ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: I-415/12
DATE: 20130924
BETWEEN:
HER MAJESTY THE QUEEN
– and –
MICHELE FIORILLI
John Scutt, for the Crown
John Park, for the Defendant
HEARD: August 6, 7 and 8, 2013
TROTTER J.
Introduction
[1] Mr. Fiorilli is charged with four counts of fraud over $5,0000 arising from the sale of two Toronto homes – 450 Clinton Avenue (“Clinton”) and 30 Buttonwood Avenue (“Buttonwood”).
[2] It is alleged that, in 2004, Mr. Fiorilli, through a corporation, orchestrated the sale of these properties, at inflated prices, to so-called straw purchasers. The purchasers obtained mortgage funds from the Royal Bank of Canada (“RBC”). The mortgages soon went into default. This resulted in combined losses of $267,082 to the Canadian Mortgage and Housing Corporation (a Crown Corporation of the Government of Canada) (“CMHC”), who insured the mortgages. The funds that were advanced by RBC were distributed to various corporations and individuals, with Mr. Fiorilli receiving a substantial portion. The Crown alleges that, through his actions, Mr. Fiorilli defrauded RBC and the Government of Canada.
The Evidence
(a) The Corporation
[3] A company incorporated in Ontario, Camera Capital Investments Inc. (“CCI”), initially purchased Buttonwood in 2003 and Clinton in 2004. Mr. Fiorilli is the President (and one of two directors of this corporation) and had signing authority on behalf of CCI.
(b) Real Estate Brokers
[4] On their face, both transactions appeared to have been facilitated in the normal way, through a real estate broker. The Agreements of Purchase and Sale (“APS”) for both purchases indicated that RE/MAX Performance Realty Inc. (“RE/MAX”) was the broker of record. The APS for Clinton reflected that a $20,000 deposit on the sale of this property was held by RE/MAX. The APS in relation to Buttonwood indicated that RE/MAX was the broker and that it held a $10,000 deposit for this transaction.
[5] Ms. Janice Shoures, an administrator with RE/MAX, testified that brokerages are required to keep records of the APSs in which the brokerage is involved. Moreover, she indicated that the brokerage holds deposit monies until transactions are completed. Both of these duties are imposed by the Real Estate Council of Ontario. Ms. Shoures did a search of RE/MAX records in relation to both transactions. She could find no record of either transaction or any indication that RE/MAX ever held deposit monies for either transaction.
[6] In cross-examination, Ms. Shoures said that it is the responsibility of the real estate agent to ensure that transactional information is properly entered in the company’s system. There was some suggestion that an agent who once used to work at this brokerage, Sam McDadi, did the deals on behalf of RE/MAX, but merely failed to document them. However, Ms. Shoures testified that, if not properly entered, the agent is not entitled to any commission. Mr. McDadi did not testify.
(c) The Clinton Property
[7] In April of 2004, CCI obtained Clinton for $265,000. On August 19, 2004, the property was transferred to Salvatore Cirillo for no consideration. The property remained in Mr. Cirillo’s hands (at least on paper) until August 23, 2004, when it was sold to Natalia Gutnikov for $469,000. It is important to note that the APS between Ms. Gutnikov and Mr. Cirillo was entered into on July 30, 2004, before Clinton had been transferred to Cirillo. As part of the August 23, 2004 transfer, RBC advanced roughly $444,226.00 on the strength of Ms. Gutnikov’s mortgage application.[1]
[8] Mr. Cirillo, who is now 64 years old and Mr. Fiorilli’s nephew, testified for the Crown. He was a most difficult witness who was very unfocused and prone to unhelpful, gratuitous remarks about Mr. Fiorilli, which I ignore. Around 2004, Mr. Cirillo was addicted to numerous drugs. He said that he “lost” himself and did not understand his surroundings. Apparently, Mr. Cirillo stopped doing drugs in 2006. He said that Mr. Fiorilli knew he was an addict back in 2004.
[9] Mr. Cirillo admitted that he had been involved in some deals with Mr. Fiorilli, but that he never made any money at it. He was contradicted by his preliminary inquiry testimony, at which he said he once made $30,000 on a deal. As for the Clinton property, Mr. Cirillo said that he never lived there and had no recollection of purchasing the property or conveying it to Ms. Gutnikov. Mr. Cirillo maintained that he was not involved with Mr. Fiorilli at that time of his life. He said he was collecting welfare and selling sunglasses and clothes on the street.
[10] Mr. Cirillo was shown numerous documents concerning his purported purchase and sale of the Clinton property. Occasionally he would admit that they contained his signature; at other times he said they appeared to be forged. Mr. Cirillo testified that he is illiterate. He allowed Mr. Fiorilli to use his name to do whatever he wanted, as long as it was legitimate. Mr. Cirillo said that he told Mr. Fiorilli: “use me but don’t abuse me.”
[11] As noted above, Ms. Gutnikov purchased the Clinton property on August 23, 2004 for $469,000. Ms. Gutnikov, who is now 60, came to Canada from Kiev in 1997. She feels that she still does not speak English very well. In 2004, she was unemployed. As she was hard up for money, she looked to a friend to help out.
[12] Ms. Gutnikov was introduced to a man she knew only as “Slava.” She initially spoke to Slava, and then to Mr. Fiorilli. Slava told Ms. Gutnikov that Mr. Fiorilli, “his boss”, had an uncle who had a house. The uncle was having marital problems and needed to transfer the house to someone else for 3 months until matters were resolved. If she cooperated by taking title under this arrangement, Ms. Gutnikov was to receive $5,000.
[13] Ms. Gutnikov said that, when she was eventually introduced to Mr. Fiorilli, he explained the arrangement to her again. He told her that he would cover the mortgage payments for the three-month period and then the house would be transferred back to his uncle.
[14] Ms. Gutnikov said that she met Mr. Fiorilli about five to ten times. She produced a business card that he had given to her. She denied picking it up off of a counter when she met Slava in the same office building. Ms. Gutnikov testified to numerous meetings at Mr. Fiorilli’s office, often in the presence of Slava. She said Slava would have her sign certain documents and then he would take them to Mr. Fiorilli for approval. Ms. Gutnikov also provided her identification that was copied and provided to Mr. Fiorilli.
[15] Ms. Gutnikov spoke about a meeting at (what she thought was) a law office in Mississauga. While she went there with just Slava, Ms. Gutnikov insisted that Mr. Fiorilli called ahead of time and told her and Slava that the people in Mississauga were expecting them. At this office, Ms. Gutnikov signed documents in blank, but Slava assured her that nothing was wrong.
[16] On another occasion, Ms. Gutnikov went to a law office on Danforth Avenue. This time she went with Slava, Mr. Fiorilli and Mike Procopio, who was an associate of Mr. Fiorilli and who received money from the sales of both Clinton and Buttonwood. There was some confusion over who went in what car and with whom, but I find that it is important. At this office, Ms. Gutnikov was asked to sign numerous documents. She said that she only saw the signature portions of most documents as they were turned up for her to sign.
[17] Ms. Gutnikov testified that Mr. Fiorilli was hospitalized around this time. Mr. Cirillo confirmed that Mr. Fiorilli had a heart attack at some point. After Mr. Fiorilli was released from hospital, Ms. Gutnikov accompanied him and Mr. Procopio to an RBC branch. While she waited in the car, the two men went into the bank. After they came out, the two men spoke outside of the car, and then Mr. Fiorilli gave her $5,000 in $100 bill denominations.
[18] Over the next couple of months, Ms. Gutnikov received money from Mr. Fiorilli to deposit in her account to cover the mortgage payments. Sometimes it was cash, and once by cheque. Ms. Gutnikov’s banking records show mortgage payments of roughly $3,000 and deposits into her account in this amount, beginning September 2004 and ending in February 2005. She went to visit Mr. Fiorilli in early 2005 about mortgage payments. When she arrived, he put a tape recorder on his desk and said “I have never met this woman in my life.” But, by this time, Ms. Gutnikov had already reported the matter to an RBC investigator.
[19] A number of key documents were reviewed with Ms. Gutnikov. She identified her signature on many of them. As for the APS for Clinton, Ms. Gutnikov said she did not deposit $20,000 because she had no money. She had no discussions with bankers about interest rates or other mortgage terms. Ms. Gutnikov said that she was not aware that she had bought a house. As for Clinton, she said she had “never seen it in my life.”
[20] Ms. Gutnikov was shown documents that purported to show her financial situation, documents that were submitted to RBC for the purposes of obtaining the mortgage. In particular, she was shown an Investment Statement from a company that indicated that she had funds in excess of $32,000. Ms. Gutnikov said she had never heard of the company and that, if she had that sort of money, she would have had “no reason to get involved in this stupid affair.” An employment letter from “Mr. Vigorous Roots Tonic”, signed by Mr. Wesel Peart, indicated that she made $146,000. Ms. Gutnikov had never heard of the company. I will return to this company, and Mr. Peart, shortly.
[21] Lastly, Ms. Gutnikov was shown a document that reflected the distribution of funds upon the purchase of Clinton. It showed that $102,435.49 went to Mr. Fiorilli and $32,202.12 went to Mr. Procopio. A copy of the cheque to Mr. Fiorilli was also identified.
[22] In cross-examination, Ms. Gutnikov was pressed on the fact that it appeared that she was pointing the finger more directly at Mr. Fiorilli at trial than she did at the preliminary inquiry. However, upon review of the portions of her prior testimony that were put to Ms. Gutnikov at trial, she clearly pointed the finger at both Slava and Mr. Fiorilli at the preliminary inquiry. This is put beyond all doubt by the following passage from her cross-examination at the preliminary inquiry (which she adopted as true during her re-examination at trial):
Q.: So [Mr. Fiorilli] was not present when you were signing those documents?
A: What do you mean he wasn’t present? He was always in the office when I saw [sic, signed?] the documents. He gave instructions and the documents to Slava what I was supposed to sign.
Q.: Okay. Did you see Mike giving instructions to Slava, or is that your understanding?
A.: I saw him….I saw him tell Slava, in my presence, what papers and where I needed to sign. He was saying, “Here, here, here. I put the markers there. Where I put the signs.” And then Slava would go back to Michael and show it to him just, you know, to make sure nothing was missed and then…..
Q.: Are you able to tell us if Mike saw you signing any other documents at Weston Road?
A.: Yes.
Q.: Okay.
A.: There were a couple of times that I missed a couple of signatures, and I was invited back to Michael’s office, and Michael was pointing to where exactly I have to put my signature and I did.
Q.: So you were speaking directly to Mike?
A.: Yes.
Q.: And were you speaking in the English language or in Russian?
A.: Yes.
Q.: I’m sorry, English language?
A.: Yes.
Q.: Was Slava present?
A.: Most often, yes.
[23] When the transaction was completed, existing mortgages on the property were discharged. When CCI purchased Clinton in April of 2004 for $265,000, the mortgages totalled more than $295,000. In short, the property was heavily mortgaged. Mr. Fiorilli was the guarantor of these mortgages. The funds advanced by RBC when the property was transferred to Ms. Gutnikov allowed CCI to discharge these mortgages. And as noted above, Mr. Fiorilli walked away with an additional $102,435 and his associate, Mr. Procopio, received $32,202.
(d) The Buttonwood Property
[24] In October of 2003, CCI obtained Buttonwood for $167,250. As with Clinton, this property was heavily mortgaged, with three charges amounting to roughly $220,000. Again, Mr. Fiorilli was the guarantor of these mortgages. The property was transferred to Orville Smith for $262,000 on September 8, 2004. RBC advanced mortgage monies in the amount of $248,087.[2] Again, the existing mortgages were paid off and Mr. Fiorilli walked away with fund additional. However, there is some discrepancy on this issue. In a document entitled “Direction Re Funds”, dated September 1, 2004, which appears to be signed by Mr. Fiorilli, $8720.44 is directed to CCI. However, a trust ledger statement from a week later indicates that CCI was paid $25,212.28.[3]
[25] This transaction happened a little differently than the sale of Clinton. While Orville Smith was the straw purchaser of Buttonwood, this story starts a little earlier with Wesel Peart. In 2004, he had a business called Mr. Vigourous Herbal Roots Tonic. Mr. Peart knew Mr. Fiorilli. He was living off of Weston Road, close to where Mr. Fiorilli owned property. Mr. Fiorilli allowed Mr. Peart to park his car there. Mr. Peart and Mr. Fiorilli became acquaintances and Mr. Peart would go to his office from time to time. Mr. Peart testified that, at one point, Mr. Fiorilli transferred property to him for a brief period of time. Mr. Peart said that he made no money on the deal and was left with the mortgage when Mr. Fiorilli stopped making payments. Mr. Peart could not put this incident into any discernable time frame in relation to the Clinton and Buttonwood transactions. He was vigorously challenged in cross-examination about the truthfulness of this allegation, which he maintained.
[26] Mr. Peart was shown the letter of employment referenced above in relation to Ms. Gutnikov. Mr. Peart said he had never met Ms. Gutnikov. He acknowledged that the letter was on his letterhead, but that she never had a job with him and that the letter was false. He denied that it was his signature on the document. As for the pay stub that accompanied the letter, he said that he never issued pay stubs to his employees.
[27] Mr. Peart knew Orville Smith and he also knew his mother. Mr. Smith did some work for Mr. Peart. As discussed shortly, Mr. Smith produced a commercial for Mr. Peart and his business. However, he never worked full-time for Mr. Peart. As part of the application for mortgage funds on the Buttonwood transaction, an employment letter from Mr. Peart’s company was submitted, indicating that Mr. Smith worked full-time for the company and earned roughly $90,000 per year. Mr. Peart said that the information was false. Again, he acknowledged that the letterhead was that of his company. He said that the signature “almost looks like my signature”, but that he did not know how the letter was created. Interestingly, the signatures on the Gutnikov and Smith letters are very different.
[28] Mr. Peart denied that Mr. Fiorilli had access to his letterhead. He said his office was always open and anyone could have taken it. Mr. Smith testified that Mr. Fiorilli’s voice was at one time the voicemail greeting for Mr. Peart’s business (because Mr. Fiorilli did not think that Mr. Peart had a pleasant voice). When asked about this, Mr. Peart said that he could not recall whether this was the case or not, an answer I found to be incredulous.
[29] Mr. Peart denied that he was actively involved in Mr. Fiorilli’s business. He denied that he had ever met Mr. Procopio or the realtor Sam McDadi. He denied preparing the Gutnikov and Smith letters, at the behest of Mr. Procopio, and he denied receiving any money for doing so.
[30] Mr. Smith confirmed meeting Mr. Peart and doing some sort of promotional work for him. At the time, Mr. Smith was working and was making between $25,000 to $30,000 a year. He had a son and was very anxious to purchase a home in which to raise him. Mr. Peart introduced him to Mr. Fiorilli for this purpose and Mr. Fiorilli agreed to help him.
[31] Mr. Smith testified that he went to Mr. Fiorilli’s office, where he signed many documents in his presence. These were all related to obtaining a home and getting mortgage funding. Mr. Smith was also to receive $10,000 as part of RBC’s cash back promotion. At the direction of Mr. Fiorilli, Mr. Smith went to a couple of other locations, including an RBC branch, to sign documents. He was driven to these places by Mr. Procopio. Mr. Smith said that he did not read over the documents very carefully before signing, although he did identify his own signature on many of them. Some of the background documents concerning his financial situation (such as a bank statement) were false. He denied ever paying a $10,000 deposit as part of the purchase.
[32] Once the Buttonwood transaction was complete, Mr. Smith had trouble gaining access to the house. Mr. Fiorilli told him that the broker was to give him the key; a broker told him that Mr. Fiorilli was to give him the key. It turned out that there were tenants in the house. With the assistance of a lawyer, Mr. Smith eventually gained access to the house and Mr. Fiorilli agreed to advance funds to him. Mr. Smith believed that the money was part of a cash back promotion from RBC. He said that Mr. Fiorilli gave it to him to make payments on the mortgage. He did so for a while, and when the funds dried up, RBC came and “closed the door”, to use Mr. Smith’s expression.
[33] Mr. Smith testified that he knew about the employment letter from Mr. Vigourous Roots Tonic. He agreed that the letter would be submitted, knowing that it was false. He said that he needed to do this to obtain mortgage financing. Mr. Smith claimed that Mr. Fiorilli provided this letter.
[34] Bank documentation established that Mr. Smith received cheques on numbered company’s account account totalling $14,023. All cheques were signed by Mr. Fiorilli. Mr. Smith testified that these were received as a result of a meeting with Mr. Smith and his lawyer and were given to him for the purpose of servicing the mortgage debt.
[35] In cross-examination, Mr. Smith said that he believed that he met Sam McDadi and signed a document in his presence. Mr. Smith believed that Mr. McDadi was the agent or broker on the transaction. Mr. Smith further admitted that, after the closing, he got into a dispute with Mr. Fiorilli about the configuration of the house that he had just purchased. Mr. Smith thought he had purchased a house with three bedrooms. It only had two. It was suggested to him that he settled with Mr. Fiorilli for $16,000. Mr. Smith rejected that this was the sole reason he received money from Mr. Fiorilli. He said it was also over the cash back funds that he said Mr. Fiorilli had improperly withheld from him.
[36] Moreover, Mr. Smith admitted filling out a document called a Mortgage Qualifier Document. It is a form that Mr. Smith filled in and signed. He said that Mr. Fiorilli told him what to write. There was some confusion as to why $89,000 was written as the amount that Mr. Smith was being paid. It was suggested that he wrote that amount because he was the one that produced the letter, and it was not the other way around. He maintained the letter was in the file with Mr. Fiorilli already.
(e) Values of the Properties
[37] As part of its theory that Mr. Fiorilli defrauded RBC and CMHC, the Crown alleges that Clinton was transferred to Ms. Gutnikov and Buttonwood was transferred to Mr. Smith at inflated values. On consent, appraisals for both properties were entered into evidence. As of August, 2005, Clinton’s value was between $280,000 to $292,000, where as the value of Buttonwood was between $190,000 to $214,000.
Analysis
General
[38] There can be no doubt that CMHC was defrauded to the tune of $267,082 as a result of these two transactions. Quite reasonably, Mr. Park on behalf of Mr. Fiorilli acknowledges that this is the case. Neither mortgagor could afford the mortgage payments associated with the funds that were advanced. False documents were filed to obtain these funds. The real issue is whether it has been proved beyond a reasonable doubt that Mr. Fiorilli was responsible, in whole or in part, for perpetrating fraud through these transactions.
[39] On behalf of Mr. Fiorilli, Mr. Park argues that there is no evidence that Mr. Fiorilli was responsible for defrauding RBC and CMHC. Mr. Fiorilli was engaged in the perfectly legitimate business of flipping properties. Mr. Park submits that others, including Mr. Procopio and Slava, in particular, acted in concert behind his back. He submits that they (and perhaps others) were responsible for perpetrating these frauds. He submits that this evidence should raise a reasonable doubt about Mr. Fiorilli’s guilt. However, the evidence overwhelmingly shows that a large amount of the funds advanced by RBC found its way into Mr. Fiorilli’s hands (either directly or through CCI). This important fact tends to undermine the argument that others acted behind his back. There is no doubt that Mr. Procopio was involved in these scenarios. It would appear that he was paid a fee for his services on both transactions. However, this fact does not detract from the case against Mr. Fiorilli.
[40] This case cannot be approached in general. Both transactions must be examined individually because, for the most part, different witnesses were involved with respect to each property. Moreover, the credibility of the witnesses must be carefully examined.
(a) The Clinton Property
[41] There were credibility problems with one of the primary witnesses concerning the transactions related to this property. As I have already noted, Mr. Cirillo was a difficult witness in many ways. He was frequently unfocused in his responses to basic questions. Mr. Cirillo had been in business with Mr. Fiorilli in the past. However, he refused to fully acknowledge the extent to which he was aware of Mr. Fiorilli’s business. I am skeptical that he had no knowledge of the real nature of the Clinton transactions and that he was not somehow compensated.
[42] At the end of the day, even if Mr. Cirillo was complicit, it does not help Mr. Fiorilli. The transfer between CCI and Mr. Cirillo would appear to have taken place for no legitimate purpose. I am also concerned about the fact that the APS between Mr. Cirillo and Ms. Gutnikov was signed before the property was actually transferred to Mr. Smith. It speaks to dishonest dealings with the property from the start.
[43] As Ms. Gutnikov testified, she was asked if the title could be in her name for a few months while Mr. Fiorilli’s uncle (presumably, Mr. Cirillo, although she never knew him by name) sorted out some matrimonial problems. The documents that she was asked to sign appear consistent with the proposal that was made to her. Perhaps Clinton was transferred to Mr. Cirillo for the purpose of giving credence to this theory in the eyes of Ms. Gutnikov.
[44] I have no doubt that Ms. Gutnikov was a straw purchaser and that she served in this capacity for compensation. The documents demonstrate that this was clearly the case. As I noted previously, counsel for Mr. Fiorilli reasonably acknowledges that this scheme (and the one relating to Buttonwood) defrauded RBC and CMHC of a large sum of money. The contentious part of Ms. Gutnikov’s trial testimony concerns the extent to which she attempted to point the finger at Mr. Fiorilli as being the moving force. Mr. Park argues that her testimony at trial was at variance with her evidence at the preliminary inquiry. However, this theory is laid to rest by the preliminary inquiry testimony she adopted in re-examination at this trial.
[45] There was some confusion in Ms. Gutnikov’s evidence as to where certain meetings took place and who was in attendance. But these did not really detract from the cogency of her evidence as a whole given that she was testifying to events that occurred nine years ago.
[46] In assessing Ms. Gutnikov’s credibility, I ask myself whether I believe her when she said that she did not think that she was doing anything wrong at the time. She said that Slava assured her that it was legal and safe. I am somewhat skeptical that an intelligent person such as Ms. Gutnikov thought that there was nothing wrong with agreeing to hold title to a home, for money, in order to assist another with matrimonial proceedings. However, this does not detract from my overall assessment of her credibility, especially given that her account is completely confirmed by documentation.
[47] In all of the circumstances, I accept the evidence of Ms. Gutnikov. She was a straw purchaser of Clinton at the behest of Mr. Fiorilli, and perhaps in conjunction with others. She did not have the means to purchase the property in question. Documents outlining her background and income were fraudulent and designed to convince RBC that she was a legitimate purchaser worthy of receiving the mortgage funds that were advanced on this transaction. It is clear that she maintained the mortgage payments with money that Mr. Fiorilli paid to her. Eventually, he stopped making payments and the scheme came to an end. But by then, everyone, including Mr. Fiorilli, had been paid out.
[48] I find as a fact that the APS pertaining to this transaction was fraudulent. There was no record of it being preserved by RE/MAX. No deposit was actually paid. No commission was paid out. I find that the APS was created to lend the appearance of legitimacy to the transaction and to ensure that the mortgage funds were advanced.
[49] The appraisal evidence that was adduced demonstrates that the value of Clinton was significantly inflated in the very short time that the property was sold. This is another indicia of dishonesty that contributed to the deceit of RBC. However, the Crown need not prove this aspect of its allegations to succeed in establishing fraud in this case; it merely speaks to the extent of the loss incurred by RBC (and CMHC) in this straw purchaser arrangement.
[50] On the strength of those aspects of the evidence of Mr. Cirillo that I accept, and based on Ms. Gutnikov’s evidence, I am satisfied beyond a reasonable doubt that Mr. Fiorilli was an active participant in the fraud that was perpetrated on RBC and CMHC. From all of the circumstances, I find that he intended to do what he achieved, knowing that he was deceiving the lender. RBC, and then CMHC, suffered an actual loss as a result of this scheme. Mr. Fiorilli received a benefit.
[51] I find Mr. Fiorilli guilty on Counts #1 and #2.
(b) The Buttonwood Property
[52] The scenario and the overall evidence concerning Counts #3 and #4 was quite different from Counts #1 and #2. Mr. Smith did not stand in the same position as Ms. Gutnikov. While she said that she was approached to temporarily hold title for money, Mr. Smith testified that he was going to be buying a house. Or perhaps, more accurately, he thought he was going to be given a house. This strikes me as quite strange. While Mr. Smith had no money or savings, he did have a steady income. He testified that Mr. Peart introduced him to Mr. Fiorilli, who might help him get a house. He signed all the documents, agreed to the submission of a forged employment letter and lied on a mortgage qualifier form. He put no money down and then expressed great dismay about realizing that the bank was taking possession of the property.
[53] Mr. Smith was a man who was involved in making commercials and doing work in conjunction with the National Film Board. I find it odd that he believed that this was the true state of affairs and that he was going to be receiving a home, from a stranger, without investing any of his own money (unless he knew otherwise and was not prepared to admit it). Moreover, Mr. Smith seemed to be under the impression that he did deal with a proper real estate broker, perhaps Mr. McDadi, in the lead up to the transfer of this property.
[54] I have similar concerns about Mr. Peart. He did not really corroborate Mr. Smith’s evidence concerning the first meeting with Mr. Fiorilli. He attempted to minimize his relationship with Mr. Fiorilli. I am concerned that the letters of reference that were used in both the Clinton and Buttonwood transfers were prepared with his complicity. Lastly, I found his response concerning the voice on his answering machine to be unbelievable.
[55] Despite these shortcomings in the viva voce evidence relating to this count, the Buttonwood transfer and the banking aftermath are both supported by documentation and were properly admitted. Whether or not Mr. Smith (and/or Mr. Peart) was complicit, I accept the evidence of Mr. Smith that he worked directly with Mr. Fiorilli to make a false application to RBC for mortgage funds. Mr. Smith had a more substantial cash flow than Ms. Gutnikov. However, he still did not earn sufficient funds to be able to service the mortgage that he was taking on. This is why the fraudulent letter from Mr. Vigourous Roots Tonic was included in the application for funds. There was some discrepancy as to how the Mortgage Qualifier document was completed and who provided what information to whom. However, while Mr. Smith may have filled it out by hand, I accept that Mr. Fiorilli was a guiding hand, if not the directing force, in the process.
[56] As with Clinton, the Buttonwood real estate documents appear to be fraudulent. Again, RE/MAX is listed as the broker. However, there is no record of this transaction in its electronic archives. There is no record of any commission being paid out to an agent or broker. Indeed, there would be no need for an agent in the circumstances given how the “purchaser” (Mr. Smith) and the vendor (Mr. Fiorilli or CCI) found each other. Mr. Smith’s evidence muddies the waters somewhat in that he admitted that he might have met the agent, Sam McDadi, who was in fact with RE/MAX at the time. But he was uncertain. As I have already noted, Mr. McDadi was not called as a witness in these proceedings.[4]
[57] There was also some evidence of an artificially inflated purchase price with the sale of Buttonwood, although it would not appear to be as egregious as the price manipulation involved with Clinton. Again, such a finding is not necessary to sustain a finding of guilt on these counts. In short, Mr. Fiorilli assisted and facilitated a fraudulent application for mortgage funds for a person who could not afford the mortgage. Upon the advance of funds, Mr. Fiorilli was able to discharge existing mortgages on the property (which he guaranteed), as well as walk away with a little extra cash for himself and his associates, including Mr. Procopio. Mr. Smith was left holding the bag.
[58] I am satisfied beyond a reasonable doubt that Mr. Fiorilli’s involvement in the sale of Buttonwood was a clear cut case of mortgage fraud in the manner I have described it above. There will be findings of guilt on Counts #3 and #4.
Conclusion
[59] There are a number of unanswered questions that remain about the two transactions discussed in this judgment. It would appear that others were involved in the deception of RBC. Some are named in the narrative accounts above. Others are unknown. But the evidence adduced at this trial points directly at Mr. Fiorilli as the person at the helm of both scenarios. I am satisfied beyond a reasonable doubt of his guilt on all four counts in the indictment.
TROTTER J.
Released: September 24, 2013
COURT FILE NO.: I-415/12
DATE: 20130924
ONTARIO
SUPERIOR COURT OF JUSTICE
HER MAJESTY THE QUEEN
– and –
MICHELE FIORILLI
REASONS FOR JUDGMENT
TROTTER J.
Released: September 24, 2013
[1] In fact, $460,030.08 was borrowed. After deducting CMHC insurance premiums and taxes, and after advancing $18,401.21 as part of a cash back arrangement, the total was $462,627.78.
[2] In fact, $256,989.25 was borrowed. After deducting CMHC insurance premiums and taxes, and after advancing $10,279.57 as part of a cash back arrangement, the total was $256,367.43.
[3] When both documents are compared, it would appear that the $25,212.28 that is in Trust Ledger Statement reflects the total of the following payments referred to in the earlier Direction: Fred Procopio ($10,140.00), Farida Khan ($2,500), Sivaramalingam Suthakaran ($3,851.84) and CCI ($8,720).
[4] In footnote 3, above, I listed a payment made on this transaction to an individual named Sivaramalingam Suthakaran. Mr. Suthakaran was described as a mortgage broker in the evidence of Jack Abboud, who was with RBC at the time of these transactions. It is unclear to me why Mr. Suthakaran would have received any payout from this transaction. It may have been unrelated to this sale. Mr. Suthakaran did not testify.