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 Avraj Singh Dulay.

NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES

TO: Avraj Singh Dulay

TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director, Litigation and Enforcement (the “Director”) is proposing to impose the following eighteen (18) administrative penalties in the total amount of $44,000 on Avraj Singh Dulay:

1. Seventeen administrative penalties of $2000 each, in the total amount of $34,000, for giving false or deceptive information or documents when dealing in mortgages in Ontario, with respect to 17 potential mortgage transactions, contrary to section 43(2) of the Act; and
2. An administrative penalty of $10,000 for doing or omitting to do anything that might reasonably cause the brokerage on whose behalf he was authorized to deal or trade in mortgages to contravene section 48 of Ontario Regulation 188/08, contrary to section 3 of Ontario Regulation 187/08.

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, 7^th floor
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 states 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 eighteen (18) administrative penalties in the total amount of $44,000 on Avraj Singh Dulay (“Dulay”).

II. BACKGROUND

A. FSRA Licensing History

2. Dulay was initially licensed as a mortgage agent (licence # M18002058) under the Act on September 18, 2018. His licence expired on March 31, 2023.
3. At all relevant times, Dulay was licensed and conducting business on behalf of his brokerage, The Mortgage Alliance Company of Canada Inc. (licence # 10530) (“Mortgage Alliance”).

B. False or Deceptive Information or Documents

4. On September 1, 2022, Mortgage Alliance advised FSRA that it had terminated Dulay following an inquiry from a developer of preconstruction units seeking to confirm the legitimacy of certain mortgage preapproval letters.
5. Mortgage Alliance discovered Dulay fabricated 17 mortgage preapproval letters (the “Letters”).
6. The Letters were on Mortgage Alliance letterhead and purported to show that the prospective borrowers had received mortgage preapprovals from a certain lender.
7. The Letters were provided to a developer with whom each of the 17 borrowers referenced in the Letters had an agreement of purchase and sale for residential units in a new housing development. The agreements required the purchasers to provide evidence of a satisfactory mortgage pre-approval to the developer.
8. In an interview with FSRA, Dulay admitted he created the Letters without the knowledge or approval of Mortgage Alliance or the lender.
9. Dulay also admitted, among other things, that he made a mistake and that the preapproval letters should have gone through the lender.

C. Dulay’s Conduct Caused Brokerage Non-Compliance

10. Dulay admitted, and Mortgage Alliance confirmed, that he did not maintain files with Mortgage Alliance related to the Letters.
11. Dulay kept his clients’ documents in email and WhatsApp messages outside the knowledge or control of Mortgage Alliance, contrary to its policies.

III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. False or Deceptive Information or Documents

12. Section 43(2) of the Act prohibits a person from giving false or deceptive information or documents when dealing in mortgages in Ontario.
13. The Director is satisfied that Dulay contravened section 43(2) of the Act by fabricating the Letters and submitting them to a developer without the knowledge or consent of his brokerage or the purported lender.

B. Conduct Resulting in Brokerage Non-Compliance

14. Section 3 of Ontario Regulation 187/08 prohibits a mortgage agent from doing or omitting to do anything that might reasonably cause the brokerage on whose behalf he was authorized to deal or trade in mortgages to fail to comply with a requirement under the Act.
15. Section 48 of Ontario Regulation 188/08 requires Mortgage Alliance to maintain and retain required records related to the mortgage brokering activities of its agents.
16. By failing to provide his brokerage with any of the documents obtained from the borrowers referenced in the Letters, Dulay caused Mortgage Alliance to fail in its requirement to maintain and retain required records contrary to section 48 of Ontario Regulation 188/08.

IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

17. The Director is satisfied that imposing administrative penalties on Dulay under section 39 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 or entity from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under the Act.
18. The Director is satisfied that eighteen (18) administrative penalties totalling $44,000 should be imposed on Dulay as follows:
    1. Seventeen administrative penalties of $2,000 each, in the total amount of $34,000, for giving false or deceptive information or documents when dealing in mortgages in Ontario, with respect to 17 potential mortgage transactions, contrary to section 43(2) of the Act; and
    2. An administrative penalty of $10,000 for doing or omitting to do anything that might reasonably cause the brokerage on whose behalf he was authorized to deal or trade in mortgages to contravene section 48 of Ontario Regulation 188/08, contrary to section 3 of Ontario Regulation 187/08.
19. In determining the appropriate amount of administrative penalties, the Director has considered the following criteria as required by section 3 of Ontario Regulation 192/08:
    1. The degree to which the contravention or failure was intentional, reckless or negligent. The Director is satisfied that Dulay’s actions were intentional as he admitted to creating the 17 preapproval letters himself on Mortgage Alliance letterhead, and that his brokerage did not authorize their creation. Dulay further admitted that the lender listed on the Letters did not provide preapproval for any of the 17 purchases for which the Letters were created. Dulay has shown a repeated and consistent pattern of conduct that circumvents regulatory requirements.
    2. The extent of the harm or potential harm to others resulting from the contravention or failure. The Director is satisfied that Dulay created a potential risk of consumer harm. By creating preapprovals that were not legitimate, consumers may not have been able to pursue the transaction with the developer due to the issue with their documentation or financing. Dulay’s conduct also harms market participants by undermining their trust in documents supplied by licensed agents. The developer could have entered into contracts with clients that otherwise would not have qualified for the purchase. By failing to provide his brokerage with supporting documentation for any of the transactions, Dulay caused his brokerage to fail to fulfill its requirements under the Act and prevented the brokerage from effectively monitoring his conduct.
    3. The extent to which the person or entity tried to mitigate any loss or take other remedial action. The Director is not aware of Dulay taking steps to mitigate loss or remediate.
    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. As a result of Dulay’s failure to comply with the Act, he would have reasonably been expected to derive an economic benefit had the transactions closed.
    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. The Director is not aware of any other contraventions under the Act or with any other financial services legislation in Ontario or any jurisdiction during the proceeding five years by Dulay.
20. The Director is satisfied, having regard to all the circumstances, that the proposed amount of the administrative penalties are not punitive in nature as required by section 3(2) of Ontario Regulation 192/08, and the amount is consistent with one or both purposes of section 38 of the Act.
21. Such further and other reasons that may come to the attention of the Director.

DATED at Toronto, Ontario, July 23, 2024.

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.