Dozens of boxes related to a mortgage fraud lawsuit are wheeled into the Calgary courthouse on Friday. (CBC)

A rare court order in a civil lawsuit over an alleged multimillion-dollar mortgage fraud scheme granted searches and evidence seizures without advance notice, it was revealed in a Calgary court.

Hundreds of binders and boxes were rolled into the Calgary courthouse Friday as the Bank of Montreal proceeded with its lawsuit against hundreds of Albertans over the alleged scam.

Most of the motions being dealt with are procedural. But the dozens of lawyers and volumes of documents — with boxes stacked almost two metres high in the courtroom — underline how complicated the alleged scheme may be.

The BMO claims the scheme generated $70 million in fraudulently obtained mortgages, costing the bank $30 million in potential losses. It is believed to be the biggest mortgage fraud in Canadian history, according to court documents first uncovered by CBC News.

Court of Queen's Bench Justice Adele Kent pointed out on Friday that the lawyers named in the case are being sued for negligence, and are not implicated in the alleged fraud.

In just the second day that the case has been in court since documents were unsealed, it was revealed that a judge issued an Anton Piller order, a rare directive that allows premises to be searched and evidence to be seized without prior warning, mainly to prevent the destruction of incriminating evidence.

'Prejudging things is difficult at an early stage just based on allegations and some incomplete evidence.'—Brian Clark, defence lawyer

Mortgage documents stuffed in a child's backpack, as well as other receipts and records in duffle bags and suitcases were seized, James Bancroft, an independent counsel hired to oversee the bank's seizure of documents from the alleged masterminds, told the court on Friday.

A briefcase was also found. It was filled with cash, passports, more than 10 watches, diamond earrings, and dozens of chequebooks for U.S. and Canadian accounts.

Officials also seized computers, CDs and a bag full of keys.

The case already boasts 35,000 pages of information. One defence lawyer complained that he can't get paid since his client's bank accounts have been seized.

"There's a massive number of defendants and a lot of information to digest, but the matter's still in its early stages. I think it's important to remember that a statement of claim is a collection of allegations," said Brian Clark, a lawyer representing a party named as an alleged mastermind.

"Prejudging things is difficult at an early stage just based on allegations and some incomplete evidence."

Proceeds wired overseas

The BMO alleges ringleaders would buy properties at market value but convince the bank they were worth much more and subsequently obtain a grossly inflated mortgage. The masterminds would then pocket the difference.

The bank alleges the ringleaders recruited people, mostly new immigrants, to be to "straw buyers." For a payment of up to $8,000, these straw buyers would allow their name to be used to obtain the mortgage on a property.

Eventually, the ringleaders walk away from the scheme, leaving the straw buyer on the hook. The bank usually loses when it forecloses on the mortgage.

The allegations, which name straw buyers as well as lawyers including Calgary MP Devinder Shory, have not been proven in court.

Court documents show some of the apparent proceeds of the alleged scheme were transferred to overseas accounts.

With files from the CBC's Brooks Decillia and Alison Myers