An order that is made regarding a licence holder reflects a situation at a particular point in time. The status of a licence holder can change. Readers should check the current status of a person’s or entity’s licence on the Licensing Link section of FSCO’s website. Readers may also wish to contact the person or entity directly to get additional information or clarification about the events that resulted in the order.
REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, in particular sections 8, 18, 19, and 21.
AND REGARDING Metro Financial Planning Limited;
AND REGARDING Dinesh Khanna (a.k.a. Dennis Khanna).
Metro Financial Planning Limited
193 King Street West
Subsection 19(1) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (the “Act”) provides that the Superintendent of Financial Services may, by order, revoke a licence in certain specified circumstances.
Section 21 of the Act provides that if the Superintendent proposes to revoke a licence without the licensee’s consent, the Superintendent shall give written notice of the proposal to the licensee, including the reasons for the proposal.
Subsection 19(3) of the Act provides that, if in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21, the Superintendent may, without notice, make an interim order suspending the licence.
INTERIM ORDER SUSPENDING LICENCE
IT IS ORDERED THAT pursuant to subsection 19(3) of the Act, and for the reasons described below, the mortgage brokerage licence of Metro Financial Planning Limited is suspended. During the suspension, Metro Financial Planning Limited is not authorized to deal or trade in mortgages in Ontario.
IT IS ORDERED THAT pursuant to subsection 19(3) of the Act, and for the reasons described below, the mortgage broker licence of Dinesh Khanna is suspended. During the suspension, Dinesh Khanna is not authorized to deal or trade in mortgages in Ontario.
TAKE NOTICE THAT this Interim Order takes effect immediately and will remain in effect until the expiry of the period for requesting a hearing in respect of the Superintendent’s Notice of Proposal set out below (15 days after the Notice is given, or deemed to have been delivered).
AND TAKE NOTICE THAT pursuant to subsections 48(4) and 49(1) and (2) of the Act, every person who fails to comply with an order made under this Act is guilty of an offence and every individual convicted of an offence under the Act is liable to a fine of not more than $100,000.00 or imprisonment for a term of not more than a year or both a fine and imprisonment. Every corporation convicted of an offence under the Act is liable to a fine of not more than $200,000.00.
Pursuant to subsection 48(5) of the Act, every director or officer of a corporation that commits an offence under this Act who directed, authorized, assented to, acquiesced in or participated in the commission of the offence, or who failed to take reasonable care to prevent the corporation from committing the offence, is guilty of an offence, whether or not the corporation is prosecuted or convicted.
Subsection 48(6) provides that every partner of a partnership and every individual who is a member of the directing body of an entity, other than a person or partnership, who directed, authorized, assented to, acquiesced in or participated in the commission of an act or omission by the partnership or entity which, if committed by a person, would be an offence under the Act, is guilty of an offence.
Si vous désirez recevoir cet ordre en français, veuillez envoyer votre demande immédiatement à: Adjointe, audiences, Greffe, Commission des services financiers de l’Ontario, 5160 rue Yonge, boîte 85, Toronto ON M2N 6L9.
NOTICE OF PROPOSAL TO REVOKE LICENCE
TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, the Superintendent is proposing to revoke the mortgage brokeragelicence of Metro Financial Planning Limited.The reasons for this proposal are described below.
AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, the Superintendent is proposing to revoke the mortgage brokerlicence of Dinesh Khanna.The reasons for this proposal are described below.
Si vous désirez recevoir cet avis en français, veuillez envoyer votre demande immédiatement à: Adjointe, audiences, Greffe, Commission des services financiers de l’Ontario, 5160 rue Yonge, boîte 85, Toronto ON M2N 6L9.
AND TAKE NOTICE THAT pursuant to subsection 21(3) of the Act, a hearing before the Financial Services Tribunal about this proposal may be requested by completing the enclosed Request for Hearing (Form 1) and submitting it to the Tribunal within 15 days after the Notice is received. A copy of that form is included with this notice. Additional copies can be obtained by visiting the Tribunal’s website at www.fstontario.ca.
If a Request for Hearing (Form 1) is submitted to the Tribunal within 15 days after the Notice is received, subsections 21(3) and 21(4) of the Act provide that the Tribunal shall hold a hearing and decide whether or not to direct the Superintendent to carry out this proposal, with or without changes, or substitute its opinion for that of the Superintendent, and the Tribunal may impose such conditions as it considers appropriate in the circumstances.
If no Request for Hearing (Form 1) is submitted to the Tribunal within 15 days after the Notice is received, TAKE NOTICE THAT the Superintendent will carry out the proposal to revoke the mortgage brokerage licence of Metro Financial Planning Limited and the mortgage brokerlicence of Dinesh Khanna.
Completed Request for Hearing Forms must be received by the Tribunal within 15 days after this notice is received. They may be mailed, faxed or delivered:
Financial Services Tribunal
5160 Yonge Street, Box 85
Toronto ON M2N 6L9
Superintendent of Financial Services
Regulatory Discipline Officer
Licensing and Market Conduct Division
5160 Yonge Street, Box 85
Toronto ON M2N 6L9
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal, made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22. Those 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 ext. 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 TO REVOKE LICENCE
- These are the reasons to support the Superintendent’s Notice of Proposal to Revoke the Mortgage Brokerage Licence of Metro Financial Planning Limited (“Metro Financial”) and the Mortgage Broker Licence of Dinesh Khanna, also known as Dennis Khanna.
- Metro Financial holds a mortgage brokerage licence (Licence #10696).
- Mr. Khanna holds a licence as a mortgage broker (licence number #M08000505) which authorizes him to deal or trade in mortgages on behalf of, and under the supervision of, a mortgage brokerage. Mr. Khanna is currently authorized to deal in mortgages on behalf of Metro Financial. He is also the principal broker and the sole director and officer of Metro Financial.
- Mr. Khanna’s licence was most recently renewed on April 1, 2014, with an expiry date of March 31, 2016.
- Starting in May 2014, FSCO received numerous complaints from former clients of Metro Financial, regarding mortgages they had acquired through Metro Financial and Mr. Khanna.
- Through the subsequent investigation of the complaints, FSCO learned that Mr. Khanna had misled and deceived clients by registering mortgages on their property without their knowledge or consent, registering mortgages without ensuring that the clients understood the mortgage or by registering mortgages for amounts greater than what was authorized by the client. The lenders in these cases were often close family relations to Mr. Khanna and when the borrower was unable to maintain their payments, legal proceedings were commenced to enforce the mortgage and the borrowers were forced from their homes. In most cases, Mr. Khanna or a close family relation ended up with possession of the clients’ homes and/or title to the properties.
- In addition, examinations of Metro Financial’s files in 2014 and 2015 exposed a litany of serious contraventions of the Mortgage Brokerages, Lenders, and Administrators Act (the “Act”). The pervasive and serious nature of these contraventions, coupled with the fact that Metro Financial and Mr. Khanna had done nothing to remedy the systemic non-compliance between the 2014 and 2015 examinations provides, on its own, ample grounds to support the revocation of the mortgage brokerage licence of Metro Financial and the mortgage broker licence of Mr. Khanna.
- Finally, a number of the female complainants have alleged that Mr. Khanna made unwanted and inappropriate overtures towards them of a sexual nature. These overtures were made in the context of Mr. Khanna’s mortgage brokering activity and also support the revocations.
Mortgage Business Activity Complaints
- FSCO investigated the complaints and confirmed the following facts.
L.M. and H.M.
- In late 2013, L.M. and H.M. owned a house in Hamilton, Ontario. L.M. and H.M. were in a difficult financial position. They were behind on their mortgage payments and had been served with Notice to Vacate dated November 21, 2013.
- In December 2013, L.M. and H.M. became aware of Metro Financial through an advertisement and arranged to meet with Mr. Khanna about refinancing their mortgages in order to resolve their imminent financial problems.
- Based on discussions and information provided by Mr. Khanna, L.M. and H.M. believed that they were entering into a new mortgage with Italian Canadian Savings & Credit Union Limited (“ICSCU”), and that this mortgage would cover the two existing mortgages on their house and permit a manageable monthly payment.
- L.M. came to find out that, in addition to the mortgage she obtained through ICSCU, two other mortgages were registered against her property by Metro Financial and Mr. Khanna without her knowledge or consent. In fact, L.M. and H.M. are not even aware that any amounts under these mortgages were ever advanced.
- A title search for their property reveals that the following mortgages were registered against the property:
- On December 2, 2013, a mortgage in the amount of $65,000 was registered by Metro Financial (signed by Mr. Khanna) in favour of Vic Handa Professional Dentistry Corp. (“Handa Dentistry”) (Instrument Number WE938077);
- On January 22, 2014, a mortgage in the amount of $250,600 in favour of the ICSCU (instrument number WE946000) which was registered as a first mortgage by virtue of a postponement executed by Handa Dentistry (Instrument Number WE946001) thereby making the Handa Dentistry mortgage a second mortgage; and
- On January 24, 2014, a third mortgage in the amount of $34,500 was registered by Metro Financial (signed by Mr. Khanna) in favour of Vivek Handa (Instrument Number WE946288).
- Dr. Vivek Handa is the principal shareholder of Handa Dentistry. Mr Khanna has admitted that Dr. Handa is his nephew.
- Although there are mortgage commitment and Disclosure to Borrower forms which purport to be signed by L.M. and H.M., L.M. and H.M. have no recollection or knowledge of agreeing to the second and third mortgages
- Even if it could be established that the Disclosure to Borrower forms were provided to L.M. and H.M. (which does not appear to be the case), there was no disclosure on the Disclosure to Borrowers forms, or otherwise, of the close family relationship between Mr. Khanna and Dr. Handa. The Disclosure to Borrower forms do reveal that the brokerage fees and bonuses for the second and third mortgages total $11,500.
- L.M. and H.M. defaulted on the second and third mortgages in favour of Handa Dentistry and Dr. Handa.
- Handa Dentistry commenced an action against L.M. and H.M. on March 5, 2014 (Court File Number 14-46028-SR) in respect of the default on the Handa Dentistry mortgage. Default judgment in the amount of $68,258.68 was obtained against L.M. and H.M. on April 7, 2014.
- On April 29, 2014, Handa Dentistry obtained an Order granting Handa Dentistry leave to obtain a Writ of Possession in respect of the property. In support of its motion for this order, Handa Dentistry filed an affidavit sworn by Mr. Khanna in which Mr. Khanna identified himself as “agent for the Plaintiff”. Based upon the issued court orders, L.M. and H.M. were forced from their home.
- The title search for the property reveals that property was transferred under a power of sale from Handa Dentistry to new purchasers on June 23, 2014 (Instrument Number WE971160). The ICSCU mortgage was discharged on August 8, 2014 (Instrument Number WE983534).
- Further, on July 17, 2014, a Notice of Garnishment was issued to L.M.’s employer.
- The net effect of the conduct of Metro Financial and Mr. Khanna is that H.M. and L.M. have lost their home and are indebted to the two lenders in respect of which they never agreed to borrow. It appears that they enjoyed no benefit from these transactions because there is no evidence that amounts were ever advanced under these mortgages.
- Since 2002, D.M. owned a house in St. Catharines, Ontario. In early 2009, D.M. was experiencing financial difficulty. She defaulted on her mortgage at the time with the Bank of Nova Scotia.
- In order to address these difficulties, D.M. contacted Metro Financial for assistance after seeing an advertisement in the phone book. In early 2009, D.M. arranged to meet with Mr. Khanna to discuss refinancing her two existing mortgages in order to consolidate them into one mortgage with one managable payment.
- D.M. understood that Metro Financial and Mr. Khanna were to arrange refinancing for her home in order to provide a more manageable monthly carrying cost. However, the particulars of the mortgages proposed were never sufficiently explained by Mr. Khanna. Consequently, D.M. had insufficient understanding of the paperwork she was being asked to sign to properly assess the nature of the transactions which were proposed or to make an assessment as to whether or not the proposed transactions were suitable given her circumstances. Metro Financial failed to take any steps to ensure the proposed mortgages were suitable for D.M. (as required in section 24 of Ontario Regulation 188/08) nor was there any written disclosure of the material risks (as required under section 25 of O Reg 188/08).
- The mortgages which were arranged by Metro Financial as shown on title are as follows:
- On March 6, 2009, a mortgage in the amount of $88,900 was registered on title listing the Chargee as “B2B Trust in Trust for RRSP/RRIF #[……]” (Instrument Number NR203009).
- Also on March 6, 2009, a second mortgage in the amount of $30,000 was registered on title in favour of Global Financial Management Inc (“Global”) (Instrument Number NR203010).
- Once the mortgages had been arranged, Mr. Khanna personally attended at D.M.’s residence to collect the amounts owing on the mortgages. This activity constitutes carrying on business as a mortgage administrator when neither Metro Financial nor Mr. Khanna were licensed as such contrary to section 5(2) of the Act. Also, on these attendances Mr. Khanna made inappropriate and unwanted overtures towards D.M.’s daughter. D.M. states that Mr. Khanna would arrive at her residence with alcohol and try to sit down with her 19 year old daughter while D.M. was out of the house.
- Eventually, the total payments on the two mortgages was more than D.M. could afford. As a result of her default, Global commenced an action on September 9, 2009 (Court File Number 09-14458 SR). A Default Judgment was issued on October 9, 2009 which included an order that she deliver possession of her property to Global.
- Further, on December 10, 2009, Global obtained an Order granting it leave to issue a Writ of Possession against the property. Mr. Khanna filed an affidavit in support of the motion for this order in which he again identified himself as the “agent for the Plaintiff”.
- A Writ of Possession was obtained and executed on January 21, 2010. As a result, D.M. was required to vacate her home.
- On August 10, 2011, there was a transfer of the charge from Global to Veeru Kantoor, who Mr. Khanna has admitted is his wife (Instrument Number NR275982).
- Although Mr. Khanna is in possession and control of the property, a search of title reveals that D.M. remains as owner of the property. There have been significant tax arrears and charges relating to bylaw infractions levied against D.M. as a result of the failure pay municipal taxes and to maintain the property during this period. On July 9, 2015, a tax certificate was placed on title in respect of the municipal taxes owing in respect of the property (Instrument Number NR386084).
M.P. and A.P.
- M.P. and A.P. own a house in Brantford, Ontario. Owing to financial difficulties, M.P. and A.P. filed a consumer proposal under the Bankruptcy and Insolvency Act on January 18, 2007. In 2009, they contacted Metro Financial who assisted in arranging refinancing of the then existing mortgages on their home to permit them to pay the amounts owing under the proposal on June 2, 2009.
- In 2010, M.P. and A.P. again approached Mr. Khanna to arrange refinancing of the mortgages against their home.
- Based on their discussions with Mr. Khanna and the limited documentation he provided, M.P. and A.P. understood that Mr. Khanna had arranged a first mortgage with Home Trust Company and a second mortgage was to be provided by 1108456 Ontario Ltd.
- However, a title search reveals that a third mortgage was also registered against the property without the consent or knowledge of M.P. and A.P. Specifically, the title search reveals the following registrations on title:
- On February 22, 2010, a mortgage in favour of Home Trust was registered (Instrument Number BC179230);
- On February 24, 2010, a second mortgage in favour of 1108456 Ontario Inc. in the amount of $16,000 was registered (Instrument Number BC179355); and
- On March 2, 2010, a third mortgage also in favour of 1108456 Ontario Inc. in the amount of $14,500 was registered (Instrument Number BC179734).
- M.P. and A.P. did not consent to nor have any knowledge of the third mortgage in favour of 1108456 Ontario Inc. M.P and A.P. claim that Mr. Khanna asked them to sign papers for different transactions and did not provide them the opportunity to read through the documents. They also claim that Mr. Khanna refused to explain the nature of the documents to be signed or their legal effect.
- Further, no written disclosure to borrower was provided to M.P. and A.P. in respect of the third mortgage and the disclosure provided in respect of the second mortgage was deficient, in contravention of section 6 of Ontario Regulation 191/08.
- Moreover, M.P. and A.P. were never provided with any accounting as to the proceeds of the third mortgage. The only reference to any amount advanced in the records provided to M.P. and A.P. is to an $11,000 amount in a trust ledger statement provided by the lawyer who Mr. Khanna arranged to act on the transaction. This amount is labelled as “Received from client” but M.P. and A.P. never provided any amounts to discharge the prior mortgage. If this amount is actually the amount advanced under the third mortgage, there is no accounting for the balance of the mortgage amount.
- On the disclosure to borrower form for the second mortgage it was disclosed that 1108456 Ontario Ltd was an affiliated company to Metro Financial, however the nature of this affiliation was not disclosed. A corporate search reveals that the directors of 1108456 Ontario Ltd. are Naresh Handa and Shanta Handa, who Mr. Khanna admits are his sisters-in-law.
- M.P. and A.P. were able to obtain subsequent financing to discharge all three of the mortgages arranged by Metro Financial and did not lose their property. However, it is unclear if they have received any funds from the third mortgage.
- Following the initial investigation numerous other complainants were interviewed by FSCO with respect to the business practices of Metro Financial and Mr. Khanna.
- In 2011, J.A. owned a house in Hamilton, Ontario. Due to financial difficulties, J.A. needed to obtain a mortgage on her property. J.A. had a line of credit secured against her home at the time.
- In April 2011, J.A. met with Mr. Khanna to arrange a new mortgage on her property to provide funds for her daughter’s tuition and to pay off other debts.
- J.A. claims that she provided Mr. Khanna with 12 post-dated cheques at this time but did not receive any paperwork with respect to the mortgage.
- One year later, in 2012, J.A. was informed that the balance of her mortgage was due and that she would have to come to his office to renegotiate the mortgage. These terms were not made clear to J.A. when she initially met with Mr. Khanna in 2011.
- J.A. did not agree to renew the mortgage at this time, but was eventually approached by Mr. Khanna who informed her that she was pre-approved for a new first mortgage to consolidate her current debts.
- A title search of the property reveals the following mortgages were registered against the property:
- On April 26, 2011, a mortgage in the amount of $35,800 was registered by Metro Financial (signed by Mr. Khanna) in favour of Shanta Handa (Instrument Number WE755318).
- On September 28, 2012, a mortgage in the amount of $196,000 was registered in favour of CIBC Mortgages Inc trading as Firstline Mortgages (Instrument Number WE859392).
- On October 12, 2012, a mortgage in the amount of $37,430 was registered by Metro Financial (signed by Mr. Khanna) in favour of Dr. Handa (Instrument Number WE861986)
- Although there are commitment and Disclosure to Borrower forms in respect of all three mortgages signed by J.A., J.A. claims that the amounts on the documents for the first mortgage with Shanta Handa were altered after she signed them. Further, there was no disclosure on the Disclosure to Borrower form, or otherwise, of the close family relationship between Mr. Khanna and the lenders, Dr. Handa and Shanta Handa (who are Mr. Khanna’s nephew and sister-in-law, respectively).
- The Disclosure to Borrower form for the second mortgage listed above (Firstline Mortgages) indicates that the principal amount of the mortgage would be $220,000. There is no paperwork in the mortgage file that explains why the mortgage amount was registered on title in the amount of $196,000.
- The Disclosure to Borrower form for the third mortgage was signed on September 17, 2012 but the mortgage was not registered on title until October 12, 2012. Additionally, there was no disclosure of the close family relationship between Mr. Khanna and the lender, Dr. Handa.
- The title search on the property reveals a transfer of charge from Dr. Handa to Veeru Kantoor on May 23, 2013 (Instrument Number WE898994).
- Veeru Kantoor commenced an action against J.A. on May 23, 2013 (Court File Number 13-41350-SR). Default judgement in the amount of $40,033.10 was obtained against J.A. on June 14, 2013.
- On June 27, 2013, Veeru Kantoor obtained an order granting leave to issue a Writ of Possession in respect of the property. In support of the motion for this order, Veeru Kantoor filed an affidavit sworn by Mr. Khanna in which Mr. Khanna again identified himself as “agent for the plaintiff”. Based upon these proceedings, J.A. was forced from her property.
- Further, on October 29, 2013, Veeru Kantoor issued a notice of garnishment to J.A.’s employer and began garnishing J.A.’s wages.
- J.A. left her property in 2013 believing that her issues with Metro Financial and Mr. Khanna were over. However, on April 17, 2015, J.A. was served with a statement of claim by Firstline Mortgages for $197,476.79 (Court File Number 15-52636). Firstline Mortgages obtained default judgement against J.A. on June 8, 2015.
- J.A. subsequently learned that Mr. Khanna had been renting out her property and that title to the property was still in J.A.’s name. It does not appear that Mr. Khanna was making payments on the Firstline mortgage.
- The title search revealed that the property was transferred under power of sale from Veeru Kantoor to Mr. Khanna personally on May 1, 2015 (Instrument Number WE1034061).
- In addition to the aforementioned complaints regarding the mortgages, J.A. states that Mr. Khanna made unwanted advances towards her, offering to “wine and dine” her when her children weren’t home. On one occasion Mr. Khanna invited her into the back room of his office and offered her a drink. She declined his offer.
- In 2011, S.C. owned a property in Stoney Creek. S.C. was in a difficult financial position and consulted Metro Financial to assist with refinancing her property.
- S.C. states that from the information and documents provided by Mr. Khanna, she was under the impression that she was to borrow $34,000 from 1125916 Ontario Ltd. However, the mortgage document registered on title states that the mortgage was for $65,000.
- A title search for the Stoney Creek property reveals that the following mortgage was registered against the property:
- On March 31, 2011, a mortgage in the amount of $65,000 was registered by Metro Financial (signed by Mr. Khanna) in favour of 1125916 Ontario Inc. (instrument number WE751337).
- The title search for the Stoney Creek property reveals that on August 28, 2013, there was a transfer of charge registered by Metro Financial (signed by Mr. Khanna) from 1125916 Ontario Inc. to Veeru Kantoor (Mr. Khanna’s spouse) (Instrument Number WE919152).
- Veeru Kantoor commenced an action against S.C. on August 29, 2013 (Court File Number 13-42897-SR). The claim was for $53,645.76. Default judgement in the amount of $37,442.92 was obtained against S.C. on September 27, 2013.
- In 2014, S.C. gave up vacant possession of her Stoney Creek property and purchased a different property in Hamilton from Veeru Kantoor.
- S.C. was lead to believe that she was no longer the owner of the Stoney Creek property. However, subsequent to this S.C. received a property tax bill for her Stoney Creek property. She alleges that Mr. Khanna never transferred title of her Stoney Creek property out of her name.
- The title search for the Stoney Creek property reveals that it was transferred by power of sale from Veeru Kantoor to Mr. Khanna personally on March 17, 2015 (Instrument Number WE1025325).
2014 Examination of Metro Financial’s Mortgage Files
- In July 2014, a FSCO Senior Compliance Officer conducted an ad-hoc examination of 9 mortgage files prepared by Mr. Khanna. This examination found numerous contraventions of the Act and Regulations. Specifically, the examination found:
- Approximately 20 violations of subsection 31(1) of Ontario Regulation 188/08 regarding incorrect or missing information on the disclosure form for lenders and investors.
- Approximately 8 violations of section 24 of O Reg 188/08 regarding information about the suitability of the mortgage for the customer.
- Approximately 8 violations of section 10 of O Reg 188/08 regarding verification the identity of the borrower, lender and investor.
- Approximately 5 violations of subsection 8(1) of Ontario Regulation 191/08 regarding providing an amortization schedule.
- Violations of sections 6(1), 9(2), 18, 19, 25, 26, 28, 34, 36, 48(4), and 59 of O Reg 188/08, sections 5(1) and 7 of O Reg 191/08, and section 5 of O Reg 193/08.
- During the investigation it was determined that Metro Financial had not disclosed complaints in its 2012 and 2013 Annual Information Returns (AIR), in contravention of section 45(1) of the Act.
- This examination was summarized in a letter to Metro Financial and Mr. Khanna on August 13, 2014. Mr. Khanna responded to this letter on October 2, 2014. The general thrust of the response was that Metro Financial would be in compliance with all requirements in the future.
2015 Inspection of Metro Financial
- In August 2015, FSCO Investigators, assisted by the Ministry of Finance Computer Forensic Investigators and Hamilton Police, conducted an inspection of Metro Financial’s business. During the inspection, original mortgage files were seized, including several that had been created after the 2014 examination and Metro Financial’s response to the examination.
- FSCO staff conducted an examination of the files seized and determined that the files contained over 300 violations of the Act and Regulations.
- Many of the issues outlined above continued to persist on the mortgage files seized through the investigation. Further, additional issues arose from this investigation including:
- Amortization Schedules were prepared by K.A., the receptionist at Metro Financial, who is not a licenced mortgage agent or mortgage broker, though the Amortization Schedule lists her as an agent.
- Numerous violations of section 27 of O Reg 188/08 regarding nondisclosure of the nature of the relationship between the brokerage and the lender.
- During the investigation, a FSCO Investigator spoke with the receptionist at Metro Financial, K.A., about the financial records of Metro Financial. K.A. informed the Investigator that she provides receipts to individuals who bring in cash payments for their mortgages. This further supports the allegation that Metro Financial and Mr. Khanna are acting as mortgage administrators without being licensed to do so, contrary to section 5 of the Act.
- The Superintendent is continuing to investigate the activity of Metro Financial and Mr. Khanna and new complainants have emerged with similar complaints as those above. The Superintendent continues to investigate these complaints and intends to rely upon further information that may be revealed through the investigation into these other complainants to support the revocation of the licences of Metro Financial and Mr. Khanna.
Grounds for Revocation
- The above examples indicate a pattern of manipulation and exploitation with respect to individuals who are in dire financial situations. Metro Financial, through Mr. Khanna, appears to prey on individuals who have no other option, and eventually takes over their property after they inevitably default on their mortgages.
- Metro Financial, through Mr. Khanna, appears to be working in tandem with a group of individuals, including lawyers, a paralegal firm, and numerous family members including his wife, in order to gain title to people’s homes.
- Under subsection 19(1) of the Act, the Superintendent may, by order, revoke a licence in any circumstances in which the Superintendent is authorized to suspend a licence. The circumstances under which the Superintendent may suspend a licence are listed in section 18(1):
- if the licensee ceases to satisfy the prescribed requirements for issuance or renewal, as the case may be, of the licence;
- if the Superintendent believes, on reasonable grounds, that the licensee is no longer suitable to be licenced having regard to the circumstances, if any, prescribed for the purposes of subsections 14(1) or 16(4) and such other matters as the Superintendent considers appropriate;
- if the licensee contravenes or fails to comply with a requirement established under this Act; or
- in such other circumstances as may be prescribed.
- With respect to clause 18(1)(c), Metro Financial, through its principal broker and sole director Mr. Khanna, contravened or failed to comply with numerous provisions of the Act and Regulations as evidenced by the 2014 and 2015 examinations and the specifics of the complaints set out above. Individually, these contraventions are serious, however the magnitude of non-compliance affords ample grounds to revoke Metro Financial’s and Mr. Khanna’s licences.
- Additionally, Metro Financial and Mr. Khanna are administering in mortgages without a mortgage administrator licence, in violation of subsection 5(2) of the Act. This is evidenced by K.A.’s statement to the FSCO Investigator, as well as the statements of several of the complainants above.
- Section 3 of Ontario Regulation 187/08 states that a mortgage broker or agent shall not do or omit to do anything that might reasonably be expected to result in the brokerage on whose behalf he or she is authorized to deal or trade in mortgages to contravene or fail to comply with a requirement established under the Act. As the principal broker and operating mind of Metro Financial, Mr. Khanna contravened this section through the misconduct outlined above.
- In addition, Mr. Khanna is the principal broker of Metro Financial. As such, he has a duty to ensure that the brokerage complies with the requirements of the Act and to remedy any contraventions which do occur (section 2 of Ontario Regulation 410/07). Mr. Khanna has failed to meet these requirements. To the contrary, the evidence indicates that he is the main actor in the misconduct and is personally responsible for the contraventions.
- In determining suitablity to be licensed, the Superintendent is required by subsections 16 (4) of the Act and section 10 of Ontario Regulation 409/07 (for individual licensees) and by subsection 1(2) of Ontario Regulation 408/07 (for brokerages) to have regard to the following prescribed circumstances:
- Whether the individual's past conduct (or the past conduct of a director or officer of the brokerage) affords reasonable grounds for belief that he, she, or the brokerage will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
- Whether the individual or brokerage is carrying on activities that contravene or will contravene the Act or the regulations if he or she is licensed.
- With respect to clause 1 above, the pattern of conduct exhibited by Metro Financial and Mr. Khanna affords reasonable grounds that they will not deal or trade in accordance with the law and with integrity and honesty. Metro Financial and Mr. Khanna have been cautioned by FSCO on several occasions, yet have not altered their business practices to comply with the requirements of the Act and regulations. Their intentional conduct has resulted in significant financial hardship for their former clients.
- With respect to clause 2, it is evident that Metro Financial and Mr. Khanna have a brazen disregard for the obligations under the Act and regulations and continue to carry on activities that contravene the Act and regulations. The FSCO examinations and the complaints reveal a litany of contraventions and a systemic unwillingness to act in compliance with legal requirements.
- Accordingly, the Superintendent proposes to revoke the mortgage brokerage licence of Metro Financial Planning Limited and the mortgage broker licence of Dinesh Khanna.
- Section 19(3) of the Act provides that if, in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21 (the requesting and holding of a hearing before the Financial Services Tribunal), the Superintendent may, without notice, make an interim order suspending the licence.
- The Superintendent is of the opinion that “the interests of the public may be adversely affected by any delay in making an order” and, therefore, the issuance of the interim suspension is necessary. Metro Financial is still in operation and Mr. Khanna is still offering mortgage brokering services to the public. Given the serious and pervasive misconduct outlined above there is significant risk to the public in permitting Metro Financial and Mr. Khanna to continue to offer services to the public
- Accordingly, the interest of the public will be adversely affected by any delay in making a revocation order. The criteria for issuance of an interim suspension order has, therefore, been met.
- For the reasons set out above and such further and other grounds as the Superintendent may advise, the Superintendent proposes to revoke the licences of Metro Financial and Mr. Khanna.
DATED at Toronto, Ontario, December 22, 2015.
Original signed by
Director, Licensing Branch
By delegated authority from the
Superintendent of Financial Services
© Queen's Printer for Ontario, 2015