As much as nine out of 10 cases of mortgage fraud in Canada stem from massively organized crime taking advantage of elevated housing prices, according to a former RCMP top investigator.
Henry Tso, previously the superintendent in charge of RCMP’s federal organized crime and financial integrity team in BC, warned that such extensive networks leverage their wide roster of operatives planted across multiple locales and levels.
These individuals disguise themselves as both buyers and sellers, all working in conspiracy to acquire properties that would otherwise have gone to hopeful domestic buyers and other legitimate market players.
Homes then change hands between these criminals at blinding speed. The fraudsters increase the value with each transaction, ultimately fanning the flames of further housing price growth in already overheated markets.
“Illegal property flipping involves repeatedly and fraudulently selling a property between colluding individuals,” Tso stated in an interview with Global News. “The price is artificially driven up through false appraisals or subsequent sales.”
The assets involved eventually end up in the auspices of “straw buyers” who use stolen identities or fake mortgage information to secure the final purchase.
This set-up is particularly suited for the needs of these cartels, who often find the need to move enormous sums undetected. Many of the flipped homes are used to launder illicit funds from fraud and drug trafficking, Tso said.
“The ‘straw buyer’ intends to let the property default and be untraceable to the financial institution,” he explained. “As the price is artificially inflated, the loss to financial institutions can be significant.”