IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 35, 38, and 39;

AND IN THE MATTER OF Tracy Scimeca;

AND IN THE MATTER OF Antonino (Nino) Scimeca.

NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES
AND COMPLIANCE ORDER

TO:Tracy Scimeca

AND TO: Antonino (Nino) Scimeca

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 two administrative penalties in the total amount of $200,000 on Tracy Scimeca as follows:

1. One administrative penalty of $100,000 for repeatedly dealing in mortgages for remuneration while not acting on behalf of their authorized mortgage brokerage or while not exempt from the requirement to have a licence, contrary to section 2(3) of the Act and for repeatedly receiving remuneration for dealing in mortgages from a person or entity other than their authorized mortgage brokerage, contrary to section 4(1) of Ontario Regulation 187/08.
2. One administrative penalty of $100,000 for giving, assisting in giving or inducing or counseling another person to give or assist in giving any false or deceptive information or document when dealing or trading in mortgages, contrary to section 43(2) of the Act and for acting, or doing anything or omitting to do anything, in circumstances where they ought to know that by acting, doing the thing or omitting to do the thing, they are being used by a person to facilitate dishonesty, fraud, crime or illegal conduct, contrary to section 3.1 of Ontario Regulation 187/08.

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 one administrative penalty of $50,000 on Antonino (Nino) Scimeca for acting, or doing anything or omitting to do anything, in circumstances where they ought to know that by acting, doing the thing or omitting to do the thing, they are being used by a person to facilitate dishonesty, fraud, crime or illegal conduct, contrary to section 3.1 of Ontario Regulation 187/08.

AND TAKE NOTICE THAT pursuant to section 35 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to issue an order against Tracy Scimeca to cease and desist from dealing or trading in mortgages in Ontario.

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 35(3), 35(4), 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 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 reasons for the proposal by the Director to impose two administrative penalties in the total amount of $200,000 on Tracy Scimeca and one administrative penalty of $50,000 on Antonino (Nino) Scimeca (“Nino Scimeca”).

II. BACKGROUND

A. Licensee Background

2. Tracy Scimeca was licensed as a mortgage agent (level 2) (licence # M11001877) under the Act. Tracy Scimeca’s mortgage agent licence expired on March 31, 2023. While licensed and during the material times, Tracy Scimeca was authorized to deal in mortgages on behalf of Crown Eight Capital Inc. (mortgage brokerage licence # 12875). Tracy Scimeca had been licensed as a mortgage agent since 2011.
3. Nino Scimeca was licensed as a mortgage agent (level 2) (licence # M18000722) under the Act. Nino Scimeca’s mortgage agent licence expired on March 31, 2024. While licensed and during the material times, Nino Scimeca was authorized to deal in mortgages on behalf of MA Mortgage Architects Inc. operating as Mortgage Architects (mortgage brokerage licence # 12728). Nino Scimeca had been licensed as a mortgage agent since 2018.
4. Nino Scimeca is the sole officer and director of 1634744 Ontario Inc. (“163 Inc.”). Nino Scimeca is also the sole director, officer and majority shareholder of 10731862 Canada Inc. (“107 Inc.”, together with 163 Inc., the “Scimeca Companies”).
5. Tracy Scimeca and Nino Scimeca are married to each other.
6. S.O.R.A. Real Estate & Insurance Ltd. operating as MIC Financial (“MIC Financial”) is licensed as a mortgage brokerage (licence # 11891) under the Act.
7. Roberto Gabriel Mammone (“Roberto Mammone”) is licensed as a mortgage broker (licence # M09002437) under the Act. Roberto Mammone is authorized to deal in mortgages on behalf of MIC Financial.
8. Tracy Scimeca and Nino Scimeca have never been authorized to deal in mortgages on behalf of MIC Financial.

B. The MIC Financial Mortgage Transactions

9. Between November 2020 and July 2023, Tracy Scimeca arranged 68 mortgages outside her brokerage.
10. In these transactions, the borrower generally obtained a first mortgage directly from a financial institution. Subsequently, Tracy Scimeca brokered a second private mortgage for the borrower.
11. Of these second mortgage transactions, Tracy Scimeca arranged 64 private mortgages through MIC Financial (the “MIC Mortgages”). The documentation for the majority of the MIC Mortgages identifies MIC Financial as acting for both borrower and lender.
12. For the MIC Mortgages, Tracy Scimeca collected information about prospective borrowers, including identification documents, and information about employment, income, and assets.
13. Tracy Scimeca was the primary point of contact for the prospective borrowers in negotiating and arranging the mortgages, even though she was never identified as their agent in the MIC Mortgages documents. Generally, the prospective borrowers did not communicate directly with MIC Financial before the mortgage transactions were completed.
14. Tracy Scimeca was not acting on behalf of her authorized brokerage when arranging the MIC Mortgages. Instead, the MIC Mortgages were processed by Roberto Mammone through MIC Financial.
15. MIC Financial paid Tracy Scimeca over $192,000 in fees related to the MIC Mortgages, either directly, or through her husband (Nino Scimeca) or 163 Inc. Over $125,000 in these payments were directed through Nino Scimeca or 163 Inc.

C. The Promissory Notes

16. In many of the transactions, the prospective borrower lacked sufficient funds for the down payment or closing costs.
17. As a condition of the mortgage, the first lender prohibited secondary financing. Generally, the prospective borrower signed a declaration that they would not obtain secondary financing related to the home purchase.
18. Tracy Scimeca and Nino Scimeca provided funds to the prospective borrowers for their downpayment or closing costs through a promissory note (the “Promissory Note”). Tracy Scimeca negotiated the promissory note directly with the prospective borrower. The lender for the Promissory Note was typically one of the Scimeca Companies.
19. Tracy Scimeca did not disclose the ultimate source of the funds or the resulting conflict of interest to all prospective borrowers. In some cases, through the Scimeca Companies, Tracy Scimeca and Nino Scimeca received interest payments on the Promissory Notes.
20. Tracy Scimeca counseled a prospective borrower to submit false documents to the first lender. For instance, Tracy Scimeca facilitated the submission of a gift letter to the first lender, when the true source of the funds was the Promissory Note.
21. The prospective borrower used the funds obtained from the Promissory Note to close the first mortgage transaction.
22. After the first mortgage transaction closed, an MIC Mortgage was arranged to repay the Scimeca Companies and a second mortgage was registered.
23. The debt burden of the first mortgages, Promissory Notes, and MIC Mortgages proved unaffordable for some borrowers, and they experienced significant financial distress.

D. Unlicensed Activity

24. In October 2024, a lender provided FSRA with correspondence from Tracy Scimeca indicating that she is engaged in dealing or trading in mortgages in Ontario after her mortgage agent licence expired on March 31, 2023.

III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. Tracy Scimeca Dealt in Mortgages Outside the Brokerage

25. Section 2(3) of the Act provides that no individual shall deal in mortgages in Ontario for remuneration unless they have a mortgage broker’s or agent’s licence and is acting on behalf of a mortgage brokerage or are exempted from the requirement to have such a licence.
26. Tracy Scimeca dealt in mortgages with respect to the MIC Mortgages. She provided information about a prospective borrower to a prospective mortgage lender, assessed a prospective borrower on behalf of a prospective mortgage lender, and negotiated or arranged a mortgage on behalf of others.
27. Tracy Scimeca was not acting on behalf of her authorized mortgage brokerage and was not exempt from the requirement to be licensed.
28. Tracy Scimeca received remuneration for the MIC Mortgages either directly or through Nino Scimeca or the Scimeca Companies.
29. The Director is satisfied that Tracy Scimeca repeatedly contravened section 2(3) of the Act by dealing in mortgages with respect to the MIC Mortgages while not acting on behalf of her authorized mortgage brokerage or while not exempt from the requirement to have a mortgage broker or agent licence.

B. Tracy Scimeca Received Remuneration Outside the Brokerage

30. Section 4(1) of Ontario Regulation 187/08 provides that a mortgage agent shall not receive remuneration for dealing in mortgages from an entity other than the brokerage on whose behalf they are authorized to deal in mortgages.
31. Tracy Scimeca received remuneration for dealing in mortgages for the MIC Mortgages directly and indirectly from MIC Financial.
32. The Director is satisfied that Tracy Scimeca contravened section 4(1) of Ontario Regulation 187/08 by receiving $192,000 for dealing in mortgages from an entity other than her authorized mortgage brokerage.

C. Tracy Scimeca Gave, Assisted in Giving, or Counseled Prospective Borrowers to Give False or Deceptive Information

33. Section 43(2) of the Act provides that a mortgage agent shall not give, assist in giving or induce or counsel another person to give or assist in giving any false or deceptive information or document when dealing in mortgages.
34. The prospective borrowers provided false information to the first lender when they declared that there would be no secondary financing.
35. Tracy Scimeca told a borrower to submit a false document to the first lender.
36. By arranging the Promissory Notes and MIC Mortgages, Tracy Scimeca assisted in giving, induced, or counseled another person to give false information during the mortgage transactions.
37. The Director is satisfied that Tracy Scimeca contravened section 43(2) of the Act.

D. Nino Scimeca Facilitated Dishonesty, Fraud or Illegal Conduct

38. Section 3.1 of Ontario Regulation 187/08 provides that a mortgage agent shall not act, or do anything or omit to do anything, in circumstances where they ought to know that by acting, doing the thing or omitting to do the thing, they are being used by a person to facilitate dishonesty, fraud, crime or illegal conduct.
39. Nino Scimeca received over $125,000 in fees, directly and through corporations he controlled, on behalf of Tracy Scimeca, in relation to her dealing in mortgages and receiving fees outside her brokerage.
40. Nino Scimeca provided funds through corporations he controlled to Tracy Scimeca, which were loaned to prospective borrowers through promissory notes.
41. In the circumstances, Nino Scimeca knew or ought to have known that he was being used by Tracy Scimeca to facilitate dishonesty, fraud, or illegal activity.
42. The Director is satisfied that Nino Scimeca contravened section 3.1 of Ontario Regulation 187/08.

IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

43. The Director is satisfied that imposing administrative penalties on Tracy Scimeca and Nino Scimeca 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.
44. The Director is satisfied that two administrative penalties in the total amount of $200,000 should be imposed on Tracy Scimeca as set out in the Notice above.
45. The Director is satisfied that an administrative penalty in the amount of $50,000 should be imposed on Nino Scimeca as set out in the Notice above.
46. In determining the amount of the 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.
    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.
47. In respect of the first criterion, the Director has considered that Tracy Scimeca acted intentionally. Due to her experience in the mortgage brokering sector, Tracy Scimeca was aware that her actions contravened the Act.
48. The Director has considered that Nino Scimeca was, at best, reckless in his contravention of the Act. Nino Scimeca was aware that his wife was receiving payments from MIC Financial, an entity that was not her mortgage brokerage. Nino Scimeca also provided funding for numerous Promissory Notes arranged by his wife. Nino Scimeca was experienced in the mortgage brokering sector and ought to have been aware that he was facilitating conduct that contravened the Act.
49. In respect of the second criterion, the Director has considered the harm that resulted from the contraventions by Tracy Scimeca and Nino Scimeca. The borrowers were deprived of the protections of the Act, including conflict of interest disclosure and suitability assessment. For some borrowers, the debt burden was unaffordable, resulting in significant financial distress.
50. In addition, Tracy Scimeca and Nino Scimeca increased the risk of loss to the first mortgage lenders through the Promissory Notes.
51. In respect of the third criterion, the Director has considered that Tracy Scimeca has admitted fault but has not taken steps to mitigate or remediate the contraventions.
52. In respect of the fourth criterion, the Director has considered the direct economic benefit that Tracy Scimeca and Nino Scimeca derived from their contraventions of the Act. Tracy Scimeca and Nino Scimeca collected fees of over $192,000 from Tracy Scimeca’s outside mortgage dealing. In some cases, Tracy Scimeca and Nino Scimeca collected interest through the Promissory Notes.
53. 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 Tracy Scimeca or Nino Scimeca.
54. 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.

V. GROUNDS TO IMPOSE COMPLIANCE ORDER

55. The Director is of the opinion that Tracy Scimeca may have committed an act or pursued a course of conduct that contravenes or does not comply with a requirement established under the Act. The Director is of the opinion that the proposed order is necessary to remedy the situation.
56. Since March 31, 2023, Tracy Scimeca has not been licensed as a mortgage agent.
57. In October 2024, FSRA received information indicating that Tracy Scimeca is engaged in dealing or trading in mortgages in Ontario after her mortgage agent licence expired on March 31, 2023
58. Therefore, the Director proposes an order pursuant to section 35 of the Act for Tracy Scimeca to cease and desist from dealing or trading in mortgages in Ontario.
59. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, February 6, 2025.

Original signed by

Elissa Sinha
Director, Litigation & Enforcement

By delegated authority from the Chief Executive Officer

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