November 6, 2018
Money Gate Mortgage Investment Corporation, a North York, Ontario-based mortgage investment corporation, was placed in receivership on November 6 on application by the Ontario Securities Commission ("OSC"). Between 2014 and 2017, the company raised approximately $11.0MM from approximately 155 investors. These funds were then pooled and loaned to borrowers, which loans were secured by residential and commercial mortgages. It is alleged, however, that the company was operating a far riskier mortgage investment business than the one represented to investors. Morteza Katebian and his son, Payam Katebian - the company's principals - are respondents in an enforcement proceeding before the OSC, in which it is alleged that they defrauded investors through misrepresentations contained in disclosure documents and committed other violations of Ontario securities law. In April 2017, the OSC obtained a temporary cease trade order, which is still in effect and which prevents the company from raising any more capital. The company later advised investors that it was winding down its operations; despite this announcement, however, the company continued to make loans and it is alleged that the principals diverted over $1.3MM in corporate funds for their personal benefit. As a result of this recently discovered evidence, the allegations in the OSC proceedings have been expanded to include fraud. In October 2018, the OSC issued a freeze direction. Grant Thornton was appointed receiver and manager. Jamie Gibson and Dihim Emami are counsel to the OSC.