MP excluded from fraud

Legal counsel for the Bank of Montreal told a Calgary court on Friday that none of the lawyers named in a massive lawsuit over alleged mortgage fraud is being accused of actively taking part in the scheme.

CALGARY — Legal counsel for the Bank of Montreal told a Calgary court on Friday that none of the lawyers named in a massive lawsuit over alleged mortgage fraud is being accused of actively taking part in the scheme.

Munaf Mohamed told a hearing the bank accuses the lawyers of negligence, not fraud.

“We do not allege impropriety against any of the lawyers who are named in this action,” he said in response to a question from Justice Adele Kent.

Calgary lawyer and backbench Conservative MP Devinder Shory is among the dozens of defendants listed in the lawsuit.

The Bank of Montreal alleges that some of the defendants bought houses that cost less than average in upscale neighbourhoods, then forged papers to make the houses seem to be worth as much as others in the area.

The bank says the fraudsters paid people known as “straw buyers” a few thousand dollars to put their name on a mortgage application and then forged more documents to make it look like the straw buyers had the ability to pay.

Once the mortgage was approved, the fraudsters pocketed the difference between what they paid for the house and the mortgage they were able to get, the bank alleges, and the money was then sent overseas.

The allegedly fraudulent mortgages were worth around $70 million and the bank says it expects to lose around $30 million.

The allegations have yet to be proven in court. There have been no criminal charges laid.

BMO (TSX:BMO) confirmed in a statement Friday that it is not alleging fraud against Shory.

“We allege that he was negligent in the way he acted as counsel for both the bank and the straw buyer in four transactions in which the bank has suffered a loss of approximately $300,000,” reads the statement.

“Our claim against Mr. Shory in his capacity as a lawyer is no different than the claims against other lawyers in this action.”

Shory has said that he has done nothing wrong and will defend himself vigorously against the accusations.