IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 18, 21, 38 and 39;

AND IN THE MATTER OF Sabine Quattrociocchi;

NOTICE OF PROPOSAL TO SUSPEND LICENCE and
TO IMPOSE AN ADMINISTRATIVE PENALTY

TO: Sabine Quattrociocchi

TAKE NOTICE THAT pursuant to sections 18 and 21 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 suspend the mortgage agent licence (licence # M17000871) issued to Sabine Quattrociocchi under the Act for a period of six (6) months.

TAKE FURTHER NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose an administrative penalty in the amount of $5,000 on Sabine Quattrociocchi for providing false information to the Chief Executive Officer contrary to section 45 of the Act.

The 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), 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 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 West, 7^th Floor
Toronto, Ontario
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

These are reasons for the proposal by the Director:
1. to suspend the mortgage agent licence issued to Sabine Quattrociocchi (“Quattrociocchi”) for a period of six (6) months; and
2. to impose an administrative penalty of $5,000 on Quattrociocchi.

II. BACKGROUND

Quattrociocchi is licensed as a mortgage agent (licence # M17000871) under the Act. Quattrociocchi has been licensed since April 3, 2017. Quattrociocchi’s licence will expire on March 31, 2022.
From April 3, 2017 to January 7, 2019, Quattrociocchi was authorized to deal or trade in mortgages on behalf of “I Direct Mortgages Inc.” (mortgage brokerage licence # 10584).
From January 7, 2019 to July 24, 2020, Quattrociocchi was authorized to deal or trade in mortgages on behalf of “Unimor Capital Corporation” (mortgage brokerage licence # 10675).
Quattrociocchi is currently authorized to deal or trade in mortgages as a mortgage agent on behalf of “Adamas Financial Corporation” (mortgage brokerage licence # 13266).

A. False or Deceptive Information while Dealing in Mortgages, Dealing in Mortgages Outside of Brokerage, and Receiving Mortgage Fees Outside of Brokerage

On August 19, 2019, the Financial Services Regulatory Authority of Ontario (“FSRA”) received a complaint from GK. GK was a private mortgage lender.
On February 6, 2018, Quattrociocchi solicited GK to invest in a mortgage on a property in Mississauga. Quattrociocchi provided details of the mortgage to GK via text message. The text message noted that the mortgage was “12% rate, 2% lenders, only 6-month term, $425k amount, 74% LTV”. GK was informed that there was an existing first mortgage on the property.
GK agreed to the terms and Quattrociocchi informed GK that she would prepare the commitment. GK advanced the $425,000 for the mortgage and it was registered on February 12, 2018 (the “Second Mortgage”).
I Direct Mortgages Inc. confirmed that it has no record of the Second Mortgage and that the Second Mortgage was not done on behalf of the brokerage.
Quattrociocchi approached GK when the Second Mortgage was due and asked GK to allow for an extension while the house was being sold. GK agreed to the extension because he was told by Quattrociocchi that she was providing funds for a third mortgage to cover the extension interest to GK. A third mortgage of $85,000 was registered on October 30, 2018 (the “Third Mortgage”)
Subsequently, GK learned that the first mortgage was misrepresented by Quattrociocchi and that the borrower owed $200,000 more on the first mortgage than what Quattrociocchi stated. This additional amount resulted in a loan to value ratio (“LTV”) over 100%.
Further, GK learned that Quattrociocchi did not invest in the Third Mortgage on the property. Instead, Quattrociocchi solicited other individuals to provide the Third Mortgage on the property.
GK was not paid out at the end of the extension term and was forced to sell the property by power of sale. GK lost approximately $216,000 of his $425,000 Second Mortgage due to misrepresentation of the balance of the first mortgage. The third mortgagees lost their entire investment of $85,000.
With respect to the misrepresented LTV for the GK mortgage, Quattrociocchi stated that she merely provided details as a referral by a lawyer and did not conduct any mortgage brokering activity. Contrary to this claim, Quattrociocchi also provided details of the Second Mortgage to the borrower, JT, by email, in addition to her dealings with GK.
The email to JT and the Statement of Advance provided by GK identify a lender’s fee which GK denies receiving.
Quattrociocchi also brokered the Third Mortgage for JT, which her brokerage at the time has no record of. Quattrociocchi emailed JT details of the mortgage and instructed JT to sign the commitment and a promissory note for the Third Mortgage.
The Statement of Advance for the Third Mortgage shows $12,000 paid for a promissory note. The promissory note directed funds to 2605336 Ontario Inc. This fee was paid directly to 2605336 Ontario Inc. from the proceeds of the Third Mortgage, and was not paid to the brokerage.
Quattrociocchi is the sole director of 2605336 Ontario Inc. Quattrociocchi was asked by a FSRA Investigator to provide an accounting of the $12,000, but failed to do so.

B. False Information in Application to Renew Licence

On February 19, 2021, Quattrociocchi submitted an application to renew her mortgage agent licence (the “Renewal Application”).
At Step IV of the Renewal Application, Quattrociocchi answered “No” to the following questions:

… are you currently a defendant in any civil proceeding or are there any unsatisfied judgements imposed by a civil court in Canada or elsewhere, against you personally?

… are you currently a defendant in any civil proceeding or are there any unsatisfied judgements imposed by a civil court in Canada or elsewhere, against a business in which you have an interest of at least 10 percent?

…has a complaint ever been made against you to a regulatory body in any province, territory, state, or country that was or is, based in whole or in part, on fraud, theft, deceit, misrepresentation, forgery, or similar conduct; or based in whole or in part, on professional negligence or misconduct?
Quattrociocchi is named as a defendant in two separate statements of claim (court file number CV-20-00635001-0000 and CV-20-00653275-00CL). Both statements of claim predate the Renewal Application.
Quattrociocchi denied knowledge of these statements of claim in her interview with the FSRA Investigator. However, it is clear that she had knowledge of the CV-20-00653275-00CL proceeding as she filed a Notice of Intent to Defend on February 3, 2021, 16 days before submitting the Renewal Application.
Quattrociocchi was also aware of the complaint from GK made against her as she had provided a response to FSRA prior to submitting the Renewal Application.
Therefore, it is clear that Quattrociocchi provided false information on the Renewal Application and to the FSRA Investigator.

III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

Section 2(3) of the Act states that no individual shall deal in mortgages for remuneration unless they are licensed and are acting on behalf of a mortgage brokerage.
Section 4(1) of Ontario Regulation 187/08 states that no agent shall directly or indirectly receive any fee or other remuneration for dealing or trading in mortgages from a person or entity other than the brokerage on whose behalf he or she is authorized to deal or trade in mortgages.
The Director is satisfied that Quattrociocchi was dealing in mortgages for remuneration while not acting on behalf of a mortgage brokerage with respect to the Second Mortgage and Third Mortgage. Quattrociocchi engaged in multiple activities that constitute dealing in mortgages under section 2(1) of the Act, including soliciting GK to lend money on the security of real property, providing him with information about the Second Mortgage, and negotiating and arranging the Second and Third Mortgages on behalf of the borrowers and lenders. Quattrociocchi’s brokerage has no record of the Second or Third Mortgage.
The Director is further satisfied that Quattrociocchi received a fee or other remuneration, directly or indirectly, from another person other than the brokerage on whose behalf she was authorized to deal or trade in mortgages. In particular, $12,000 was paid directly to 2605336 Ontario Inc. from the proceeds of the Third Mortgage, and Quattrociocchi is the sole officer and director of that company.
Section 43(2) of the Act states that no agent shall give or assist in giving any false or deceptive information or document when dealing or trading in mortgages.
Quattrociocchi provided false information to GK with respect to the LTV for the Second Mortgage and deceptive information regarding her intentions to provide the Third Mortgage on the property to induce GK into providing an extension on the Second Mortgage.
Section 45 of the Act states that no person shall give false or misleading information to the Chief Executive Officer in respect of any matter related to the Act, or regulations, or include false or misleading information in any document required to be given to the Chief Executive Officer.
The Director is satisfied that Quattrociocchi provided false information on the Renewal Application regarding the civil proceedings against her.

IV. GROUNDS FOR SUSPENSION OF LICENCE

Pursuant to section 18(1) of the Act, the Chief Executive Officer may, by order, suspend a licence:
1. if the licensee ceases to satisfy the prescribed requirements for issuance or renewal, as the case may be, of the licence;
2. if the Chief Executive Officer believes, on reasonable grounds, that the licensee is no longer suitable to be licensed having regard to the circumstances, if any, prescribed for the purposes of subsection 14(1) or 16(4), as the case may be, and such other matters as the Chief Executive Officer considers appropriate;
3. if the licensee contravenes or fails to comply with a requirement established under this Act; or
4. if such other circumstances as may be prescribed.
Section 10 of Ontario Regulation 409/07 prescribes the criteria the Chief Executive Officer is required to have regard to under section 18(1)(a) of the Act. The Chief Executive Officer is required to have regard to:
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.
Quattrociocchi has contravened or failed to comply with a requirement established under the Act. Quattrociocchi engaged in mortgage brokering activity outside of the brokerage she was authorized to deal or trade in mortgages and received a fee from someone other than the brokerage. Quattrociocchi also provided false or deceptive information to GK while dealing or trading in mortgages.
Additionally, Quattrociocchi’s past conduct demonstrates that she will not deal or trade in mortgages in accordance with the law and with integrity and honesty. It is essential that lenders receive accurate information from licensees under the Act about the mortgage they enter into.
Quattrociocchi also made several false statements or provided false information on the Renewal Application. She made further false statements to the FSRA Investigator when asked about the false statements provided on her Renewal Application.
Given the conduct outlined above, the Director is satisfied that Quattrociocchi is not suitable to be licensed as a mortgage agent.

V. GROUNDS FOR IMPOSING AN ADMINISTRATIVE PENALTY

The Director is satisfied that imposing an administrative penalty on Quattrociocchi 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.
The Director is satisfied that an administrative penalty of $5,000 should be imposed on Quattrociocchi for providing false information to FSRA contrary to section 45 of the Act. It will promote compliance with the requirements established under the Act. It will ensure that the Chief Executive Officer is provided with truthful information required to administer the Act and the regulatory regime.
In determining the amount of the administrative penalty, 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.
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.
In respect of the first criterion, the evidence indicates that the contravention was intentional. Quattrociocchi was aware of the complaints made against her and the lawsuits naming her personally. Quattrociocchi knew that the answers she provided to the questions in the Renewal Application were false.
In respect of the second criterion, the potential for harm exists when individuals provide false information to FSRA. The ability to collect accurate and truthful information is essential to the integrity of the Act and its regime which operates to protect the public from fraudulent activity through its regulations.
In respect of the third criterion, Quattrociocchi has not taken any other remedial action with respect to the false information. Further, when confronted with the information, Quattrociocchi continued to provide false information with respect to the lawsuits in which she is named.
In respect of the fourth criterion, the Director is satisfied that Quattrociocchi is reasonably expected to derive an indirect economic benefit from the contravention by maintaining her licence.
In respect of the fifth criterion, the Director is not aware of 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 Quattrociocchi.
Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, September 17, 2021.

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.

NOTICE OF PROPOSAL TO SUSPEND LICENCE and TO IMPOSE AN ADMINISTRATIVE PENALTY