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 1813404 Ontario Corp. o/a CSI Mortgages (“CSI Mortgages”).

AND IN THE MATTER OF Hansel Patrick.

MINUTES OF SETTLEMENT AND UNDERTAKING

PART I – INTRODUCTION

Hansel Patrick (“Patrick”) is licensed as a mortgage broker (licence # M08006978) under the Act. Patrick’s licence was renewed on April 1, 2023 and will expire on March 31, 2024.
Patrick is an officer, director, and the principal broker of 1813404 Ontario Corp. o/a CSI Mortgages (“CSI Mortgages”), a mortgage brokerage licensed under the Act (licence # 12052).
On June 20, 2023, the Director, Litigation and Enforcement (“Director”), by delegated authority from the Chief Executive Officer (“CEO”) of the Financial Services Regulatory Authority of Ontario (“FSRA”), issued a Notice of Proposal in respect of CSI Mortgages and Patrick (the “NOP”).
CSI Mortgages and Patrick disputed the allegations and, on or about July 19, 2023, requested a hearing before the Financial Services Tribunal (the “Tribunal”) in respect of the NOP.
CSI Mortgages, Patrick, and the Director, by delegated authority from the CEO, (collectively the “Parties”) wish to resolve this matter on consent and without a hearing before the Tribunal.

PART II – AGREED FACTS

A. FAILURE TO MAINTAIN ERRORS AND OMISSIONS (“E&O”) INSURANCE

On January 10, 2022, FSRA received an application to surrender the mortgage brokerage licence of CSI Mortgages. This application disclosed that CSI Mortgages did not have valid E&O insurance.
In February 2022, FSRA was advised that CSI Mortgages was surrendering its brokerage licence because its E&O insurance policy had expired and that no other insurer from FSRA’s approved list was willing to provide insurance to the brokerage.

E&O is Cancelled by Intact

Intact Insurance Company (“Intact”), CSI Mortgages’ E&O insurance policy provider, confirmed to FSRA that it sent a cancellation notice via registered mail to CSI Mortgages’ address on file. The cancellation notice was dated July 4, 2019, and stated that the E&O insurance policy cancellation would be effective on August 3, 2019 due to a missed payment.
On March 1, 2022, FSRA was advised that CSI Mortgages did not discover its E&O insurance policy was cancelled by Intact until May 2021.
CSI Mortgages claimed that it took immediate action to arrange replacement E&O insurance in a form acceptable to the CEO from a provider on the list of insurers who offer such coverage, but due to the passage of time since the policy was cancelled, they were unsuccessful.

B. FALSE STATEMENTS ON ANNUAL INFORMATION RETURNS (“AIR”)

2019 and 2020 AIRs

On March 22, 2020 and March 23, 2021, Patrick submitted CSI Mortgages’ 2019 and 2020 AIRs, respectively.
In both the 2019 and 2020 AIRs, CSI Mortgages reported that it had E&O insurance in place from Intact, policy # EA 5763715, with expiry dates of September 23, 2020 and September 23, 2021, respectively.
Further, Patrick attested on both AIRs, as the principal broker of CSI Mortgages, that he was aware that it is an offence to make a false statement to FSRA and that the information in the AIRs was true to the best of his knowledge and belief.
The E&O insurance information submitted by Patrick on the 2019 and 2020 AIRs was false as CSI Mortgages’ E&O insurance had been cancelled since August 3, 2019.

2021 AIR

On March 31, 2022, Patrick submitted CSI Mortgages’ 2021 AIR.
CSI Mortgages was required to upload a copy of its current E&O policy with the 2021 AIR and therefore reported that CSI Mortgages’ E&O insurance had been cancelled.

C. COMPLIANT E&O INSURANCE

On October 5, 2023, CSI Mortgages provided FSRA with evidence of proper E&O insurance coverage for CSI Mortgages. Coverage under this policy began on August 5, 2023 and expires on August 5, 2024.

PART III – NON-COMPLIANCE WITH THE ACT

By engaging in the conduct described above in Part II, CSI Mortgages admits and acknowledges that it breached the Act as follows:
1. By contravening section 42 of Ontario Regulation 188/08 by failing to maintain proper E&O insurance in a form approved by the CEO between August 3, 2019 and August 5, 2023;
2. By contravening sections 45(1) and 45(2) of the Act by providing false information regarding CSI Mortgages’ E&O insurance on its 2019 and 2020 AIRs; and
3. By contravening section 13 of Ontario Regulation 193/08 by failing to immediately notify the CEO that its E&O insurance had been cancelled.
By engaging in the conduct described above in Part II, Patrick admits and acknowledges that he breached the Act as follows:
1. By contravening section 2(1) of Ontario Regulation 410/07 by failing to ensure CSI Mortgages maintained proper E&O insurance between August 3, 2019 and August 5, 2023; and
2. By contravening sections 45(1) and 45(2) of the Act by providing false information regarding CSI Mortgages’ E&O insurance on its 2019 and 2020 AIRs.

PART IV – TERMS OF SETTLEMENT

CSI Mortgages and Patrick admit the facts contained in Part II of these Minutes.
CSI Mortgages and Patrick acknowledge and agree that they have been given the opportunity to seek independent legal advice and have done so (or have waived the right to do so) and are entering into these Minutes of Settlement and Undertaking (“Minutes”) voluntarily, understanding the consequences of doing so.
CSI Mortgages and Patrick acknowledge that these Minutes are an undertaking within the meaning of the Act, and that failure to comply may result in immediate regulatory action including, but not limited to, the issuance of a Notice of Proposal to revoke the licence, a Notice of Proposal to impose an administrative penalty, or a prosecution under the Provincial Offences Act.

(a) Issuance of Orders

CSI Mortgages and Patrick acknowledge that, upon execution of these Minutes by both Parties, the orders, attached hereto as Schedule “A” (the “Orders”), will be issued, pursuant to which:
1. CSI Mortgages will pay administrative penalties in the total amount of $9,000; and
2. Patrick will pay administrative penalties in the total amount of $4,000.

(b) Process for Execution of Settlement

CSI Mortgages and Patrick acknowledge that these Minutes are not binding on the Director until signed by the Director.
These Minutes may be executed in counterparts and may be executed and delivered by facsimile or e-mail, and all such counterparts and facsimiles or e-mails, as applicable, shall together constitute one and the same agreement.
Upon receiving an executed copy of these Minutes from FSRA, CSI Mortgages and Patrick will withdraw their Request for Hearing (Form 1) in respect of the NOP before the Tribunal by completing a Withdrawal/Discontinuance (Form 5) and filing it with the Registrar at the Tribunal within five (5) business days.
Upon confirmation from the Tribunal that the Request for Hearing has been withdrawn and the hearing has been cancelled, the Parties agree that the Director will issue the Orders in the form attached as Schedule “A” to these Minutes.
The Parties accept and understand that these Minutes and any rights within the Minutes shall enure to the Parties and to any successors or assigns of the Parties.

(c) Disclosure of Minutes and Orders

The Parties will keep the terms of these Minutes and the Orders confidential until the Orders are issued, except that:
1. The Director shall be permitted to disclose the Minutes and the Orders within FSRA; and
2. The Parties shall be permitted to inform the Financial Services Tribunal.
If either Party does not sign these Minutes or the Director does not issue the Orders:
1. These Minutes, the Orders, and all related discussions and negotiations will be without prejudice to FSRA, CSI Mortgages, and Patrick; and
2. The Parties will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing of the allegations contained in the NOP. Any proceedings, remedies and challenges will not be affected by these Minutes, the Orders, or any related discussions or negotiations.
Upon issuance of the Orders:
1. CSI Mortgages and Patrick agree that these Minutes and the Orders form part of their administrative record for the purposes of any future licensing decision or as an aggravating factor in respect of a future administrative penalty or prosecution against them or any affiliated entities;
2. CSI Mortgages and Patrick acknowledge that these Minutes and the Orders are public and will be published by FSRA on its public website (or that of its successor) along with a press release that summarizes these Minutes and the Orders; and
3. The Parties agree not to make representations to any member of the public or media or in a public forum that are inconsistent with these Minutes or the Orders.

(d) Further Proceedings

Whether or not the Orders are issued, CSI Mortgages and Patrick will not use, in any proceeding, these Minutes or the negotiation or process of approval of these Minutes as the basis for any attack on FSRA’s jurisdiction, alleged bias, alleged unfairness, or any other remedies or challenges that may be available.
Upon issuance of the Orders:
1. CSI Mortgages and Patrick waive all rights to a hearing before the Tribunal regarding the NOP;
2. CSI Mortgages and Patrick waive all rights to a judicial review or appeal of the Orders;
3. The Director agrees that FSRA will not take any further proceedings against CSI Mortgages or Patrick arising solely from the facts contained in Part II of these Minutes, unless facts not disclosed by CSI Mortgages or Patrick come to the attention of FSRA that are materially different from those contained in Part II of these Minutes or CSI Mortgages or Patrick fail to comply with any term in the Orders; and
4. CSI Mortgages and Patrick agree that should they fail to comply with any term in these Minutes or the Orders, FSRA is entitled to bring any proceedings available to it.

DATED at Vaughan, Ontario, January 23, 2024

Original signed by

1813404 Ontario Corp. o/a CSI Mortgages
Per: Anthony Ambrosio

DATED at Vaughan, Ontario, January 23, 2024

Original signed by

Marina Grontis
Name of Witness

DATED at Vaughan, Ontario, January 23, 2024

Original signed by

Hansel Patrick

DATED at Vaughan, Ontario, January 23, 2024

Original signed by

Marina Grontis
Name of Witness

DATED at Toronto, Ontario, February 1, 2024

Original signed by

Elissa Sinha
Director, Litigation and Enforcement
Financial Services Regulatory Authority of Ontario

By delegated authority from the Chief Executive Officer

SCHEDULE A

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

AND IN THE MATTER OF 1813404 Ontario Corp. o/a CSI Mortgages (“CSI Mortgages”).

ORDER IMPOSING ADMINISTRATIVE PENALTIES

CSI Mortgages is licensed as a mortgage brokerage (licence # 12052) under the Act.

On June 20, 2023, 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”) issued a Notice of Proposal to revoke the mortgage brokerage licence issued to CSI Mortgages and impose administrative penalties on CSI Mortgages for the following contraventions:

failing to maintain Errors and Omissions (“E&O”) insurance coverage, contrary to section 42 of Ontario Regulation 188/08;
failing to immediately notify the Chief Executive Officer of its E&O insurance cancellation, contrary to section 13 of Ontario Regulation 193/08; and
for providing false statements to the Chief Executive Officer on two separate occasions, contrary to section 45 of the Act.

A Request for Hearing (Form 1) dated July 19, 2023, was delivered to the Financial Services Tribunal (the “Tribunal”) in accordance with section 39(5) of the Act respecting the Notice of Proposal.

On [DATE], CSI Mortgages withdrew the Request for Hearing, and, on [DATE], the Tribunal closed its file in respect of this matter. This order is made pursuant to a settlement entered into by CSI Mortgages and the Director.

ORDER

Four administrative penalties, in the total amount of $9,000, are hereby imposed on 1813404 Ontario Corp. o/a CSI Mortgages for the reasons set out in the Minutes of Settlement.

TAKE NOTICE THAT the Financial Services Regulatory Authority of Ontario will deliver an invoice to 1813404 Ontario Corp. o/a CSI Mortgages with information as to where and how to pay the administrative penalties. 1813404 Ontario Corp. o/a CSI Mortgages must pay the administrative penalties no later than thirty (30) days after the date of this Order.

If 1813404 Ontario Corp. o/a CSI Mortgages fails to pay the administrative penalty in accordance with the terms of this Order, the Chief Executive Officer may file the Order with the Superior Court of Justice and the Order may be enforced as if it were an order of the court. An administrative penalty that is not paid in accordance with the terms of the order imposing the penalty is a debt due to the Crown and is enforceable as such.

DATED at Toronto, Ontario,

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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

AND IN THE MATTER OF Hansel Patrick (“Patrick”).

ORDER IMPOSING ADMINISTRATIVE PENALTIES

Patrick is licensed as a mortgage broker (licence # M08006978) under the Act. Patrick is an officer, director, and the principal broker of 1813404 Ontario Corp. o/a CSI Mortgages (“CSI Mortgages”), a mortgage brokerage licensed under the Act (licence # 12052).

On June 20, 2023, 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”) issued a Notice of Proposal to revoke the mortgage broker licence issued to Patrick and impose administrative penalties on Patrick for the following contraventions:

failing to ensure CSI Mortgages maintained proper Errors and Omissions (“E&O”) Insurance, contrary to section 2(1) of Ontario Regulation 410/07; and
providing false statements to the Chief Executive Officer on two separate occasions, contrary to section 45 of the Act.

A Request for Hearing (Form 1) dated July 20, 2023, was delivered to the Financial Services Tribunal (the “Tribunal”) in accordance with section 39(5) of the Act respecting the Notice of Proposal.

On [DATE], Patrick withdrew the Request for Hearing, and, on [DATE], the Tribunal closed its file in respect of this matter. This order is made pursuant to a settlement entered into by Patrick and the Director.

ORDER

Two administrative penalties in the total amount of $4,000, are hereby imposed on Hansel Patrick for the reasons set out in the Minutes of Settlement.

TAKE NOTICE THAT the Financial Services Regulatory Authority of Ontario will deliver an invoice to Hansel Patrick with information as to where and how to pay the administrative penalties. Hansel Patrick must pay the administrative penalties no later than thirty (30) days after the date of this Order.

If Hansel Patrick fails to pay the administrative penalties in accordance with the terms of this Order, the Chief Executive Officer may file the Order with the Superior Court of Justice and the Order may be enforced as if it were an order of the court. An administrative penalty that is not paid in accordance with the terms of the order imposing the penalty is a debt due to the Crown and is enforceable as such.

DATED at Toronto, Ontario,

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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