Monday, September 28, 2015

Fortress Real Developments Defaults on Purchase Agreement

I strongly encourage you to first read my previous article on Fortress Real Capital

It was only a matter of time, but the veil of safety in the Fortress Real Capital & Developments empire may be starting to collapse. Fortress has a history of project overruns and delaying payment to their investors but defaulting on an agreement to purchase a long delayed development places serious concerns about the return of capital to Fortress investors. 

The Mady Collier Centre in Ontario has a long history of trouble and by July 2015, Fortress was forced to bail out the project, placing a $1.7m deposit and a commitment to complete the already three year old development. However, unsurprisingly this week we learned that Fortress was unable to obtain further financing and defaulted (losing their entire deposit). Sobey's which was the lead anchor tenant also pulled their commitment to the project. When Fortress Real Capital investors will be able to obtain their delayed 'investment' back is still not known. 

The reason Fortress is so obsessed on not having a project fail is so they can continue to promote their investment products as 'safe' and 'secure'. Some of the brokers of Fortress's product have even used the legally damaging word of 'guaranteed': 

Remember, Fortress calls their investment products 'private syndicated mortgages' to avoid the traditional OSC investment regulation. It is of course, no coincidence that in 2011 their CEO was fined and banned by the OSC for 15 years due to operating what most would describe as a boiler room scheme. This ban of course is in addition to the Fortress Real Capital CEO's 2005 lifetime ban by the MFDA (Mutual Fund Dealers Association). 

I look forward to the truth about Fortress coming to light but continue to feel terrible about the investors, particularly seniors, who fell victim to the pitch of 8% per year on their money in a 'safe' and 'secure' product. Shady promoters will always come and go and the onus is on regulators to protect the public. After months of emailing and calling I received little to no feedback on my numerous complaints to the FSCO.  It's a shame the FSCO and OSC did not step in to prevent naive investors from draining their RRSPs and even RESPs into this speculative product. 

Follow on Twitter and read the previous article for more information.

For those who are concerned about their investment with Fortress or believe they were mislead by a broker.

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