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 S.O.R.A. Real Estate & Insurance Ltd. operating as MIC Financial;

AND IN THE MATTER OF Roberto Gabriel Mammone.

NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES

TO:
S.O.R.A. Real Estate & Insurance Ltd. operating as MIC Financial
800 Arrow Road
Toronto, ON  M9M2Z8

Emilio Mammone
Principal Broker

AND TO: Roberto Gabriel Mammone

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 $300,000 on S.O.R.A. Real Estate & Insurance Ltd. operating as MIC Financial, as follows:

1. One administrative penalty of $100,000 for authorizing an individual to deal or trade in mortgages on its behalf when the brokerage knew, or reasonably ought to have known, that the individual is a broker or agent who is authorized to deal or trade in mortgages on behalf of another brokerage, contrary to section 43(2) of Ontario Regulation 188/08.
2. One administrative penalty of $200,000 for paying a fee or other remuneration to an individual for dealing or trading in mortgages on its behalf when the brokerage knew, or reasonably ought to have known, that the individual is a broker or agent who is authorized to deal or trade in mortgages on behalf of another brokerage, contrary to section 44(2) of Ontario Regulation 188/08.

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 $20,000 on Roberto Gabriel Mammone for doing or omitting to do anything that might reasonably be expected to result in their mortgage brokerage contravening or failing to comply with a requirement established under the Act, contrary to section 3 of the 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.

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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 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 administrative penalties as follows:
   1. Two administrative penalties in the total amount of $300,000 on S.O.R.A. Real Estate & Insurance Ltd. operating as MIC Financial (“MIC Financial”);
   2. One administrative penalty of $20,000 on Roberto Gabriel Mammone (“Roberto Mammone”).

II. BACKGROUND

A. Licensee Background

2. MIC Financial is licensed as a mortgage brokerage (licence # 11891) under the Act. Emilio Mammone is the principal broker (licence # M08010583) of MIC Financial.
3. 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.
4. 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. Before her licence expired, Tracy Scimeca was authorized to deal in mortgages on behalf of Crown Eight Capital Inc. (mortgage brokerage licence # 12875).
5. Antonino (Nino) Scimeca (“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. Nino Scimeca is the sole officer and director of 1634744 Ontario Inc. (“163 Inc.”).
6. Tracy Scimeca and Nino Scimeca have never been authorized to deal in mortgages on behalf of MIC Financial.

B. The MIC Financial Mortgage Transactions

7. Between August 2020 and July 2023, 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.
8. For the MIC Mortgages, Tracy Scimeca collected information about prospective borrowers, including identification documents, and information about employment, income, and assets.
9. Tracy Scimeca was the primary point of contact for the prospective borrowers in negotiating and arranging the MIC Mortgages. Generally, the prospective borrowers did not communicate directly with MIC Financial before the MIC Mortgages were brokered.
10. Roberto Mammone brokered the MIC Mortgages on behalf of MIC Financial.
11. Generally, Roberto Mammone did not speak with the prospective borrowers before the MIC Mortgages were brokered.
12. MIC Financial collected over $400,000 in mortgage brokering fees related to the initial MIC Mortgages (net of fees paid to Tracy Scimeca).
13. 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.
14. The debt burden proved unaffordable for some borrowers, and they experienced significant financial distress.

III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. MIC Financial Authorized Tracy Scimeca to Act as its Agent

15. Section 43(2) of Ontario Regulation 188/08 provides that a mortgage brokerage shall not authorize an individual to deal or trade in mortgages on its behalf if the brokerage knows, or reasonably ought to know, that the individual is a broker or agent who is authorized to deal or trade in mortgages on behalf of another brokerage.
16. Roberto Mammone was aware that Tracy Scimeca was licensed as a mortgage agent on behalf of a different mortgage brokerage. Thus, MIC Financial knew, or reasonably ought to have known, that Tracy Scimeca was a mortgage agent authorized to deal in mortgages on behalf another mortgage brokerage.
17. MIC Financial allowed Tracy Scimeca to deal in mortgages on its behalf.
18. The Director is satisfied that MIC Financial contravened section 43(2) of Ontario Regulation 188/08 by repeatedly allowing Tracy Scimeca to deal in mortgages on behalf of MIC Financial, when she was only authorized to deal in mortgages on behalf of a different mortgage brokerage.

B. MIC Financial Paid Tracy Scimeca

19. Section 44(2) of Ontario Regulation 188/08 provides that a mortgage brokerage shall not pay an individual for dealing or trading in mortgages on its behalf if the brokerage knows, or reasonably ought to know, that the individual is a broker or agent who is authorized to deal or trade in mortgages on behalf of another brokerage.
20. MIC Financial knew, or ought to know, that Tracy Scimeca was a mortgage agent authorized to deal in mortgages on behalf of Crown Eight Capital Inc.
21. MIC Financial paid Tracy Scimeca over $192,000 in fees for dealing in mortgages with respect to the MIC Mortgages, directly and indirectly.
22. The Director is satisfied that MIC Financial contravened section 44(2) of Ontario Regulation 188/08 by repeatedly paying fees to Tracy Scimeca, when she was authorized to deal in mortgages on behalf of another mortgage brokerage.

C. Roberto Mammone Caused the Brokerage to Contravene the Act

23. Section 3 of Ontario Regulation 187/08 provides that a mortgage agent shall not do or omit to do anything that might reasonably be expected to result in the brokerage on whose behalf they are authorized to deal or trade in mortgages to contravene or fail to comply with a requirement established under the Act.
24. Although Tracy Scimeca communicated with the prospective borrowers and arranged the MIC Mortgages, Roberto Mammone brokered the MIC Mortgages through MIC Financial.
25. Roberto Mammone arranged for MIC Financial to make payments to Tracy Scimeca.
26. The Director is satisfied that Roberto Mammone contravened section 3 of Ontario Regulation 187/08 by causing MIC Financial to contravene sections 43(2) and 44(2) of Ontario Regulation 188/08.

IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

27. The Director is satisfied that imposing administrative penalties on MIC Financial and Roberto Mammone 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.
28. The Director is satisfied that two administrative penalties in the total amount of $300,000 should be imposed on MIC Financial for contravening sections 43(2) and 44(2) of Ontario Regulation 188/08.
29. The Director is satisfied that an administrative penalty of $20,000 should be imposed on Roberto Mammone for contravening section 3 of Ontario Regulation 187/08.
30. In determining the amount of the administrative penalties, 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.
31. In respect of the first criterion, the Director has considered that the contraventions were intentional. MIC Financial and Roberto Mammone were aware of their obligations under the Act. Despite this, they engaged in a pattern of noncompliance with the Act in relation to the MIC Mortgages.
32. In respect of the second criterion, the Director has considered the harm that resulted from the contraventions. The borrowers may have been deprived of the protections of the Act owed to them by MIC Financial, including conflict of interest disclosure and suitability assessment. For some borrowers, the debt burden was unaffordable, resulting in significant financial distress.
33. In respect of the third criterion, the Director has considered that Roberto Mammone proactively identified transactions involving Tracy Scimeca and MIC Financial.
34. In respect of the fourth criterion, the Director has considered that MIC Financial and Roberto Mammone collected over $400,000 in fees related to the MIC Mortgages, net of amounts paid to Tracy Scimeca.
35. 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 MIC Financial or Roberto Mammone.
36. The Director is satisfied, having regarded all the circumstances, that the proposed amount of the administrative penalties is not punitive in nature, and that the amount is consistent with one or both purposes of section 38 of the Act.
37. 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 and Enforcement

By delegated authority from the Chief Executive Officer

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