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Zarar Butt said he was approached by a rich man with a fancy car who made him a tempting offer. ((CBC))

Zarar Butt had never heard of Devinder Shory, let alone that he was the Conservative Member of Parliament for Calgary Northeast.

In his fractured English, the Pakistani immigrant told CBC News he had no idea that Shory is one of the lawyers accused of being part of a massive mortgage fraud scheme.

But what Butt now knows is that in part because of Shory, he is being labelled a "straw buyer" and may be liable for a debt of $158,000.

Straw buyers

IN DEPTH: How does the scheme work?

"I can't pay it," Butt said in an interview at his suburban Airdrie home, surrounded by his wife and four children, aged two months to nine years. "I work 17 years here [in Canada]. I can't pay."

The Bank of Montreal is suing Shory and hundreds of other Albertans over an alleged mortgage fraud scheme that the bank says is costing it as much as $30 million.

The bank claims fraud masterminds recruited people, mostly new immigrants, to be "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 the property.

None of the allegations contained in the lawsuit has been proven in court. Shory has publicly denied any wrongdoing and said he will defend himself vigorously against the bank's accusations.

Lured by rich man

Butt said he was approached by a rich man with a fancy car who made him a tempting offer.

"I don't know, like, how they talk big," Butt said. "Like do me the favour, you will make money, and we just need you and your wife, you just give them your name and you make $25,000."

Butt says he was asked to apply for a mortgage to buy a condo he had never seen. He was told it would be sold after six months and he would get his money. But six months passed and it wasn't sold.

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Calgary Conservative MP Devinder Shory is named in a lawsuit filed by the Bank of Montreal. ((CBC))

"Every day, I ask them, 'Why don't you close the property?' They said, 'We have to separate all the units. There is a lot of units.'"

Butt says he eventually learned the man who had recruited him had moved to Pakistan.

Earlier this year, Butt's application for a credit card was denied because he had a poor credit rating. A land title search shows his name still on the title of a condo in Olds, north of Calgary. He owes the Bank of Montreal $158,000.

CBC News showed Butt and his wife several documents the bank has gathered for the lawsuit. The bank says the documents are fabricated.

The records show the Butts made a down payment on the condo of nearly $10,000. But they say they put down nothing and in fact, never made a single mortgage payment.

The documents show Butt's wife, Sobia, worked as a pizza cook at Amore Pizza in Calgary, while Butt worked at Cargill Meat Solutions in High River. But Sobia has never worked outside the home since coming to Canada and her husband never worked in High River.

Shory accused in at least 5 cases

Civil court documents filed in the Bank of Montreal lawsuit, and obtained exclusively by CBC News, allege the bank was the target of a sophisticated scam operated by 14 interconnected groups that generated at least $140 million, about $70 million of which was for phony mortgages.

The bank's investigators say the scam's ringleaders would buy affordable properties at real market value, but convince the bank the property was worth more. The bank claims it would end up providing a grossly inflated mortgage, and the ringleaders would pocket the difference, known as the skim.

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The civil lawsuit filed against hundreds of Albertans includes thousands of pages of documents. ((CBC))

In the end, the masterminds walk away from the scheme, leaving the straw buyer, who typically has no means to pay the mortgage, or a renter, on the hook. Ultimately, the bank loses when it forecloses on the mortgage.

The bank has sued 17 lawyers, including Shory, alleging they were either directly involved in the scheme or did not perform their due diligence as lawyers. Lawyers would produce the necessary legal documents for the house sale.

The bank alleges Shory executed legal transactions that misrepresented the true mortgage owner of at least five Calgary-area properties. The allegations centre on actions that would have occurred before Shory was elected as an MP in 2008.

The bank claims Shory ran more than $3.7 million through an account that the bank has linked to the fraud.

In the case involving Zarar and Sobia Butt, the documents show Shory did not disclose to the bank that he was involved in a transaction involving a straw buyer.

Butt says he will never get involved in anything like this again.

"The lesson is, I even tell my wife I never give anybody my name in my life. Even [if] my brother came, I don't give him my name to use or buy something."