>> Barry Stevens thought he was making a smart investment when he put his life savings into a syndicated mortgage. A financial product that pools investors money to pay for construction of condominiums, retirement communities, and other speculative projects. For Stevens it was a condominium in Barrie, Ontario sold by Canada's Fortress Real Developments.
A broker told Stevens he'd get an 8% return on his investment. What the broker didn't tell him was that he'd be betting on a high risk project, with the possibility of losing all the money he'd invested.>> I jumped at it, little did I know that when it came time to collect the principle money I put in, wasn't forthcoming
>> Now the 70 year old retiree works as a security guard during the day and an Uber driver at night to pay for his wife's medical bills, Reuters correspondent Matt Scuffham.>> Barry Stevens experience was very typical of a lot of investors that got into this kind of product.
He's a pensioner, he was looking for a better return on his investments than low interest rate bank savings accounts and mutual funds. He went to a self presentation and it was very glossy sales tactics used, he was promised this 8% annual return, told that it was a very safe investment.
And he was basically blown away by the prospect of this, he thought it was a fantastic place to put his money. Unfortunately for Barry he put his entire life savings into this investment and at this point he hasn't received any of his money back. There was also an issue that the fees that were taken by the brokers and by Fortress were not disclosed to investors.
So typically 35% of the money raised would go to Fortress and its brokers, that should be disclosed to the investors at the point of sale, but the investors were totally unaware of it>> It's government says it's not just shady brokers who are to blame, it's also the financial services commission of Ontario, the regulator tasked with scrutinizing them.
>> This is really a problem that goes back to lax regulations by FSCO. FSCO was aware, from the year 2011 on wards, that there were problems with the way this product was being sold. They could have taken action much earlier, but because of their negligence, millions of dollars of investors' money has been put at risk.
>> Stevens now works 12 hours a day, he re-mortgaged his home at a high interest rate, and he suffered a heart attack, that he blames on stress from losing the $300,000 he put in syndicated mortgage investments.