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Financial Services Regulatory Authority of Ontario

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006,
S.O. 2006, c. 29, as amended (the “Act”), in particular sections 38 and 39;

AND IN THE MATTER OF Pritpal Sandhu.

NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES

TO: Pritpal Sandhu

TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director, Litigation and Enforcement, (the “Director”) is proposing to impose twelve (12) administrative penalties of $5,000 each, in the total amount of $60,000, on Pritpal Sandhu for twelve separate contraventions of subsection 43(2) of the Act by giving false or deceptive information when dealing in mortgages in Ontario.

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 39(2) AND 39(5) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:  
Financial Services Tribunal
25 Sheppard Avenue W, Suite 100
Toronto, ON M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal. TAKE FURTHER NOTICE of the payment requirements in section 4 of Ontario Regulation 192/08, which state that the penalized person or entity shall pay the penalty no later than (thirty) 30 days after the person or entity is given notice of the order imposing the penalty, after the matter is finally determined if a hearing is requested or such longer time as may be specified in the order.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 extension 7294.

At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.

REASONS FOR PROPOSAL

    I. INTRODUCTION

  1. These are the reasons for the proposal by the Director to impose 12 administrative penalties of $5,000 each, in the total amount of $60,000 on Pritpal Sandhu (“Sandhu”).

    2. II. BACKGROUND

    A. Parties

  2. Sandhu was licensed as a mortgage agent (licence # M17000071) under the Act from January 11, 2017, until the expiry of her licence on March 31, 2021. Sandhu is not currently licensed under the Act.

  3. During the relevant time, Sandhu was authorized to deal and trade in mortgages as a mortgage agent by and on behalf of The Mortgage Alliance Company of Canada Inc. (“Mortgage Alliance”), a mortgage brokerage licensed under the Act (licence #10530), from January 11, 2017, until January 9, 2020. Mortgage Alliance terminated Sandhu’s mortgage agent contract for cause.

  4. Sandhu was subsequently authorized to deal and trade in mortgages as a mortgage agent by and on behalf of Real Mortgage Associates Inc. (“RMA”), a mortgage brokerage licensed under the Act (licence #10464), from January 22, 2020, until RMA terminated her mortgage agent contract on January 4, 2021.

  5. Sandhu submitted mortgage applications to Manulife Bank of Canada (“Manulife”) between November 8, 2019 and July 15, 2020.

    6. B. Submission of Altered Documents to Manulife

  6. On February 3, 2021, Manulife advised FSRA that Sandhu submitted fraudulent proof of downpayment documentation.

  7. Between December 2019 and July 2020, Sandhu submitted 12 altered bank account statements in support of the 12 mortgage applications detailed in the table below (the “Mortgage Applications”). The altered bank account statements purported to show that the applicants had significantly higher amounts of funds in their bank accounts available for a downpayment than they actually had.

  8. The altered bank account statements were purportedly issued by various banks, including Toronto Dominion Bank (“TD”), Canadian Imperial Bank of Commerce (“CIBC”), Royal Bank of Canada (“RBC”), and Bank of Montreal (“BMO”). Manulife considered the altered statements when deciding to extend mortgage loans to the applicants and determining whether the applicants had sufficient funds for downpayments.

  9. FSRA obtained accurate statements from each of the banks for the accounts in issue and confirmed significant discrepancies..

  10. The following table compares the altered bank account statements submitted by Sandhu to Manulife with the bank account statements for the same accounts provided by the banks to FSRA.

    Applicant Statement funds as of Funds per Statement submitted by Sandhu to Manulife Actual Funds per Statement supplied by Bank
    PG November 8, 2019 $148,047.73 $7,264.23
    RSK/SKK November 21, 2019 $35,913.03 (RSK) $5,913.03 (RSK)
    TM January 31, 2020 $120,048.48 $438.09
    AG/PS February 21, 2020 $88,000.08 $8,705.46 (PS)
    NP/RP March 9, 2020 $125,838.16 (NP) $25,986.19 (NP)
    KT/JT April 21, 2020 $103,203.01 (KT) $60.29 (KT)
    SUM/SOM April 22, 2020 $82,736.79 (SUM) $20,236.79 (SUM)
    PCO April 24, 2020 $193,448.93 $3,176.26
    SSG April 30, 2020 $58,828.75 $13,935.59
    MMS/ZE As on April 21, 2020 $40,212.05 $1,447.89
    JS March 2, 2020 $43,422.46 $322.46
    MA June 29, 2020 $120,399.17 $399.17


  11. Furthermore, the altered RBC bank account statement for MMS and ZE’s joint bank account appears to show bi-weekly salary payments of $1,710 and $1,659 to MMS and ZE, respectively. These payments were not reflected in the bank account statement for the same period provided by RBC to FSRA.

  12. Sandhu submitted the altered bank account statements by email to Manulife Bank Broker Services in order to meet the conditions stipulated in the mortgage commitments issued by Manulife to the applicants listed above. The 12 Mortgage Applications record that Sandhu was the mortgage agent on the applications and submitted them to Manulife.

  13. Due to the altered bank statements submitted by Sandhu, Manulife was deceived into funding 12 mortgages in the total amount of $7,279,736. Sandhu earned commissions amounting to $53,430 as the mortgage agent on the above transactions.

  14. Between January 2020 and July 2020, Sandhu submitted a total of 32 mortgage applications through RMA. Those with altered bank account statements represent approximately 1/3 of Sandhu’s overall business during that period.

  15. Sandhu admitted to FSRA that she did not take any steps to confirm if the altered bank account statements were genuine prior to submitting them to Manulife.

  16. Further, Sandhu was unable to recall how the bank statements were provided to her, demonstrate that they were altered when she received them, or provide a plausible explanation for the appearance of similarly altered bank statements in 12 mortgage applications she submitted in an 8-month period.

    17. III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

    A. Giving False or Deceptive Information

  17. Subsection 43(2) of the Act provides that no mortgage agent shall give, assist in giving or induce or counsel another person or entity to give or assist in giving any false or deceptive information or document when dealing in mortgages in Ontario or trading in mortgages in Ontario. Such conduct is prohibited whether or not the agent is aware that the information is false or deceptive.

  18. During an eight-month period, Sandhu recklessly and negligently submitted 12 altered bank statements in support of 12 Mortgage Applications to Manulife. Sandhu did not take any steps to confirm if the bank statements were genuine.

  19. In view of the above the Director is satisfied that Sandhu gave false or deceptive information to Manulife when dealing in mortgages and thereby contravened subsection 43(2) of the Act repeatedly in respect of each of the Mortgage Applications.

    20. IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

  20. The Director is satisfied that imposing an administrative penalty on Sandhu under section 39(1) of the Act will satisfy one or both of the following purposes under section 38(1) of the Act:

    1. To promote compliance with the requirements established under the Act.

    2. To prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under this Act.


  21. In determining the amount of the administrative penalty below, the Director has considered the following criteria as required by section 3(1) of Ontario Regulation 192/08:

    1. The degree to which the contravention or failure was intentional, reckless, or negligent.

    2. The extent of the harm or potential harm to others resulting from the contravention or failure.

    3. The extent to which the person or entity tried to mitigate any loss or take other remedial action.

    4. The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure.

    5. Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.


    22. Administrative Penalties to be Imposed on Sandhu

  22. The Director is satisfied that twelve administrative penalties of $5,000 each in the total amount of $60,000 should be imposed on Sandhu for contravening section 43(2) of the Act by providing false or deceptive information to Manulife in relation to the 12 Mortgage Applications.

  23. In respect of the first criterion, the Director is satisfied that Sandhu’s conduct was reckless and negligent. Sandhu took no steps to confirm if the altered bank statements and the information contained in them were accurate prior to submitting them to Manulife.

  24. Furthermore, Sandhu exhibited a pattern of misconduct by submitting altered bank statements to Manulife on 12 separate occasions over 8 months, and in 1/3 of the applications she submitted during this period.

  25. In respect of the second criterion, the Director is satisfied that Sandhu’s reckless and negligent conduct as a mortgage agent caused harm to others. Manulife was deceived into funding mortgages based on false information supplied in support of the 12 Mortgage Applications submitted by Sandhu. Manulife may not have funded the mortgages if the correct bank statements were provided to it. As a result of Sandhu’s misconduct,

    1. Manulife funded 12 mortgages in the total amount of $7,279,736 based on false information as to the assets and financial circumstances of the applicants. Manulife paid total commissions amounting of $58,129 for the brokering of these mortgages;

    2. The deposit amounts are inflated significantly in many of the altered bank statements, often in an amount greater than $100,000. Accordingly, there is a risk that the mortgages may not be affordable or suitable for the applicants and they may suffer financial harm if they cannot make their payments; and

    3. In the event the applicants default on the mortgages, Manulife may suffer harm.


  26. Furthermore, Sandhu’s misconduct as a mortgage agent, licensed and regulated under the Act, has the potential to harm public confidence in the regulatory regime established by the Act and its regulations.

  27. In respect of the third criterion, the Director is unaware of any steps taken by Sandhu to remedy the contraventions described in this proposal.

  28. In respect of the fourth criterion, the Director is satisfied that Sandhu derived substantial direct economic benefit from the contraventions described in this proposal. Sandhu received a total of $53,430 in the form of commissions from Manulife for the funded mortgages on the 12 Mortgage Applications.

  29. In respect of the fifth criterion, the Director is unaware of any further contraventions or failures to comply in the preceding five years by Sandhu, other than those discussed in this Notice of Proposal.

  30. The Director is satisfied, having regarded all the circumstances, that the proposed amount of the penalty is not punitive in nature, and the amount is consistent with one or both purposes of section 38 of the Act.

  31. Such further and other reasons as may come to the attention of the Director.

  32. The Director is satisfied that there are sufficient grounds to impose the order described in this Notice of Proposal to impose administrative penalties in the total amount of $60,000.

DATED at Toronto, Ontario, January 18, 2023

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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