Mortgage Broker

CMB MAGAZINE cmba-achc.ca winter 2018 | 37 Y ou are a mortgage broker and have breached your regulatory statute. Your conduct in this instance is also contrary to criminal and civil law. Can you be sanctioned in all three regimes? e short answer is "Yes," but the proper and longer answer (as follows) is more nuanced. Understanding Regulatory, Criminal and Civil Sanctions Regulatory, criminal and civil sanctions each serve different purposes. n A regulatory sanction protects the public generally, but primarily protects persons involved in a specific sector (for example, regulatory sanctions against mortgage brokers protect members of the public from improper mortgage brokering conduct by the mortgage brokers they engage). A primary purpose of a regulatory sanction is to enforce the regulatory scheme and to maintain public confidence in the scheme. n A criminal sanction protects the public at large from having its peace breached. A primary purpose of a criminal sanction is to punish those who breach the peace and to dissuade further breaches by the wrongdoer and others. n A civil judgement corrects the wrong between the specific, involved parties. A primary purpose of a civil order is to require the wrongdoer to take steps (usually by paying compensation) to the wronged party to cover damages caused by the wrongful conduct. Sometimes the sanctions imposed by the regimes may be perceived to overlap. For example, a mortgage broker who commits fraud may be required by the regulatory regime to pay an administrative monetary penalty (AMP), by the criminal court to pay a fine, and by the civil court to pay compensation to the wronged party. Further, sometimes the sanction imposed by one of the regimes might be sufficiently large in the circumstances so as to cause some people to think that the wrongdoer should not be punished further by another of the regimes. e recent BC Court of Appeal case in R. v. Samji, 2017 BCCA 415 (CanLII) should not give any mortgage broker comfort in this regard. What Happened? Notary Public Rashida Abdulrasul Samji (and companies controlled by her) operated a fraudulent Ponzi scheme for nine years. e scheme put at risk approximately $100 million from more than 200 investors. Samji falsely told investors the investment was, through a private company in Vancouver known as the Mark Anthony Group Inc. (MAG), connected to the wine business. She promised investors their money would be kept safe in her notary trust account and would be used to secure letters of comfort for MAG. She also promised investors they would receive a 12 per cent annual return, payable one month aer the date of investment. Many investors opted to roll over their investments in lieu of their capital being repaid. In fact, MAG was not involved in this scheme, none of the investors' money was held in the appellant's trust account or used in the wine business, and no letters of comfort were ever provided. Investors' money was received Broker Beware: One act of misconduct can expose you to civil, criminal and regulatory sanctions By RaY Basi, L.L.B., staff, Education and PoLicY REviEw No Double Jeopardy, Triple Consequences

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