Financial regulators in Ontario have hit two former mortgage agents with a combined total of $230,000 in administrative penalties for reckless conduct, failing to verify information and enabling fraud.
Authorities found that two agents from the Greater Toronto Area allowed “themselves to be used to facilitate dishonesty, fraud, crime, or illegal conduct,” which allegedly caused an investor to lose more than $620,000 on a mortgage loan.
Officials with the Financial Services Regulatory Authority of Ontario (FSRA) say Satyamkumar Trivedi and Sasitharan “Soma” Somasekarampillai violated the Mortgage Brokerages, Lenders and Administrators Act by “dealing outside their brokerage” while receiving financial kickbacks.
Regulators also accused Trivedi of administering mortgages without a licence and “hindering, concealing information and providing false or misleading information to FSRA.”
Officials sent a formal notice to both agents about their activities earlier this year, but only Trivedi requested a hearing before the Financial Service Tribunal, which adjudicates regulatory complaints against professionals in the financial sector.
Multiple fraud complaints
Regulators say Trivedi worked as an agent for the Mortgage Alliance Company of Canada Inc. for nearly six years, but was terminated in August 2023 after regulators received multiple complaints about his conduct. Meanwhile, Soma was working as a mortgage agent for Homewise Solutions Inc. with an active licence.
The FSRA first became concerned with Trivedi’s conduct in 2020 after they received a complaint alleging that he received a false mortgage commitment letter from a third-party and provided it to a borrower.
“The transaction did not close and Trivedi was not remunerated,” officials said.
Then in July 2023, regulators received another complaint from an unnamed investor who is referred to in official documents by the initials “HP.”
In his complaint, HP indicated that Trivedi approached him with a mortgage investment opportunity which involved lending money to a borrower through a mortgage that was taken on a gas station property.
According to regulators, the borrower, who is referred to as “DS” in official documents, falsely identified himself as the director of a corporation in order to deceive HP into lending the money.
“The borrower never paid the monthly interest payments on the mortgage and ultimately defaulted on the mortgage,” regulators wrote. “HP lost $624,000 as a result.”
HP lays the blame on the mortgage agents who, officials say, “provided him with false information about a previous mortgage on the same property and false documents.”
The agents claim they told HP that they were both involved in a previous mortgage on the gas station in 2021.
“Soma was the mortgage agent for the borrower and Trivedi acted as an intermediary between Soma and another mortgage agent who represented the lender,” regulators explained.
That mortgage was paid out in an “unusually short” period of 38 days, according to official documents.
In that deal, the FSRA says Trivedi did not process the mortgage through his brokerage, Mortgage Alliance. Instead, he did the deal on his own and earned a 10 per cent fee worth $55,000, which he allegedly shared with Soma.
Tens of thousands in financial kickbacks
Regulators believe Trivedi received commission fees outside of Mortgage Alliance on four occasions and was paid “much larger” amounts than those received through his brokerage. According to bank records from 2021 to 2022, which were obtained by the FSRA, Trivedi received a total of $66,622 in fees from those four transactions.
Regulators also claim that he’s received more than $140,000 from other mortgage dealings conducted outside his brokerage.
In the most recent case, he admitted to receiving a $65,000 broker fee, which he claims to have split evenly with Soma. His contract with Mortgage Alliance was ultimately terminated shortly after HP’s complaint.
“Trivedi admitted that he did not process the transaction through Mortgage Alliance and that if he had done so, the fraud likely would not have occurred,” the FSRA said.
In Feb. 2024, Trivedi was interviewed by regulators, and he claimed that it was Soma who dealt directly with the borrower in the most recent transaction on the gas station property.
Soma allegedly collected various documents about the borrower and the property, including financial statements and ownership documents, while Trivedi negotiated the mortgage terms, provided an appraisal report on the property, and reviewed the agreement, including the borrower’s identification.
However, regulators say he “failed to take any steps to independently verify any of the information that he was provided.”
“This included not verifying the appraisal report and borrower identification, which were falsified,” officials wrote in their decision. “Trivedi never met with, or dealt with, the borrower directly. He received all of his information through Soma.”
“He took no steps to verify any of the information he received, did not confirm that Soma had done so, ignored red flags, and still proceeded to provide the information to his client, HP,” regulators added. “This included falsified information that led to HP being defrauded.”
‘False, misleading, or incomplete information’
The FSRA also said that Trivedi misled regulators and denied receiving any fees in relation to the transaction on multiple occasions, including written emails to complaint officers and in-person interviews with regulators.
“Trivedi subsequently admitted that he received fees on the four transactions after being shown trust ledgers and bank records,” officials said.
The FSRA ultimately imposed 22 administrative penalties on Trivedi totalling $210,000. Meanwhile, regulators refused to renew Soma’s licence and slapped him with five penalties totalling $50,000.
Trivedi ultimately entered into a settlement with the FSRA, where he has agreed to pay a lesser amount of $180,000.
Neither party could be reached for comment.
