IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29, as amended (the “Act”), in particular sections 16, 21, 38, and 39;

AND IN THE MATTER OF Manpreet Ghai.

NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE AND IMPOSE ADMINISTRATIVE PENALTIES

TO: Manpreet Ghai

TAKE NOTICE THAT pursuant to Sections 16 and 21 of the Act, 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 refuse to renew the mortgage agent licence issued to Manpreet Ghai (licence #M16001317).

AND TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose 11 administrative penalties in the total amount of $52,000 on Manpreet Ghai:

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 21(2) AND 21(3), 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 15 (fifteen) 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 30 (thirty) 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:


1. refuse to renew the mortgage agent licence issued to Manpreet Ghai (“Ghai”), and


2. impose 11 administrative penalties in the total amount of $52,000 on Ghai.



II. BACKGROUND

A. Parties

2. Ghai was licensed as a mortgage agent (licence #M16001317) under the Act from May 31, 2016 until the expiry of his licence on March 31, 2022.


3. Ghai applied to renew his licence on March 29, 2022.


4. At all material times, Ghai 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).


5. Ghai ended his association with Mortgage Alliance on September 29, 2022. He is presently not sponsored as a mortgage agent by a mortgage brokerage.


6. Ghai submitted mortgage applications to Manulife Bank of Canada (“Manulife”) between February 15, 2019 and November 24, 2020.



B. Submission of Altered and Fabricated Documents to Manulife

7. Between July 2020 and November 2020, Ghai submitted 13 altered bank account statements and 11 altered and/or fabricated employment and income documents on behalf of borrowers in support of 10 mortgage applications (the “Mortgage Applications”) to Manulife.



B.1 Altered Bank Account Statements

8. On July 20, 2021, Manulife advised FSRA that Ghai submitted fraudulent proof of down payment documentation.


9. Ghai submitted 13 altered bank account statements in support of 9 of the Mortgage Applications. The altered bank account statements represented that the borrowers had significantly higher bank balances, which would be available for a down payment, than they actually had.


10. Furthermore, 4 of the 13 altered bank account statements contained fictitious transactions representing to Manulife that the borrowers had purportedly paid off taxes owed, credit card debt, and lines of credit, and thereby complied with conditions in their respective mortgage commitments.


11. 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”), Bank of Nova Scotia (“Scotiabank”), and Bank of Montreal (“BMO”). Manulife considered the altered statements when deciding to extend mortgage loans to the borrowers and when determining whether the borrowers had sufficient funds for down payments.


12. FSRA obtained statements for the same bank accounts directly from each of the banks and confirmed significant discrepancies between them and those submitted by Ghai as outlined below:



Borrower	Statement funds as of	Funds per statement submitted by Ghai to Manulife	Actual Funds per statement supplied by Bank
SA (RBC – Savings)	October 2, 2020	$ 65,001.94	$ 9,223.56
SA (TD – Savings)	September 30, 2020	$ 41,159.55	$ 159.55
SA (TD – TFSA)	September 30, 2020	$ 42,249.64	$ 248.00
GD	October 21, 2020	$ 53,299.70	$ 479.92
TC	September 30, 2020	$ 61,239.08	$ 31,238.94
NC	September 30, 2020	$ 77,728.28	$ 37,728.28
SC	July 29, 2020	$ 35,091.75	$ 310.05
KP	July 29, 2020	$ 7,590.46	$ 760.18
AD	September 8, 2020	$ 99,701.25	$ 68,782.86
BT	September 30, 2020	$ 22,511.77	$ 2,511.43
BR	July 31, 2020	$ 10,228.87	CIBC bank account does not exist
SG	September 30, 2020	$ 16,498.12	$ 6,485.71
ZB	September 18, 2020	$ 58,873.82	$ 48,873.82




B.2 Altered and Fabricated Employment Records

13. Ghai submitted 11 altered or fabricated employment and income related documents on behalf of borrowers BT, BK, and GD to Manulife.


14. On October 24, 2020, Ghai submitted a fabricated employment letter dated October 22, 2020 relating to BT (the “BT Employment Letter”) along with a Statement of Earnings to Manulife. The letter was purportedly written by HT, the CEO of GTL. The letter was provided to Manulife in support of BT and AG’s mortgage application. The letter claimed that BT was employed full time at GTL and earned a salary of $53,000 per year.


15. On September 28, 2020, Ghai submitted a fabricated employment letter dated September 22, 2020 relating to BK (the “BK Employment Letter”) along with two Statements of Earnings to Manulife. Again, this letter was purportedly written by HT in support of BK and KG’s mortgage application. The letter claimed that BK was employed full time at GTL as an office manager and earned a salary of $31,000 per year.


16. HT advised FSRA that he had not written the BT or BK Employment Letters and that BT and BK were never employed at GTL. HT also advised that his signature and the business address of GTL in the BT and BK Employment Letters were incorrect. HT further advised that his phone number in the BK Employment Letter was incorrect.


17. BK and BT advised FSRA that they were never employed at GTL.


18. On November 2, 2020, Ghai submitted an employment letter relating to GD dated October 20, 2020 (the “GD Employment Letter”), along with three Statements of Earnings (the “GD Statements of Earnings”), containing false information to Manulife. The documents were purportedly issued by GWC and the GD Employment Letter was purportedly written by JM as GWC’s human resources coordinator.


19. The current human resources coordinator for GWC, KS, advised that:


1. JM was never employed at GWC; and


2. GD was employed at GWC during the relevant time, however information relating to GD’s position and income at GWC included in the GD Employment Letter and the GD Statements of Earnings were false.


20. The altered bank account statement submitted by Ghai in support of GD’s mortgage application recorded salary payments consistent with the fabricated information in the GD Statements of Earnings.


21. Ghai also submitted altered T4 Forms for GD’s 2018 and 2019 income to Manulife which falsely inflated GD’s income.


22. Ghai submitted the altered and/or fabricated bank statements, employment letters, and income related documents by email to Manulife via Manulife Bank Broker Services in order to meet the conditions stipulated in the mortgage commitments issued to the borrowers mentioned above.


23. Ghai denies involvement with 7 of the 10 Mortgage Applications and says that the information was provided to him by others. However, all 10 Mortgage Applications list Ghai as the agent of record who submitted the Mortgage Applications to Manulife on behalf of the borrowers.


24. As a result of the altered and fabricated bank statements and employment records submitted by Ghai, Manulife was deceived into funding 10 mortgages in the total amount of $5,183,473. Manulife paid $47,037.49 in commissions for the 10 mortgages, with Ghai earning $18,590.81 in commissions for five transactions. The remaining commissions were paid to other Mortgage Alliance agents.


25. Between August 2020 and December 2020, Ghai was involved in the closing of 25 mortgage transactions as a mortgage agent associated with Mortgage Alliance. The Mortgage Applications with altered documents represent approximately 40% of Ghai’s overall business and 91% of Ghai’s business involving Manulife during that period.


26. Ghai took no steps to confirm the authenticity of the altered bank account statements he submitted to Manulife. Ghai also did not take reasonable and sufficient steps to ascertain the veracity of the employment related documents he submitted to Manulife.


27. Lastly, Ghai was unable to demonstrate that the documents were altered when he received them or provide a plausible explanation for the appearance of similarly altered and/or fabricated documents in the Mortgage Applications which he submitted over a 5-month period.



C. False Information in Renewal Application

28. On March 29, 2022, Ghai submitted a renewal application (the “Renewal Application”) on which he falsely declared that no complaints had been made against him to a regulatory body despite being made aware by Mortgage Alliance in September 2021 that Manulife had complained about Ghai’s misconduct to FSRA.


29. On September 22, 2022, Ghai admitted to the false representation in an interview with FSRA claiming that it was made in error.



III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. Giving False or Deceptive Information when Dealing in Mortgages

30. 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.


31. As described above, during a 5-month period, Ghai recklessly and negligently submitted 13 altered bank account statements to Manulife. Ghai did not take any steps to confirm if the bank statements were genuine.


32. Furthermore, Ghai recklessly and negligently submitted to Manulife 3 employment letters, 6 income statements, and 2 T4 statements, relating to borrowers BT, BK, and GD, which contained false and deceptive information. Ghai did not take reasonably sufficient steps to verify the authenticity of the employment-related documents.


33. In view of the above, the Director is satisfied that Ghai gave false or deceptive information to Manulife when dealing in mortgages contrary to subsection 43(2) of the Act, repeatedly, in respect of each of the Mortgage Applications.



B. Giving False or Misleading Information to FSRA

34. Subsection 45(1) of the Act provides that no person or entity shall give false or misleading information to the Chief Executive Officer of FSRA or a person designated by the Chief Executive Officer in respect of any matter related to the Act or its regulations.


35. The Director is satisfied that Ghai contravened subsection 45(1) of the Act by making a false representation in his Renewal Application by declaring that no complaint had been made against him to a regulatory body based on fraud or misrepresentation.



IV. GROUNDS FOR REFUSAL TO RENEW LICENCE

36. Section 16(4) of the Act states that the Chief Executive Officer shall renew the licence of an applicant who satisfies the prescribed requirements for renewal of the licence unless the Chief Executive Officer believes, on reasonable grounds, that the applicant is not suitable to be licensed having regard to such circumstances as may be prescribed and such other matters as the Chief Executive Officer considers appropriate.


37. Section 10 of Ontario Regulation 409/07 under the Act states that in determining whether an individual is not suitable to be licensed as a mortgage broker or agent, the Chief Executive Officer is required by subsections 14(1) and 16(4) of the Act to have regard to the following prescribed circumstances:
    
    
    1. Whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
    
    
    2. Whether the individual is carrying on activities that contravene or will contravene the Act or the regulations if he or she is licensed.
    
    
    3. Whether the individual has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for the licence.


38. In view of Ghai’s numerous contraventions of the Act outlined above, the Director has reasonable grounds to believe that Ghai is not suitable to deal or trade in mortgages.


39. As described above, Ghai deliberately and repeatedly, over a period of five months, contravened section 43(2) of the Act by submitting altered and/or fabricated bank statements and employment and income related documents to Manulife in support of the Mortgage Applications.


40. Ghai’s repeated failure to comply with the Act was relatively recent and was wholly related to his activities as a mortgage agent.


41. Therefore, Ghai’s past conduct affords reasonable grounds for belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty.


42. Further, by providing false information in his Renewal Application, Ghai undermined the FSRA licensing process and public confidence in the mortgage sector. FSRA requires truthful and complete disclosure by applicants and licensees to effectively regulate the mortgage brokering sector. FSRA relies upon the information provided by applicants to assess licensing applications.



V. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

43. The Director is satisfied that imposing an administrative penalty on Ghai 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.


44. 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.


45. The Director is satisfied that 10 administrative penalties of $5,000 each, totaling $50,000, should be imposed on Ghai for contravening section 43(2) of the Act by providing false or deceptive information to Manulife in support of the 10 Mortgage Applications.


46. The Director is also satisfied that an administrative penalty of $2,000 should be imposed on Ghai for contravening section 45(1) of the Act for his false declaration on his Renewal Application.


47. In respect of the first criterion, the Director is satisfied that Ghai’s conduct with respect to the submission of the altered and/or fabricated documents to Manulife was reckless and negligent.


1. Ghai took no steps to confirm if the information in the altered bank statements were accurate prior to submitting them to Manulife;


2. Ghai did not take reasonable and sufficient steps to confirm if the employment and income documents relating to BT, BK, and GD were genuine and if the information contained in them was accurate; and


3. Ghai’s conduct in the above respect was also contrary to Mortgage Alliance’s internal policies and procedures which require mortgage agents to take reasonable steps to ensure the authenticity of all documentation that may accompany a mortgage application.


48. Furthermore, Ghai exhibited a pattern of misconduct by submitting 24 altered and/or fabricated bank statements and employment related documents to Manulife in 40% of the applications that he submitted during the relevant period.


49. In addition to the above, the Renewal Application contained a caution about the provision of false information and declaration as to the truthfulness of the contents. The provision of false information, despite these reminders and safeguards, suggests intentional conduct.


50. In respect of the second criterion, the Director is satisfied that Ghai’s reckless and negligent conduct as a mortgage agent caused harm to others. As a result of Ghai’s misconduct,


1. Manulife funded 10 mortgages in the total amount of $5,183,473 based on false information as to the assets and financial circumstances of the borrowers. Manulife paid total commissions amounting to $47,037.49 for the brokering of these mortgages;


2. The deposit amounts were inflated significantly in many of the altered bank statements, often in an amount greater than $50,000. Furthermore, BT, BK, and GD’s employment details were falsely represented in the documents submitted by Ghai. Accordingly, there is a risk that the mortgages may not be affordable or suitable for the borrowers and they may suffer financial harm if they cannot make their payments; and


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


51. Ghai’s provision of false information to FSRA in his Renewal Application had the potential to harm FSRA’s ability to properly assess his suitability for continued licensing, thereby causing risk to consumers and other industry participants.


52. Furthermore, Ghai’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.


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


54. In respect of the fourth criterion, the Director is satisfied that Ghai derived substantial direct economic benefit from the contraventions described in this proposal. Ghai received a total of $18,590.81 in the form of commissions from Manulife for the funded mortgages on the 10 Mortgage Applications.


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


56. 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.


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


58. The Director is satisfied that there are sufficient grounds to refuse Ghai’s application to renew his license and impose administrative penalties in the total amount of $52,000 on Ghai.

DATED at Toronto, Ontario, June 16, 2023.

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.