Global Courant 2023-04-27 13:13:18
A major Ontario housing developer is facing surprising allegations from one of the big five banks that it orchestrated a year-long “highly sophisticated” fraud totaling more than $37 million.
TD Bank has filed a lawsuit against StateView Homes, based in Woodbridge, Ont., north of Toronto, and run by brothers Carlo and Dino Taurasi, alleging that from April 2022 to last month the company was “check-kiting” plan has been implemented.
The lawsuit also names 25 affiliates, five directors of those companies, and StateView’s former chief financial officer Daniel Ciccone as defendants.
TD alleges that the defendants wrote thousands of bad checks for large sums of money from both business and personal accounts held at other banks, according to the statement of claim, filed with the Ontario Superior Court of Justice in Toronto.
TD alleges that the defendants would cash the checks into TD accounts and that TD would conditionally release the funds before clearing the check. The bank says the defendants would quickly withdraw the money and then cancel the check to prevent the money from actually being transferred to the TD account.
During the year, TD owed $37,028,055.73 plus interest as a result, the bank claims.
“Account history review revealed what appears to be a highly sophisticated check fraud that lasted approximately 12 months and spanned dozens of accounts, involving multiple financial institutions,” the bank says in its claim.
Brothers Dino, left, and Carlo Taurasi run the company. A StateView executive says they were not aware of or participated in the alleged scheme and are working with TD to refund the money. (stateviewhomes.com)
To avoid detection, the defendants routinely performed these “sham transactions” across 22 accounts to create the illusion of new money coming in, TD alleges.
While StateView has not filed a counter-defence, it appears to have a proposed settlement agreement with TD to repay all of the money by July, according to a signed copy of the agreement reviewed by CBC Toronto but not included in publicly available court documents.
Another court document seen by CBC Toronto indicates that the lawsuit has been filed to strengthen the settlement.
Neither TD nor StateView would comment on the settlement.
Two other lenders are also suing — to get back $24 million, they borrowed StateView for a development in Markham, Ont.
These lawsuits raise questions about the future of approximately 1,400 homes StateView has planned in the Toronto area, many of which have already been sold but not yet built.
A design rendering for Nao Towns II from StateView Homes in Markham, Ont., currently under construction. (stateviewhomes.com)
Developer blames former CEO
In a statement to CBC Toronto, StateView vice president Darryl Orian, who is not named in the lawsuit, says Carlo and Dino Taurasi were not aware of or participated in the alleged scheme and are working with TD to recover the money. pay.
The alleged fraud “was committed solely at the hands of” the company’s former CFO, Ciccone, Orian said.
“When made aware of the situation (in March), Carlo and Dino immediately cooperated with the investigation and were quick to remove the CFO from his position.”
“Neither Carlo nor Dino benefits financially from these activities,” Orian said. “This situation has caused major disruption to their personal lives and has caused significant hardship for them personally and for their families as they work towards resolution.”
Townhouses built and sold by StateView Homes in Richmond Hill, Ont. (Paul Smith/CBC)
CBC Toronto tried to reach Carlo and Dino Taurasi through both the company and their lawyer, but received no response. Emails and a phone call to Ciccone went unanswered.
In the proposed settlement, until the money is repaid, TD plans to hold 31 properties, including at least three of StateView’s pre-construction projects in southern Ontario: Nao Towns II in Markham, Bea Towns in Barrie, and Elm&Co in Whitchurch -Stouffville.
StateView plans to build 600 homes in those projects, the website said.
TD has also proposed taking control of several Carlo and Dino Taurasi luxury homes in King City and Richmond Hill and ski chalets in Collingwood.
Second lawsuit
Stateview and its subsidiaries face another financial challenge.
Earlier this week, lenders Atrium Mortgage Investment Corporation and Dorr Capital Corporation filed a claim against Carlo, Dino and Stateview’s Nao Towns II company — seeking immediate repayment of a $24 million loan for the 96-unit project under construction in Markham.
It’s also one of many StateView properties that TD keeps an eye on.
When the lenders learned of the check-kiting allegations, they demanded their money back from Stateview, they said in their claim statement, also filed in the Ontario Superior Court of Justice.
The lenders also allege that Stateview failed to pay its $277,000 monthly interest payment in April and took out additional mortgages on the properties without notifying Atrium and Dorr.
Finally, the lenders are asking the courts to order a trustee to take control and sell all assets and properties of the Nao Towns II project to repay the debt.
Stateview has not yet submitted a statement of defense in that case.
What about homebuyers?
Orian says StateView understands buyers and lenders are concerned. But the company plans to “complete all projects currently under construction,” he said.
“We…are actively working with our partners to move forward on as many projects as possible, while also acknowledging the position of our backers.”
Insolvency attorney David Schatzker, who is not involved in the case, says if lenders succeed in getting a trustee to take control of StateView properties, there’s not much buyers can do.
The trustee may allow the project to be completed and the buyers to complete their home purchases, he said.
However, if a trustee instructs the sold projects to pay back lenders, those buyers may never see the homes they bought or their deposits.
“Ultimately, if the project doesn’t get completed, they could be at a loss,” said Schatzker.
“They could theoretically sue the developer at some point, but there’s a good chance that after the suspension of payments is complete, there probably won’t be much money left.”
