A Winnipeg man who immigrated to Canada from India and built his fortune in business here says he has now lost his wealth after his dealings with a local real estate broker, David Douglas.
Bankim Patel described his relationship with Douglas in an interview with CBC News.
Patel and his wife decided to lend more than a million dollars to Douglas in a series of loans over a period of two years.
“We trusted him. We all trusted him…..because he was successful,” Patel said.
“And now he's not paying us back. Basically all of our livelihood is gone,” said Patel, who recently had to move his family out of their home in Tuxedo, which is now for sale.
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Earlier this year, Patel filed a lawsuit against Douglas and Douglas responded with a counterclaim.
The CBC News I-Team has been investigating complaints about Douglas, who had been advising people on how to get rich through real estate investments.
Douglas is the subject of an investigation by the Manitoba Securities Commission, which regulates real estate professionals and mortgage brokers.
Grocery store owner worked hard to succeed
Patel said he came from humble beginnings.
“I came in 1979 [to] Canada here. I worked at McDonalds and Burger King and then I…. was a part owner of an A&W. And then I was owner of retail store, a grocery store. Three retail grocery stores,” Patel explained.
He said he and his wife worked day and night. They continued to build their small empire, buying a Robin’s Donuts Franchise, commercial properties, and then another franchise, a Second Cup.
It was in one of his coffee shops where he met Douglas.
Patel said Douglas started asking him to become a private lender for people with bad credit but who want to own a house. He said Douglas would make a cut on the deal. And he added he found the idea intriguing.
"He said you can make a profit out of that."
Patel said in court documents he and his wife entered into 40 to 50 such loan agreements, all arranged by Douglas.
But Patel said he didn't like the experience.
“Some people never paid us for two years,” Patel explained.
“It was hard on us. We weren’t able to do that kind of work. Kicking people out and stuff.”
“At the same time the bank changed the rules too, in 2008 you know,” he said. “So we stopped doing it completely.”
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"We trusted him"
After that, Patel got involved in a different kind of deal, one in which he would lend money to Douglas so he could invest in real estate.
Patel said he lent Douglas and his company about $1.8 million between 2009 and 2011.
He and his wife signed promissory notes saying Douglas would pay interest in monthly instalments "at a rate of 29.5 %" and repay the "entire balance" at the end of the term.
“He came up with a promissory note,” Patel said, adding Douglas said he would give the Patels a personal guarantee.
“So we didn't ask anybody. We did it. We trusted him,” noting he had done business with Douglas for several years at that point.
Patel said that at first Douglas paid monthly, with post-dated cheques. But in January of this year the cheques started to bounce.
After trying to resolve things with Douglas for months, Patel turned to the courts.
"A nightmare for us now"
“It's a nightmare for us now. We cannot sleep, nightmares, worries, what is going to be happening now," Patel said.
“We give him money, our money. We want our money back. That’s what we're asking for," he said.
Last month the court ruled that it was too early in the proceedings to determine if Douglas should repay the principal of loans.
However, the court ruled Douglas should pay the Patels $262,000 in interest and dismissed the counterclaim by Douglas and his company.
In court documents Douglas said “it was the Patels who approached him indicating that they had significant funds to invest for private mortgages.”
Douglas’s court documents state there is no provision in the agreements allowing the Patels to "make claim for payment of principal and interest owing after default."
Douglas’s statement of defence says the first loan doesn’t come due until December of this year and the rest will be due over the following three years.
“Prior to David Douglas filing affidavit material, it would have appeared that the Patels were victims of a friend whom they trusted,” Douglas said in his motion brief. “The evidence however establishes that rather than being dupes of David Douglas, the Patels were sophisticated lenders of money having done this on numerous occasions and historically being the primary beneficiaries of these schemes.”
They were not victims, but "active and willing participants"
“The Patels were never victims of any scheme put forward by Mr. Douglas… they were active and willing participants,” said the Douglas court document.
But CBC News has learned others have also signed promissory notes with David Douglas, including students, senior citizens, bankers, and even a teacher from Saskatchewan, Andre Sirieix of Air Ronge, Sask.
Sirieix told CBC News he heard of Douglas through a friend.
Sirieix lent Douglas $40,000 in February of 2010.
He said he received some post-dated cheques from Douglas. Then they stopped.
"I know some people put all their saving in there so they are to zero now. So I'm quite lucky in my bad luck,” Sirieix said in an interview.
“I don't mind [if people] know that I was fooled. But I just want to stop him. That's it."
As for the Patels, they've obtained an order for examination demanding Douglas attend their lawyer’s office and produce evidence of his assets.
CBC News has been unable to speak with Douglas despite repeated attempts. His lawyer declined to comment.
Douglas and his company Abacus Mortgage Group were registered with the Manitoba Securities Commission as mortgage brokers but the registrations were suspended May 31, 2013 for failure to renew.