hearing dates:

Before the Registrar's

In October 201 received a complaint located in Vancouver registered as a a registered mortgage

Staff for the Registrar assigned the investigation will describe more an individual who was

The Act requires that "mortgage broker" is

Registrar of Mortgage Brokers

THE MORTGAGE

B.C. 1996, C. 3

AND

REGO, SHANK

ARVIND SHANKAR

Registrar

for Dennis

ACT

SYSTEMS INC.

Michael Galambos Arvind Shankar

12-15, July

Cheryl Vickers

and 13

Registrar of Mortgage (Registrar's Office) that a falsified contract purchase and sale for a property

a lender by Rego, an individual with Shank Systems Inc. (Shank Capital), the Mortgage Brokers (the Act).

Brokers (Staff) an investigation, and Chin. During the course investigation, which I

expanded its include .Arvind Shankar, under the Act.

and submortgage brokers be registered. A as "a person who of the following:

2800-555 West Hastings Street Vancouver, BC V6B 4N6

Telephone: 604-660-3555 Facsimile: 604-660-3365 http://www.fic.gov.bc.ca

(a) carries on a mortgages, another

(b) holds that he or

The Act defines a actively engages in any is employed, either mortgage broker."

The Act gives the any matter arising sets out Registrar's the Registrar to impose upon a person who was or is submortgage broker be heard.

On September 30, 201 Shankar and Shank particularizes the Mr. Rego carried out contrary to section 8(1 )(i)

2

lending money money is the mortgage

or in part by own or that of

as, or by advertisement, notice or sign indicates broker;

buying and selling mortgages or agreements for sale; an amount of $1 or more in fees or other

legal fees for mortgages for other persons; money on the 1 O or more mortgages;

collecting money mortgages"

broker" as "any person who, in British Columbia, referred to in mortgage broker and

or in a particular case, or is a director or partner of, a

issued a Notice to section 8 of each Respondent.

in a manner that is by:

power to investigate a sworn complaint and

8 of the Act allows under the Act and

broker or an opportunity to

a) continuing to on behalf of using a contract of purchase and sale in mortgage application when or ought to have known the genuine;

b) collectively, submitting contracts of purchase and sale in mortgage application which knew or ought to have known were not genuine;

c) submitting an three lenders in JV's mortgage application had been rescinded;

d) submitting a application on behalf purchase financing that he knew or known was misleading;

e) submitting applications to at least seven lenders on behalf of VS for refinancing which he knew or have known were misleading;

f) facilitating g) making false

mortgage broker Staff.

by Shankar; and

Staff allege that public interest contrary

a) facilitating b) compensating

mortgage on not registered

Staff allege that without being

3

out business a manner that is prejudicial to the 8( 1 )(i) of the Act by:

activities; and in excess of $1 in a for arranging a refinance a property knowing Mr. Shankar was

business as a mortgage contrary to the Act.

business as a submortgage broker in BC so contrary to section Act by:

a) arranging one or more mortgages on behalf JV; b) arranging one or more mortgages on behalf VS; c) receiving in excess of $1 in a arranging a

mortgage on d) soliciting e) negotiating f) discussing

borrowers; and l°\rtt"l".:!f'IO commitments with

Mr. Shankar was the counsel. Mr. Rego and that he was willing dissolved.

At the hearing, Staff investigation including Filogix1 account, Rego's Email) including Shankar's Email), copies of emails interviews of Mr. and KB who did not did give evidence. In evidence.

At the conclusion evidence motion. examination that he identical to the Mr. Rego's email evidence. I dismissed evidence before me the evidence is

to attend the hearing. was represented by advised that he would not attending the hearing

admissions and accept sanctions. Shank Capital has

of documents Chin from his mortgage applications downloaded from Mr. Rego's

purportedly from [email protected] (Mr. ''"'"'""'·"'"''" himself and [email protected] (Mr.

purportedly from Rego's computer, and witnesses. The transcripts of formal

as well as interviews of GM, VC and transcripts with SH and AC who

witnesses SH and Mr. Chin witness LK gave

case, counsel for Mr. Mr. Galambos, made a no was based on Mr. Chin's acknowledgement in cross-swear that the printed in evidence were

he said he found in Mr. computer and in argued what was before me was not

In dismissing the I that there was trier of fact supports the allegations if

weight.

1 Filogix is an on line platform in which mortgage brokers put in information about a prospective borrower and transmit that information to lenders in a mortgage application. A lender can decide whether to approve or decline the application and a message will get transmitted back to the mortgage broker.

Mr. Shankar elected which I admitted over of the investigation speaks to the stored information Graf's evidence.

Mr. Shankar himself

In closing submissions, rights to know the case investigation did the case against him as issues of evidentiary given to any of the established and Uu\JC<U

Ms. Glen, counsel for was procedurally sufficiently reliable

I.

4

expert opinion of Francis Graf, Staff. Mr. report put in issue the efficacy

reliability of the resulting evidence. His report a forensically sound involving electronically tendered the expert Lo in response to Mr.

submitted Mr. procedural fairness and respond had because the

in a sufficiently enable him to assess himself, and in particular on what he identified or chain of custody. submitted no weight can be

by Staff chain custody cannot be of the evidence was done in a forensically

cannot be tested in way. He submitted, in the Mr. Shankar the evidence because

the evidentiary burden

process used in so as to afford the

Shankar, the right to know case against him and is whether the evidence is sufficiently reliable to discharge

burden to establish facts and to make

roc:es,s used in Staff's so as to afford

respond?

a written complaint LK on October 31, 2014. LK a contract on September 5, 4 to purchase property

Vancouver (the st Property) from VC for he assigned contract JV at $1.78 million. solicitor he was in a conflict because

he was also acting contract of purchase around. LK provided Avenue Property, contract of purchase as purchaser for He reported that that his solicitor had Rego of Shank Capital. Investment Corporation supporting the $2.6

Investigation of the investigator with the investigated between ·-~-, ~-,~ He then interviewed received the allegedly

On April 23, 2015, Mr. registered office of told Mr. Rego that he copy of an authorization were stored and computer. Mr. laptop. Mr. Chin files were stored. Mr. stored on the hard

5

JV who had approved based on a million, and there were two contracts floating

Office with his contract to purchase the 41 st

contract purporting to be a VC as seller and JV

as a forged contract. signature was faked, and

million transaction was Dennis with of Pacifica Mortgage

an appraisal pulled the financing.

has been an and has

initially interviewed LK. and SH who had

a contract investigator, Armstrong, attended the which was also of Mr. Rego. Mr. Chin

to him about an and showed him a outlining his authority. Rego how his files

"electronically". Chin asked Mr. Rego for his room and, after about seconds, brought out a

He asked Rego show him where his Mr. Chin to a folder named "Mortgage Business"

opened the Mortgage folder and found over 1 00 folders applications and found a few folders

names clients containing including mortgage

Mr. Chin tried to copy USB stick but got an error because the USB not able to copy. Mr. copy, but he did not files, including some Sub-folder. He the contents of the from his computer in his investigation At some point he

bearing the surname (the JV Sub-folder). He names of lenders, and files not in folders.

Business folder onto a the entire contents

which folders it was was not able to

He copied all the loose sure he had copied the JV

to Mr. Rego. office, Mr. Chin copied network. He accessed the electronic documents printed copies of interest for inclusion

alter the documents in way before printing. from the stick.

While at the offices Filogix system and Mr. accessed Mr. Rego's file related to the Filogix account and created in the last two 60 files including all name as well as a 11, 2015, Mr. Chin acci8s Rego back access interested in other files including applications printed them out for documents before and VS mortgage his investigation

Prior to attending the Outlook.com and Registrar's Office. to Mr. Rego's email email to the Outlook

While at the offices password to his email. notebook. Mr. Chin ... v"'"'"'"'

6

Mr. Chin asked Mr. Rego for his password to the password in notebook. Mr. Chin

while in Mr. found the mortgage in his own office, Mr. Chin accessed Mr. Rego's

all of the applications Mr. Rego had sorted it by surname. He downloaded approximately

there were more one application for the same of single applications. April 28 and May

Filogix account eight times, and then gave Mr. Chin then focused on JV files and became

to VS. He downloaded documents of interest Mr. Rego to lenders on behalf of JV and VS and investigation binders. He not alter Filogix copied history information with respect to the JV

Word documents printed them for inclusion in

office, Mr. Chin an e-mail account with information to William Griffiths, an person with the

Grifiths that he him the password was to be ready to contents of Mr. Rego's

event.

asked Mr. Rego for the his in Mr. Chin's

Mr. Rego's Email, there were a lot of emails and thought it would be office. He gave Mr. review all the emails or

time consuming to review them all while in the Shank Capital

office and download Chin texted the login return to his office, Mr. changed the password, Outlook account. Mr. Chin account and change his the basis of his advice downloaded emails did not give evidence

Over the next few Email and printed emails from Mr. to both the JV and of the emails or in any

of having him at Shank Capital office to him change the password back to his own

interest. Mr. Rego chose second option. Mr. Mr. Rego's Email Mr. Griffiths. Upon Mr. Chin's

him that he accessed Mr. Rego's Email, Mr. Email to the

telephoned Mr. Rego told him he could go into his . Mr. Chin believes Mr. Griffiths did as instructed on so and on the basis Mr. Chin accessed the

emails to and from Email. Mr. Griffiths

reviewed the downloaded from Mr. Rego's inclusion in his investigation binders, including

and received Mr. Shankar's Email in relation applications. Mr. Chin did alter the contents of any the emails before

During the course of began to believe was not registered Shankar.

On September 9, September 14, 1

In cross-examination, Mr. doubt" that the printed on Mr. Rego's on copied it, I pasted it on our acknowledged he metadata would have personal and professional, and pasted and did Chin put various neither denied the

In Mr. Graf's opinion, cannot be verified their authenticity cannot

Kevin Lo also provided an copying of files from Mr. sound because the he suggested that Mr. Shankar's email evidence collected. as a result of the forensically sound

7

Rego while have been

Shank Capital offices, Mr. Chin on behalf of Mr. Shankar, who

He expanded the

Mr. Armstrong Armstrong interviewed

was asked if he could "swear marked as exhibits were

he conducted

include Mr.

Mr. Rego. On Shankar.

any shadow of a to what is or was

Chin answered, "I same." He

understood that his experience both

by being copied have changed. Mr.

interviews of them and seen the documents.

experts in digital Francis Graf gave Shankar, and Kevin gave evidence for Staff in

Graf's opinion, preservation and collection of and that evidentiary integrity of the ESI

the methodology tools to collect and was not collected or in a forensically

integrity of metadata. evidence is that authenticity of of a document such as

and receiver and that it records and modification.

emails and other marked as exhibits manner in which they were collected. In his opinion,

. He agreed the ideal or forensically

metadata. However, Shankar's computer and

compare against the had been altered

. In Mr. Lo's opinion, case requires evidence.

8

that email from Shankar's email account In cross-examination, could have been authenticated. He printed copies of email

a forensically sound way the validity of the email

Staff's evidence. Mr. evidentiary value and ,:,n,roc,rl

important in this case. ESI would change

In Mr. Graf's opinion, no any particular email or emails created before corroborating computer use person accessed the computer was one way to show that anyone Mr. Rego or Mr.

Shankar's emails could have been compared to the in his opinion so would not help verify

there may be cases where metadata has no material his report did not what made metadata that nothing Mr. did or didn't do in collecting the

file.

been made to establish was that person by

document in issue. leads to the

Lo agreed authorship a

have accessed

the purported author of other documents or

evidence is that this type of inference that the same at other behavior on a

but saw no evidence computer or either of

Ms. Glen submits that I little or no weight Mr. Graf's report because his report and file disclosure are demonstrably incomplete because, although qualified as an expert in digital is not sufficiently independent and impartial for his evidence to be relied on. the reliability of Graf's report is compromised both by its deficiencies his role as "team" working on Mr. Shankar's case.

The most significant assumptions upon which which I have relied were and reviewing the "facts" are.

I also have concerns examination that he was support staff working on beyond his role as an Mr. Galambos on files and relies on him

Mr. Graf provided history document being an expert in lack of understanding

in Mr. Graf's report is not state the facts and is based. Mr. says, "The facts upon

my review of the Disclosure, attending the hearing hearing to date", but nowhere states what those

independence. It is from Mr. Graf's cross-a "team" including Mr. and Mr. Galambos'

case. He general support that went acting as a stenographer taking dictation from

He frequently contracts with Mr. Galambos on portion of his work.

his expertise including with respect to a Filogix and appended He admitted to not

cross-examination on this document demonstrated his particular document and nature the database.

Because of the deficiencies in Graf's report and ovr-.orrc disagree, I prefer

concerns about his independence, where Mr. Lo.

Mr. Galambos says been afforded the and defend himself.

Mr. Galambos submits ability to answer the case time Mr. Chin asked Chin with a laptop, know what he took from able to copy all testify as to his role in evidentiary chain have no confidence in

As the Supreme Court eminently variable, and (Knight v. Indian (Minister of Citizenship Supreme Court of Canada procedural rights Those criteria include:

(i) the nature (ii) the nature (iii) the

9

fairness case. Mr. Shankar has not and assess case against him and to respond

because Mr. swear that what he Mr. Rego's computer, is no verifiable evidence

with evidentiary affects Mr. Shankar's He points to hiatus between the

computer and Mr. Rego provided Mr. Chin did not keep a consequently does not computer or what left when he was not

USB stick, and the of Mr. Griffiths to of Mr. Rego's emails as examples of gaps in the

submits these continuity mean the public can ability to answer case against him.

fairness is be decided in specific context of each case" No. 19, [1990] 1 S.C. 653; Baker v. Canada

Immigration), [1999] 2 S.C 81 . Baker, supra, the n1"iT,or1 the criteria to in determining the

of procedural particular case.

being made and scheme;

to the individuals

followed in making it;

by it; (iv) the legitimate excJec:Iau of the individuals

by the agency the decision; and

(v) the procedural

best practices for at the close of the in the collection of that he could not swear Rego's computer. practices for the

in response to Mr. Shankar's application for disclosure of whether the procedural fairness

preserve and disclose an copy of ESI and Act does not on Staff to employ the

In his submissions forensic integrity acknowledgement

those found on Mr.

appropriate for right to know the case

10

to ensure a is met.

procedural fairness

The Baker Factors: Statutory Scheme and Nature of the Decision

In British Columbia BCCA 421, the Court content of procedural further particulars. Act "is regulatory in Securities Commission hearing. The Court rights of or between and serve its interests". penal; rather they are legislation governing

The same may be said decision flowing from a registration and oversight regulatory scheme Court of Canada in L,01omCJr

The regulatory framework ensure Registrar must access to public confidence in proposed conferred by balancing. protect the n'l'"Oi'"O<:!TC

Registrar's whole.

Commission) v. Pacific Securities Inc. 2002 the Baker factors in an analysis of the

the Securities in denying an order for first two factors, noted the Securities

essential goal is to serve public interest". The ability to make and impose sanctions after a

"essential object is ... not to decide it is to arrive at a will protect the public found the sanctions in the Securities Act "are not

are calculated compliance with the industry."

scheme of nature of the this Act. The a scheme for the

carrying on activities in the Act. It is a the public interest described by the Supreme 2001 sec 79, as follows:

a general operation of marketplace. The of competing interests, ensuring the public has

financing same time instilling by determining who is "suitable" and whose

as a broker is "not objectionable". the powers or tools on the Registrar are necessary to undertake this delicate

some degree the provisions the Act serve to the overall of Act mandates that the

owed to investors but to the public as a

include the power under premises to inspect,

of records upon Section 8 of the administrative

heard. As in the case is not to determine

serve public interest. sanctions may be imposed are intended to promote compliance with the legislation and

The Registrar's is the disclosure application:

There is preserve The Act producing it, that records examination or

There is similarly

11

criminal in nature.

impose a duty on that might be

and other confiscated

as reasonably 6(7.4)].

in my earlier decision on

or his or her Staff to criminal investigations. returned to the person even contemplates

facilitate inspection,

require the able to establish chain the same standard may be required for a a charge a reasonable doubt. The Act

of custody or evidentiary criminal investigation in does not impose an on Registrar to that is "verifiable" in the way that evidence verifiable to meet the beyond a reasonable doubt Respondents are administrative of the balance of

The importance of the decision

a criminal charge. hearing to which the 8 of the Act is not a criminal trial but an

Staff must prove allegations on the civil standard

to the Respondents is a to be weighed, it is primary purpose protect the public

While the importance not an overarching interest. In my view, brokering is, like the found in Rak v. British Columbia securities, "not a and other nrn,TCC'

Unlike these other regulated by government impacting the ability impose significant the public interest.

Brokers) [1990] B 2383 about trading in sense that doctors, lawyers, architects, engineers,

can be said in a profession." mortgage brokers are self-regulating but are directly

interest. While a decision may make orders earn a living as a broker or may

the personal of a broker cannot override

Legitimate Expectations and the Agency's Procedural Choices

As discussed in Baker, expectations may procedures the duty of fairness requires in substantive rights.

circumstances but the not create

affecting procedural administrative decision-makers, contravention of promises without representations or been made giving rise While not cast in terms

based on the principle 'circumstances' account the or regular practices of

that it will generally be unfair for them to act in as to procedure, or on substantive

procedural no evidence of procedure or investigation that may have expectations on the Respondents.

expectations, Mr. arguments suggest

that Mr. Shankar and have confidence in representations or expectations about agency's usual practices.

Astothelanguageof should give rise to an that may be necessary no evidence that Mr. investigations are

Mr. Galambos argued Shankar on the basis face of the clear power to summon

12

expect a higher investigative standard in order to scheme. In the evidence of specific

might give rise to a expectation, however, come from the the statute itself or the

as I have said above, is nothing in the Act that an investigation will be conducted to standards

criminal charges. usual practices, I have this investigation any differently than under the Act.

could not compel interviews of Mr. Rego and Mr. presented. This submission, however, flies in the

in section 6(3) which gives Registrar the same attendance of witnesses to compel them to

produce records, ,.,..,.,,c,"' or things, as the has for the trial of civil actions. The legislation cannot has the "right to remain proceedings under need not meet the

While the search of Mr. not done in a forensically preservation process was Respondents of the

expectation that a person cannot be compelled or reference to civil reinforces that the

criminal in nature that processes employed in a criminal investigation.

computer and the downloading Mr. Rego's email was I disagree that evidence collection and

unfair so as to effectively deprive the case against them and right to respond.

As to the documents Mr. Rego's computer, evidence is that Mr. Chin asked Mr. Rego for his Mr. Rego went into room and returned after about 20 seconds a that he said was his computer and contained his business files. was directed by Mr. Rego labeled "Mortgage Business" and found a bearing the name with the original complaint. I do not have concerns the 20 second in retrieving the computer compromised the Respondents' to respond to evidence that Staff say was retrieved from Mr.

Likewise, the failure computer and what respond to the documents copied all of the documents in search. After Mr. Chin returned the computer to

a log of what from Mr. Reg o's not deprive the Respondents of their ability to

on by Staff in support allegations. Mr. Chin JV Sub-folder relating to complaint leading to the

copying documents Mr. Rego's computer, he If the Respondents had concerns that Mr. Chin had

missed exculpatory attention.

I am satisfied on a from Mr. Rego's that, while the method not forensically sound, it Respondents have by Staff alleged to

As to the emails, email directly from Mr. should draw an Chin's evidence is he email to a prepared Mr. Griffiths told him account he found observed while including emails Griffiths did not the content of the and did not alter the

While there is a evidence of Mr. Griffiths as deprived the Respondents Staff to support the emails alleged to have Email. I am further change the content of the

I do not accept before and after an email. This is an purporting to come that it was authored

I do not accept Mr. Shankar could access Shankar's Email could have compared produced by Staff alleged the content of those

The Respondents were Staff and had the

13

could have documents to Staff's

probabilities that the alleged to have come come from Mr. Rego's I am further satisfied

electronic documents Mr. Rego's computer was the content the documents. The

with printed copies documents relied on from Mr. Rego's computer.

Mr. Chin recovered the to Mr. Rego's ..-cv..-cn it to Mr. Griffiths. Mr. Galambos submits I

against Staff because Mr. did not testify. Mr. Griffiths to download the of Mr. Rego's and believes Griffiths did this on the basis that

on the basis that he accessed the Outlook purporting to be to Mr. including emails he had

email account in the Shank Capital and complaint. Mr. Chin not any concerns that Mr.

had no concerns Mr. Griffiths tampered with printed copies of attachments to emails emails or attachments printing.

with the email evidence we do not have the did, I am not that the continuity issue

to respond evidence relied on by I am satisfied on a probabilities that the

from Mr. Rego's email came from Mr. Rego's method of collecting printing emails did not

that without a analysis of email activity there can be no as to the authorship of the

proceeding, not a proceeding. An email email account ,..,.,,,,<'.>'I'<:"'' presumption that email account.

there is no electronic source of evidence that Mr. allegations against Mr. agreed that Mr. forensically collected Mr. Shankar

from his own email the printed copies of emails sent or received by Shankar to challenge

printed copies challenge their content or

As to the Filogix directly from Mr. mortgage application documents in the mortgage applications that is associated with satisfied on a balance alleged to have been Filogix account content. In the absence

14

evidence is Mr. Chin Rego's password accessed Mr. Rego's account and printed

it. The evidence is mortgage application uoc,T,Cm are pdf documents altered. The

Mr. Rego's Filogix an identifier SHNK They identify as Dennis Rego. I am

that the printed mortgage applications Rego's Filogix came from Mr. Rego's

and printing change their the contrary, applications found in Mr.

Rego's Filogix account f"l"Q,<::11t.:,r1 April 23, 2015 can be presumed to have been created by Mr. Rego. Mr. Rego's Filogix cn . .-;UU

Staff disclosed to allegations in the original disclosure. detailed allegations sources relied on the case against or provided with transcripts The Act does not and in the circumstances necessary to afford opportunity to respond.

I find that the investigation, proceedings did not Respondent's by Whether the evidence proving the allegations on discussed below. the procedural right Registrar's duty to the

This case is not, as Consideration of the conclude that the sound investigative method of retrieval and being unable to know that case. The opportunity to respond.

of the documents on by Staff retrieved from were provided to the Respondents.

all of the documents support the Staff also made disclosure beyond the that having received the Notice of Hearing with the

of the documents from electronic the Respondents did opportunity to know

to respond. were also own interviews and interviews other witnesses.

to conduct a sound investigation, a forensically investigation was not

the right to know the case against them and the

tendered in these Registrar's duty of fairness to the

to know the case against them and to respond. is sufficiently reliable Staff's burden of

of probabilities is issue and will be reliability of should not be confused with

case and respond. can no question that the in that regard was in this case.

fairness case. this case lead me to

procedural require forensically that the investigative used including the

evidence, in Respondents them or deprive them their right to respond to

fully known the case against them and have had full

Mr. Galambos submitted evidentiary burden However, there is close of Staff's case which if found to be ultimate burden lies having made the onus shifted to the

The only evidence the thrust of Mr. Graf's Rego's computer forensically sound that reason they were collection of ESI was case. I have also found not result in the content Mr. Rego's Email or

There is nothing in how the loss of metadata less reliable.

I find that Mr. Graf's printed documents. I am document collection including, documents Rego's email and

relying on the content that are in evidence

Neither Mr. Rego nor document presented receiving the various any of the printed

15

Registrar's and to make

evidence can be no weight. He submits the the Respondents if is no evidence to rebut.

Mr. Galambos a no evidence motion at the that application. I there was some evidence,

could support allegations. While the the allegations on the of probabilities,

was evidence to Staff's case, the evidentiary present evidence rebut case.

As discussed earlier, documents from Mr.

collected in a been altered, and that for

that forensically sound in the context of this

collection of the ESI did

to show how r~~T~n is relevant to this case or documents relied on the content of

rebut the prima facie case presented by the the while not forensically ideal, the method of

did not alter the content any of the ESI Mr. Rego's computer, emails retrieved from Mr.

printed from Mr. Rego's Filogix account.

to section 8 of Act was give the respond to the allegations against them through the

Their response has simply that there is cannot be relied on. I have there is evidence

evidence of Mr. Graf to a concern with printed documents from electronic sources

disputed the authenticity or authorship of any their interviews. They did deny sending or

presented to them or otherwise dispute the authorship of

Other than arguments collection of the the substance of the

I am left with Staff's Beyond the documents AC, the transcripts interviews of VC,

Background

Shank Capital was 2015. Mr. Rego was broker registered with

16

reliability of the documentary evidence arising from the Respondents have evidence to refute them.

It remains to examine , I have the

Mr. Rego and

AND

that evidence demonstrates. Mr. Chin, LK, SH and

and the transcripts of

2013 to September 2, of Shank Capital the submortgage Shank Capital dissolved on September 13, 2016.

Mr. Rego was registered as a submortgage broker with Lending Corp (EQ Lending) from April 21, 2011 13 and with Shank Capital June 4, 2013 to September 2, 201 is no longer registered under the Act.

Mr. Rego's Email mortgage business. and sent respectively

Mr. Shankar has never March 2012, his request the course requirements was follow through.

Mr. Shankar's Email is Shankar's Email were

JV Mortgage Applications

In September, 201 Financial Credit Union purchase the 41st million and reported application SHNK-216 email from Mr. Rego on ::se1me commitment letter on certain conditions and sale and receipt

Mr. and Mr. Rego used emails to and from

email to conduct Email were received

as a submortgage broker under the Act. in the mortgage examination without fulfilling , but he never the examination or

. Shankar. I accept emails to and from Mr. sent respectively Mr.

received a mortgage application through BlueShore from Mr. Rego on behalf of JV to The application financing of $1.69

at $2.6 million. had received mortgage for JV to purchase st Avenue Property by

2014. On 2014, SH issued a to fund the requested mortgage subject to

and satisfactory of contract of purchase review of an appraisal (the Commitment).

17

On September 28, 2014 Mr. Rego's Email received the allegedly falsified Contract #1 from Mr. Shankar's Email. The fax header on Contract #1 indicates it was faxed from 604 . The evidence is that this number is the fax number for-

(the Company). In his interview, Mr. Shankar confirmed that the director of the Company is JV's husband.

On September 30, 2014, Mr. Rego emailed SH Contract an appraisal of the 4151

Avenue Property (the Appraisal). Appraisal was done for Shank Capital to the attention of Dennis Rego on behalf of borrower JV and appraised the 41st Avenue Property at $2.6 million.

SH continued to work with Mr. Rego with respect to the remaining financing conditions. Once the conditions had been fulfilled and a deposit received, SH instructed the file to Pacifica's conveyancing solicitor in early October 2014. Within a few days, SH received a telephone call from the conveyancing solicitor advising was in possession of an assignment contract with respect to the 41 st Avenue a much lower price. The conveyancing solicitor subsequently provided SH with a of a contract of purchase and sale for the 41st Avenue Property dated September 5, 2014, between VC as seller and LK as buyer, for $1.71 million (the Original Contract) and a copy of an Assignment of the Original Contract from LK to JV for $70,000 (the Assignment Contract).

LK gave evidence confirming the veracity of the Original Contract and the Assignment Contract.

SH contacted the head of the appraisal company who had completed the Appraisal. He immediately rescinded the Appraisal and asked SH to send an alert out to her network warning other lenders not to rely on the Appraisal. SH did so.

SH telephoned Mr. Rego and advised him there was a "suspicion of fraud" on the file and that Pacifica would not stand the Committment. Mr. Rego about the different contracts for the sale of 41 51 Avenue Property the Appraisal had been retracted. Pacifica's lawyer emailed Mr. Rego to confirm that Pacifica would not be funding the mortgage contemplated by the Commitment. SH received an email from Mr. Rego on October 8, 2014 advising "I have informed the client that I am disassociating myself from him and will not do any business with him and his family in the future."

In her interview, VC said she did not enter Contract #1 and that it was not her signature on the contract. I find Contract #1 was not a legitimate contract purchase and sale. I also find that as of October 8, 201 if not before, Mr. Rego Contract #1 was not legitimate. I accept SH's evidence she told Mr. Rego there were different contracts for this deal and that the Appraisal had been rescinded.

On October 9, 2014, Mr. Rego emailed the same mortgage application on behalf of JV to finance the purchase of the 41st Avenue Property and the Appraisal to [ ... ]@gffg.com

and copied Mr. Shankar. please find attached "

18

the email to the lender "As per Arvind,

On October 14, 201 r. emailed the same Appraisal to [ ... [email protected] and blind copied Mr.

On November 13, Appraisal to GM, c:inr,Tho

and attachments AC, a initially said he had evidence of him continuing

emailed the same application and the and blind copied Mr. GM forwarded the email

sub-mortgage interview, Mr. Rego the JV deal, when presented with the

financing for JV admitted to doing so.

the Company's fax number a 41st Avenue $2.6 million, between the

(Contract #2). On November 18, 2014, Mr. Rego Mr. Shankar. The of email reads "for you to

On November 17, contract of purchase Company as seller forwarded Contract review". Mr. Shankar interview, Mr. Rego received it from the have questioned the contracts from the

nAPo:::,rr1.::,r1 Contract #2 to GM email on same date. In his

he just forwarded it

AC gave evidence was confused by the had also heard concerns

seen this contract acknowledged that he had forwarded it to Mr. said he wouldn't

he would "just what Arvind says". He said went to Mr. Shankar time it came to him so

confirmed emails from GM. He said he GM and had questions Contract #2. He broker about Rego Mr. Shankar. On

November 23, 2014, purchasing the property "flipping" it for $2.6 million.

an email to AC explaining that Company was

contract and would

In his interview, GM to AC verbally from Shankar to be the

AC provided copies of application to Mr. Chin.

On November 24, 201 the 41 st Avenue l-'rr,no1rT, "''°'""''cc

million (Contract

In his interview, Mr. financing and described husband as being of

who was going through a divorce, and then advised AC that he had sent the second

the information in the said in his interview that

of Shank Capital.

November 23, 2014 considered Mr.

himself and related the JV mortgage

emailed GM a contract purchase and sale of as seller and Company as buyer, for $1.71

the email and contract to AC.

JV's husband him when he needed relationship. He described deals from JV's

volume" and "magnanimous size". He

acknowledged speaking identified the handwriting on

On December 6, copied the email to Mr. return by fax". The mortgage amount

19

husband respecting the JV mortgage application. He #1, #2, and #3 as of JV's husband.

emailed a Fee Agreement to v[ ... [email protected] and blind text of the email said your wife sign and

stated "We obtained approval for a You agree to pay a of $28,000."

received an email the of the appraisal On December 8, 201 company that had the Appraisal advising a review the file had "shown a gross oversight on use send a letter of transmittal. estimate of value in email to Mr. Shankar. "FYI ... How do you want me appraisal company's

Thank you [ ... ] that I am not transmittal observation. If they

In his interview, Mr. Mr.Shankarhadas~cea email.

Throughout the entire Property.

I find that Mr. Rego for JV, and that Mr. various lenders and in rocnrw,r1

findings are supported with the emails between Mr. financing despite knowing had been rescinded. I corroborated by both Mr. communicated directly the basis of Mr. Shankar that Mr. Shankar to the JV mortgage

VS Mortgage Applications

and that his company was not in a position to his company not behind the final

rescinded the Appraisal. Rego forwarded the email from Mr. to Shankar says

roc,aea." Mr. Rego the head of the copying Mr. Shankar. this email reads:

I appreciate your . Please be advised this deal and was only requested to facilitate the

broker. I will him pass along your a new appraisal will them to contact you directly."

"other broker" referred to was Shankar and that appraisal company's this way to head of

was the registered owner of West 41st Avenue

were working to and arrange financing from Mr. Shankar in sending the application to

the head of the company. These provided by Rego in his interview together Mr. Shankar. I find Mr. continued to seek

Contract #1 was not that the Appraisal basis of the emails between Shankar and GM

interview and GM's interview that Mr. Shankar with respect to JV's application. I also find on

and the email Company and Mr. communicated directly with husband with respect

On August 13, 2013 sale of property

Shankar emailed Mr. Rego a -West 381h Avenue, Vancouver

the purchase and 381h Avenue

20

Property) between RL as seller and SVas buyer,~llion and dated August 10, 2013 (Contract #4). Contract #4 shows MLS No.-. During his investigation, Mr. Chin learned that this MLS No. corresponded to a listing for the West 38th Avenue Property at $1.898 million that sold for $1.7 million. In his interview, Mr. Shankar confirmed that SV and VS are the same person. Mr. Shankar in his interview that he understood this person to be to JV or her husband. said he did not deal directly with VS but dealt with JV's husband.

On August 22, 2013, Mr. Rego emailed Contract #4 to v[ ... ]@shaw.ca saying "please see the attached as per Arvind .... please send me the revised contract along with the MLS sheet so that I can get the property details (size ,etc)." On the same day, Mr. Rego's Email received from the Company's fax number a contract of purchase and sale for the West 38th Avenue Property dated August 10, 2013 for $3 million between VJ as seller and VS as buyer (Contract #5). MLS number is shown as "Private". On August 26, 2013, Mr. Rego emailed Contract [ ... [email protected]. He submitted mortgage application SH 87 to Scotiabank through Filogix.

On August 27, 2013, Mr. Rego emailed Mr. Shankar saying "I have submitted­and it has been picked up by B[ ... ] but he has not yet got back to me with any questions. What product do we need for V[ ... )?" The reply email from Mr. Shankar on the same date says, "Variable closed." In his interview Mr. Rego said he understood Mr. Shankar to have spoken directly with the client to get that information and admitted that he should have contacted the client directly to ask what needed.

In his interview, Rego indicated deal for the 3at1, Property was funded through BlueShore and that he got paid. A Spreadsheet entitled "Statement of Deals Closed - Fee Arrangements - Shank Capital" copied by Mr. Chin from Mr. Rego's computer indicate a gross commission on a deal for VS funded through BlueShore of $16,250 was received, and distributed $12,250 to Arvind and $4,000 to Dennis. Mr. Rego admitted in his interview that Contract #4 and Contract #5 were not legitimate.

Mr. Chin gave evidence with respect several mortgage applications he found that had been sent through Filogix by Mr. Re-to various lenders on of VS seeking refinancing for a property located at Puget Drive in Vancouver (the Puget Drive Property). The applications provide different information with respect to employment, income and assets of VS.

On March 19, 2014, Mr. Rego submitted application SHNK-202 through Filogix to TD Canada Trust on behalf of VS for refinancing of the Puget Drive Property. In this application, VS's Employer is noted as Quarterdeck Brewing Company, his Job Title is noted as "Cook", his Annual Income is noted at $50,000 and his Assets are noted at $186,000.

On March 26, 2014 Mr. Rego submitted application SHNK-203 through Filogix to Scotiabank on behalf of VS for refinancing of the Puget Drive Property. VS's Employer

and Job Title are and his Assets at

On April 1, 201 Mr. Trust Company on Employer is the same as on SHNK-203, and

On March 28, 201 [ ... ]@antriminvestments.

lender's questions.

On May 1, 2014, Mr. SHNK-207 on behalf Mr. Shankar. am forwarding you email responses normal practice instruction. He Mr. Shankar in the this lender and had VS's Current Employer as $528,000. In his engineer but that he Shankar.

On March 23, 201 behalf of VS for the attached ........ pis Employer, Job his Assets are noted Shankar reads of new and rest all is good." age of the house the email reads application to a "Investor/Real Estate". that he made changes

On March 30, 2015, lender saying "Please changes/additions." [ ... ]@gffg.com and blind

On March 31, 201 The text of the email

21

application refinancing of the

two applications, are noted at $236,000.

mortgage copied Mr.

Income is noted at $40,000

through Filogix to Home Property. VS's Income the same as

SHNK-204 to on his email responses to this

@blueshorefinancial.com mortgage application Puget Drive Property copied the email to reads "Upon the my partner Arvind, I

above client". forwarded subsequent Shankar. In his interview, Mr. Rego said it was his Mr. Shankar and so on Mr. Shankar's was his "business partner". He said he mentioned

because Mr. Shankar spoken to someone at the application there. application describes Engineer/Business" lists his Assets at

said VS did not as a mechanical application because he was asked to by Mr.

application SHNK-226 on reads "see

and let me this application, VS's Income are the same as on application SHNK-203 and

email response the same day from Mr. is 1 year. It's brand new years. Change that

emailed Mr. Shankar the same application with the 1 and VS's assets as $6,401,000. The text of [sic] okay". Later that Mr. emailed the same

Mr. Shankar. time, VS's Job Title is noted as did verify VS's assets and

Mr. Shankar a draft email to[ ... ]

Rego emailed a similar Shankar.

Shankar.

an email intended for a me know of any changed message to

Mr. Shankar one last look

application SHNK-226. me know what you think".

On this application, "Owner/Partner", his email response from Mr. emailed the mortgage following day, Mr. from the lender,

Mr. Rego's evidence the VS applications is Shankar what product changing or not them to lenders, blind responding to questions lenders to Mr. Shankar. I his income or assets or Mr. Shankar to obtain with VS either, but likely applications on behalf

Commissions

Mr. Chin copied himself and to Mr.

22

is noted as the Company, his Job Title as Income as $40,000, and as $2,801,000. The

reads, "Looks good". day, Mr. Rego [ ... ]@gffg.com and blind Mr. Shankar. On the Mr. Shankar an email response to a question

lender's email declining the to Mr. Shankar.

was instructions Mr. Shankar with respect to with the email evidence asking Mr.

wanted, asking Mr. review applications, following Mr. review before sending

Shankar when sending applications and in and forwarding responses to applications from

Rego did not communicate with VS to verify '"'"''"""'"' terms of a mortgage he was "fronting" for

VS. I find Mr. Shankar did likely deal directly JV's husband with the mortgage

Mr. Rego's computer showing commissions paid to 2 to 2015. The entitled "Statement of

- Shank Capital indicates that of the received in 2014, 61 was distributed to

This sheet indicates Shankar received $24,250 in of this amount is noted been paid to Mr.

Deals Closed 2014-$197,397.50 in gross Arvind and $35,750 commissions on deals Shankar's account some is noted to have been paid against a loan from Mr. Rego. The Spreadsheet Capital indicates that Arvind and $4,000 how much commission acknowledged receiving detailing commissions evidence from both compensation from

Deals Closed - 5 Agreements - Shank commissions of $15,000, $11,000 was distributed to

interview, Mr. said that Mr. Shankar decided would take. In interview, Mr. Shankar Shank Capital. on basis of documents

,,..,,,,.." from Mr. Rego's computer supported by the Shankar's interviews that Mr. Shankar received arranging mortgages.

Mr. Shankar's involvement in Shank Capital

Mr. Chin also copied a for payments against an the loan are shown appear to be business Shankar was responsible then later admitted admitted to having a

from Mr. Rego's computer appears to account $50,000 from to Mr. Shankar. Debits on

as 50% of FICOM licence other expenses that his interview, Mr. Rego initially denied that Mr.

half the business expenses to Shank Capital, was responsible for of expenses. Mr. Shankar

and admitted Mr. Rego charged expenses

against the loan Capital.

In his interview, Mr. Capital but then 90% of his referrals came behind the operation" Shankar to engage in He said he told Mr.

In his interview, registered. He and understood that

I find that Mr. Shankar was Capital and that of the business of the commissions, Shankar as his partner.

There is no dispute case, in defense to the without being registered, have done or that mortgage brokering, or submortgage brokering behalf of JV and VS client, communicating respect to JV's application, VS, and receiving

Findings against Mr. Rego

The allegations against Below are my findings

I find that Mr. Rego manner that is prejudicial of JV using a contract the 41 st Avenue 1-J,.,.,, ... ,,,.,,.h

because of SH's advice Contract #1 was of 2015 from three

2 Designated Individual

23

liability to pay the expenses of Shank

denied that Mr. was involved in Shank they started business He indicated that

Shankar. He Mr. Shankar was "the brains was "the front man". admitted to allowing Mr.

activity and admitted, "I not do my job as a Dl". 2

times to get registered.

that both his wife Mr. had told him to get had conducted himself as a submortgage broker

been registered under the

the mortgage brokering business of Shank as a submortgage although not registered. Most came from referrals from him, received the bulk of

to half of the expenses. Rego described Mr.

was not registered under the Act. That being the he was working as a submortgage broker said he did the things he is alleged to

is alleged to have done not fall within the meaning of evidence satisfies me that Shankar did engage in

respect to the applications submitted on directly with husband on behalf of the

with GM and submitting directly to GM with Mr. Rego with respect various applications for

respect to an application on of VS.

are set out at paragraph 12 the Notice of Hearing. each allegation:

business in his capacity as a submortgage broker in a interest by continuing to financing on behalf sale in support her mortgage application for

knew or ought to known it was not genuine that Mr. Rego knew or ought to have known

continued to seek financing in October and November in each case providing Filogix Mortgage

Application SHNK-216 continuing to seek

24

Appraisal. Mr. Rego telling SH he was

at paragraph 1

his interview to from the deal.

Notice of Hearing.

business in his capacity as a submortgage broker that is

The evidence supports

I find that Mr. Rego prejudicial to the different contracts mortgage application

...,;,,.,,,,.,,_t by, collectively with submitting two

first was Contract from the Company and Shankar then forwarded the purchase of the

I find Mr. Rego knew or basis that it came from more diligent with respect

The evidence supports allegation at 12(b)(iii). Mr. Shankar to GM.

I find that Mr. Rego manner that is different lenders when had been rescinded. Notice of Hearing.

I find that Mr. manner that is prejudicial August 26, 2013 on which he knew was sale submitted to the legitimate. The 38th $1.7 million, but million. The evidence Hearing.

I find that Mr. Rego manner that is seven lenders on behalf knew or ought to information with admitted to not verifying. the Notice of Hearing.

for the 41 st in support of JV's or ought to have known were not genuine. The was Contract Mr. received Contract #2

Mr. Shankar him to review it. Mr. to GM in support JV's mortgage application for

Property.

known that same source as Contract

contract.

was not genuine on the should have been

at paragraph 12(b)(i) (ii) but not the is that Contract was from the Company to

is no evidence that Mr. Rego was aware of Contract #3.

business in his capacity as a submortgage broker in a interest by submitting Appraisal to three

on the basis of the from that the Appraisal supports the allegations paragraph 12(c) of the

in his capacity as a submortgage broker in a interest by submitting a mortgage application on

for purchase financing the 381h Avenue Property Rego admitted the of purchase and

res,oe1c1 of this application, #5, was not 1-'rr,no,rr, was actually million and sold for

the price of the 38th Property to be $3 allegations at paragraph 1 of the Notice of

in his capacity as a submortgage broker in a interest by submitting mortgage applications to

refinancing of the Drive Property which he were misleading. These applications contained varying

employment, income which Mr. Rego evidence supports the paragraph 12(e) of

I find that Mr. manner that is broker activities by Mr. evidence of email

25

in his capacity as a submortgage broker in a public interest by facilitating unregistered mortgage with respect to JV VS's mortgage applications. The

between Mr. Rego Mr. Shankar with respect to both the JV and VS Shankar sharing in interview support

nm,"''"'"'"' applications, the documentary evidence showing Mr.

I find that Mr. Rego manner that is

of Shank Capital, Mr. admissions in his paragraph 12(f) Notice of Hearing.

business in his capacity as a submortgage broker in a interest by making statements to Staff

during his interview on paragraph 12(f) of

.-uc,rnn,c;ar 9, 2015. The evidence supports the allegations at

Findings against Shank Capital

The allegations Hearing. Below are

are set out at paragraph 13 of the Notice of respect to each allegation.

I find that Shank as a business as a mortgage broker, conducted business in a manner that is contrary to public by facilitating Mr. Shankar's unregistered broker activities compensating Mr. Shankar in excess of $1,000 in a year arranging a mortgage on behalf VS for the refinancing of the Puget Drive that Mr. Shankar was not registered to conduct business as a mortgage contrary to the The evidence supports the allegations at paragraph 13 Notice of Hearing.

Findings against Mr. Shankar

The allegations Hearing. Below are my

I find Mr. Shankar without being registered I find Mr. Shankar met with a lender, submitted documents evidence supports

I find Mr. Shankar without being registered While the evidence about this application, received documents resoec:t1 find Mr. Shankar reviewed documents lenders and approved

are set out at respect to each

14 of the Notice of

as a submortgage in British Columbia so by arranging one or more mortgages on behalf of JV.

and collected documents from JV or her husband, , reviewed documents to him by Mr. Rego, and

, all in respect JV's mortgage application. The at paragraph 14(a) the of Hearing.

as a submortgage in British Columbia arranging one or more mortgages on behalf of VS. that Mr. Shankar with or spoke to VS himself

supports that he the application and application from husband on behalf of VS. I with respect to the mortgage to apply for, Mr. Rego, reviewed and revised Mr. Rego's email to

applications before submitted them, all with

respect to VS's paragraph 14 of

I find Mr. Shankar without being registered year for arranging a paragraph 14(c)

While there is

I retain jurisdiction to and Mr. Shankar.

26

The evidence allegations at

as a submortgage in British Columbia receiving compensation in excess of $1,000 in a

of VS. The supports the allegation at

Shankar conducted as a submortgage broker, a finding that he actually solicited mortgage business.

negotiated with borrowers or discussed I find the notsupportthe

14 (d), (e), and (f) of the

issues of penalty and respect to Mr. Rego liberty to provide submissions in this regard. Staff Capital.

this

Cheryl Registrar's Appointee