Lawyer disbarred years after GTA clients lost $7.7M in syndicated mortgages
CBC
More than five years after dozens of Greater Toronto Area investors found out they'd lost the millions they collectively invested in syndicated mortgages, their lawyer has been disbarred by the Law Society of Ontario's tribunal.
Christopher Di Giacomo acted on behalf of 84 clients who invested more than $7.7 million on 16 real estate projects with Black Bear Homes, a company controlled by a convicted fraudster.
In a syndicated mortgage a borrower — in this case Black Bear Homes — finds more than one private lender to invest money in a development property instead of going to a bank.
These particular syndicated mortgages were extremely high-risk because the agreements provided no security for the clients' investments, which were supposed to go toward renovating or building houses in Crystal Beach, Ont., a community about 30 kilometres south of Niagara Falls on the shores of Lake Erie.
Instead, the contracts allowed for the clients' mortgages to be postponed behind future mortgages for construction financing, and there were no restrictions on Black Bear's use of the funds. So when the developer defaulted on its loans, the new first mortgagees sold the properties under power of sale, leaving the syndicated mortgage investors with nothing.
In its scathing decisions in December and March, the Law Society Tribunal Hearing Division determined Di Giacomo never explained any of those risks to his clients and "was deliberately dishonest with his clients and completely failed to protect their interests and investments."
"The extent of the misconduct, including basic failures to communicate with clients, conflicts of interest, and mishandling of trust funds, spans the gamut of violations of a lawyer's fundamental duties and obligations," wrote Frederika M. Rotter for the tribunal's panel.
WATCH | 120 investors lost millions in mortgages tied to convincted fraudster:
Details of Di Giacomo's misconduct include failing to explain the syndicated mortgages were for more than the purchase price of the properties, postponing his clients' mortgages without their knowledge — in some cases — despite knowing Black Bear Homes had already defaulted on its interest payments to clients, and failing to disclose a conflict of interest before postponing his clients' mortgages on four projects behind mortgages from Di Giacomo's own father.
Through his lawyer, Di Giacomo declined to comment for this story because he's currently appealing the tribunal's penalty decision to revoke his licence.
Margaret Wong, a retiree who invested and lost $200,000 across four Black Bear Homes projects, says she's finally regained some faith in lawyers.
"I just hope the law society will stand by their decision to revoke his license," she said.
"So other lawyers will be made aware that there will be penalties if they're willfully proceeding with such ignorance and no obligation to their duties."
Alexander Wong — a friend of Margaret Wong's from church — lost $160,000 he invested across three projects.
