Investors speak out against Fortress Real

Investors have started speaking out against Fortress Real Developments’ syndicated mortgages, primarily complaining that the risks associated with the investments were never verbally communicated.

A couple of investors who requested anonymity detailed financial losses in what they were led to believe were bulletproof investments. The first investor is based in Halifax and worries about the fate of his wife and three children after having lost $175,000, their retirement savings.

“This week, my wife was having chest pains worrying about this,” said the 50-year-old investor. “She’s a year older than me and thought she was having a heart attack. It’s not pretty. If we knew our money was safe and growing, we wouldn’t have these anxieties.”


In 2014, the investor removed his money from Apple stocks and put it into a Fortress Real mortgage for a development in Regina called Capital Point. He initially received quarterly dividends amounting to $2,504, the last of which came in Nov. 2016, but says a $12 monthly fee is still drawn from his bank account.

“The early days were fine,” said the investor. “They were paying us interest and the money was growing for probably the first two years, and then I started seeing news releases about Fortress. I’d reach out to (the agent) and he said there’s nothing to worry about, everyone is getting their money back. The last email I got from him was in June.

“Around 2016, I started reading the news articles and asking questions about getting my money back. It was a locked investment, not liquid; it was supposed to mature in 2017, and nothing. Now it’s 2018, and nothing. They’re not even paying quarterly dividends, yet they’re still taking money out of my account.”

The investor, who works in the mortgage industry, says he previously worked with Fortress Real Developments to secure funding for a client’s project, which was eventually scrapped, and says the company appeared professional and legitimate.

The other investor is an Ontario Provincial Police officer and also claims he wasn’t verbally apprised of the risks associated with syndicated mortgages, although he concedes it was likely in the paperwork. Moreover, as can happen with syndicated mortgages, he was bumped down the creditor ladder but wasn’t directly informed. He invested $30,000 he believes he’ll never see again.

“I was told it was low risk and that my name would be on title should anything go wrong with the development,” he said. “Mine and other investors’ names would be on the mortgage. I was told I would be in the number two position behind the bigger lenders, the bigger banks, which I was told was still a relatively safe position to be in. I dropped to fourth position without my knowledge. I had to find out through a special interview after tagging along with a friend who had also invested.”

He also says that he’s a low-risk investor.

“I would have invested in something safe and secure. I’m not a high-risk investor,” said the officer. “When things went south, I reached out to (Hong) and was told not to worry about it. She was the intermediary and I had to go through her to get to Fortress and she provided me some answers, and so did somebody at Fortress. I was given multiple explanations as to why things were happening, which to me don’t make sense, but that’s the way I was told.”

While the investors both claim the risks of investing in the Fortress Real’s syndicated mortgages weren’t communicated orally, the company’s legal counsel, Scott Fenton put out a statement claiming the contrary.

The statement claims investors were apprised of all “material risks involved in the projects.” Moreover, according to Fenton’s statement, “all investors were fully advised in writing of the assumptions and methodologies used by respected industry valuators in the development-based ‘opinions of value’ for the projects as opposed to bare ‘as is’ appraisals as incorrectly alleged by the RCMP.”

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