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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 Jaswinder Dhanoa.


NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES

TO: Jaswinder Dhanoa

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 administrative penalties in the total amount of $140,000 on Jaswinder Dhanoa:

  1. twenty-two (22) administrative penalties of $5,000 each, in the total amount of $110,000, for giving false or deceptive information when dealing in mortgages contrary to section 43(2) of the Act;

  2. three (3) administrative penalties of $10,000, $5,000 and $5,000, in the total amount of $20,000 for contravening section 4(1) of Ontario Regulation 187/08 by receiving, directly or indirectly, 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; and

  3. $10,000 for contravening section 3 of Ontario Regulation 187/08 by causing Mortgage Alliance Company of Canada to contravene section 48 of Ontario Regulation 188/08.

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, 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 administrative penalties in the total amount of $140,000 on Jaswinder Dhanoa (“Dhanoa”) for

    1. Twenty-two instances of providing false or deceptive information when dealing in mortgages;

    2. Three instances of receiving fees outside the brokerage; and

    3. Causing the brokerage to fail to maintain records of mortgage transactions.


    2. II. BACKGROUND

    A. Parties

  2. Dhanoa was licensed as a mortgage agent (licence #M15002555) under the Act from December 10, 2015, until the expiry of her licence on March 31, 2022. Dhanoa is not currently licensed under the Act.

  3. During the relevant time, Dhanoa 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), until September 8, 2021 when she took a leave of absence. Dhanoa’s licence expired while on leave.

  4. Dhanoa was also the owner of a company, Fort Financial Services Ltd. (“Fort Financial”) during the below time period. Dhanoa explained that her company was a requirement of working with Mortgage Alliance and did not operate as a standalone business.

  5. Dhanoa submitted 20 mortgage applications to First National Financial (“First National”) between February 2020 and June 2021. Additionally, she submitted 2 mortgage applications in April and May 2018. Dhanoa submitted a total of 36 mortgages through the brokerage for this time period.

    6. B. Submission of Altered Documents to First National

  6. On December 5, 2021, First National advised FSRA that Dhanoa submitted fraudulent proof of downpayment documentation and fraudulent income verification documentation in 22 mortgage applications (the “Mortgage Applications”).

  7. Dhanoa submitted a total of 32 altered bank account statements in support of the 22 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. In other instances, the bank statements were altered to show fraudulent direct deposits of employment income and the removal of legitimate deposits into the accounts. In several instances, and without explanation from Dhanoa, the account balances were altered to show a lower balance.

  9. 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 (“BNS”) and Bank of Montreal (“BMO”). First National considered the altered statements when deciding to extend mortgage loans to the applicants and determining whether the applicants had sufficient funds for downpayments.

  10. FSRA obtained accurate statements from each of the banks for the accounts in issue and confirmed significant discrepancies. The discrepancies in the funds range from approximately $15,000 to over $170,000 in shortfall between the statements submitted to First National and the authentic statements provided by the banks.

  11. Additionally, for nine of the Mortgage Applications, Dhanoa submitted fraudulent employment information. In two instances, FSRA confirmed that employment letters submitted to First National were fraudulent. In the six instances, payroll deposits that appear on the fraudulent bank statements do not appear on the bank statements provided by the banks. In the last instance, the bank account showing payroll deposits did not exist.

  12. Dhanoa submitted the altered bank account statements and fraudulent information by email to First National in order to meet the conditions stipulated in the mortgage commitments issued to the applicants listed above. The 22 Mortgage Applications record that Dhanoa was the mortgage agent on the applications and submitted them to First National.

  13. Due to the altered bank statements submitted by Dhanoa, First National was deceived into funding 22 mortgages in the total amount of $13,973,989.20. Dhanoa earned commissions amounting to $84,248 as the mortgage agent on the above transactions. Dhanoa was paid $37,942.12 of these commissions and Mortgage Alliance has withheld the remainder due to Dhanoa’s failure to provide requisite documentation of the mortgages.

  14. Dhanoa admitted to FSRA that she did not take any steps to confirm if the altered bank account statements, fraudulent employment letters, and fraudulent pay stubs were genuine prior to submitting them to First National. With respect to the employment information, Dhanoa stated that she simply searched online to make sure the employer existed.

  15. Further, Dhanoa was unable to recall how the bank statements were provided to her, to demonstrate that they were altered when she received them or provide a plausible explanation for the appearance of similarly altered bank statements in 22 Mortgage Applications she submitted. Similarly, Dhanoa was unable to recall how the employment information was provided to her.

  16. In eleven instances, second mortgages were placed on the property within 1 to 14 days after the first mortgage was registered. The amount of the second mortgage corresponded with the difference between the fraudulent and real bank statements. These second mortgages are in direct violation of the terms of the First National mortgages.

  17. Dhanoa received three separate fees through Fort Financial for these second mortgages of $8,000, $3,500 and $2,500, totalling $14,000. It is not clear what activities Dhanoa undertook to earn these fees and Dhanoa denies any knowledge of the second mortgage transactions.

  18. FSRA requested all documentation in Dhanoa’s possession regarding the 22 mortgage transactions. On August 3, 2023, Dhanoa’s counsel advised FSRA that Dhanoa lost access to the email account she used for these mortgage transactions and was unable to provide any documentation.

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

    A. Giving False or Deceptive Information

  19. 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.

  20. Over a three-year period, Dhanoa recklessly and negligently submitted altered bank statements in support of 22 Mortgage Applications to First National. Dhanoa did not take any steps to confirm if the bank statements were genuine. During the same time period, Dhanoa also provided fraudulent employment information to First National with 9 of the 22 Mortgage Applications.

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

    22. B. Receiving remuneration outside the brokerage

  22. Section 4(1) of Ontario Regulation 187/08 states that a mortgage broker or agent shall not receive, directly or indirectly, 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.

  23. Dhanoa received $14,000 from the proceeds of these second mortgages, indirectly through Fort Financial and outside of her brokerage. Dhanoa denies any involvement in the second mortgages, however the funds line up with the shortfall in the accounts, there are consistent private lenders that evidence a consistent individual’s involvement, and Dhanoa has no explanation as to why Fort Financial received fees for these second mortgages. The logical conclusion is that Dhanoa was involved in arranging these second mortgages outside the brokerage, in contravention of the terms of the mortgage commitment, and received fees for so doing.

    24. C. Failing to Maintain Records

  24. Section 48 of Ontario Regulation 188/08 states that a mortgage brokerage must maintain records for a period of 6 years after the expiry of the term of the mortgage or renewal or other expiry of the mortgage transaction. These records include complete and accurate records of all documents or written information given to or obtained from a borrower.

  25. Section 3 of Ontario Regulation 187/08 states that a mortgage agent must not do, or omit to do anything, that might result in the mortgage brokerage contravening the Act or Regulations.

  26. By failing to provide the relevant records to Mortgage Alliance and failing to maintain access to her email account where emails relating to mortgages she arranged were stored, Dhanoa contravened section 3 by causing Mortgage Alliance to fail to maintain records for the requisite period.

    27. IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

  27. The Director is satisfied that imposing an administrative penalty on Dhanoa 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.


  28. 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.


    29. Administrative Penalties to be Imposed on Dhanoa

  29. The Director is satisfied that twenty-two administrative penalties of $5,000 each in the total amount of $110,000 should be imposed on Dhanoa for contravening section 43(2) of the Act by providing false or deceptive information to First National in relation to the 22 Mortgage Applications.

  30. Additionally, the Director is satisfied that three administrative penalties of $10,000, $5,000 and $5,000 in the total amount of $20,000 should be imposed on Dhanoa for contravening section 4(1) of Ontario Regulation 187/08 by receiving fees outside her brokerage for arranging the second mortgages on the properties. Dhanoa received $14,000 in fees from the proceeds of the second mortgages placed on three properties.

  31. Additionally, the Director is satisfied that an administrative penalty of $10,000 should be imposed on Dhanoa for contravening section 3 of Ontario Regulation 187/08 by causing Mortgage Alliance to contravene section 48 of Ontario Regulation 188/08. Dhanoa’s failure to provide documentation to Mortgage Alliance, coupled with her losing access to the email account in which the documents were stored, resulted in the brokerage failing to maintain required records of the transactions for the requisite period of time.

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

  33. Furthermore, Dhanoa exhibited a pattern of misconduct by submitting altered bank statements to First National on 22 separate occasions over three years, and in 2/3 of the applications she submitted during this period.

  34. In respect of the second criterion, the Director is satisfied that Dhanoa’s reckless and negligent conduct as a mortgage agent caused harm to others. First National was deceived into funding mortgages based on false information supplied in support of the 22 Mortgage Applications submitted by Dhanoa. First National may not have funded the mortgages if the correct bank statements were provided to it. As a result of Dhanoa’s misconduct,

    1. First National funded 22 mortgages in the total amount of $13,973,989.20 based on false information as to the assets and financial circumstances of the applicants. First National paid total commissions amounting of $84,248 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;

    3. In the event the applicants default on the mortgages, First National may suffer harm; and

    4. The second mortgages on properties, in defiance of the terms of the First National mortgages and to cover the shortfall in funds in the altered bank account statements, may result in an inability to renew the mortgage when it matures.


  35. Furthermore, Dhanoa’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.

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

  37. In respect of the fourth criterion, the Director is satisfied that Dhanoa derived substantial direct economic benefit from the contraventions described in this proposal. Dhanoa earned $84,248 and received a total of $37,942.12 in the form of commissions from First National for the funded mortgages on the 22 Mortgage Applications. Dhanoa is currently attempting to obtain the balance of the commissions withheld by Mortgage Alliance. Additionally, Dhanoa received a $14,000 economic benefit in relation to the second mortgages.

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

  39. 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.

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

DATED at Toronto, Ontario, October 18, 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.