TORONTO – Romspen Mortgage Limited Partnership and Romspen Investment Corporation have commenced legal proceedings in the Ontario Superior Court of Justice against Canadian Real Estate Wealth Media Corp. and its reporter Neil Sharma, who wrote and published a story that contained untrue and defamatory allegations, including false allegations that the Romspen Mortgage Investment Fund is a “Ponzi scheme.” This was done notwithstanding that the publication was provided with accurate information and publicly available documents regarding the underlying litigation that was referenced in the article.
Romspen has also sued David Franklin for statements made in the article and related defamatory statements published on his website.
This matter arose out of a mortgage loan advanced by Romspen on a property in Austin, Texas. The borrower ultimately defaulted on the loan, and Romspen began enforcement actions. The borrower was petitioned involuntarily into Chapter 11 bankruptcy by other creditors, and as part of the bankruptcy process, Romspen was the highest bidder for the property at a public auction. The entire process was approved by the bankruptcy trustee and the U.S. bankruptcy court, and all matters with the borrower were ultimately resolved and settled almost nine months ago. With Romspen’s cooperation, the unsecured creditors obtained substantial recoveries.
Dan White, a principal of the borrower, and certain of his related entities, guaranteed the loan, and provided further mortgage security in Alberta. Romspen continues to pursue its legitimate contractual remedies against those guarantor parties for the deficiency between what it has recovered to date and what it is owed on the loan. Those guarantor entities started actions against Romspen in both Alberta and Texas in an attempt to avoid their legal obligations to make our investors whole.
“The inflammatory allegations in the published article and on the website appear to be part of a strategy by a defaulting loan guarantor to force Romspen to abandon its claims against the guarantors of the underlying debt,” said Wesley Roitman, Romspen Managing General Partner. We are disappointed that, as part of an ordinary mortgage enforcement, Romspen must defend its reputation against defamation, but we have a mandate to our investors to maximize recoveries in enforcement situations, and will continue to actively pursue this, undeterred by these false allegations.”
“In particular, as the basis for many of the untrue allegations in the article, the reporter quoted from an early court filing of the bankruptcy trustee containing many unproven statements regarding Romspen. The reporter failed to mention that the statements were made in the context of a procedural motion by the trustee, that the bankruptcy trustee largely copied the allegations chapter and verse from the plaintiff’s unproven court filings, and that no evidence regarding the allegations was ever tendered in the bankruptcy case or accepted by the bankruptcy court,” said Roitman. “Most importantly, when the bankruptcy trustee’s plan for the borrower was confirmed by the bankruptcy court in January 2021, all of the alleged claims made by the bankruptcy trustee were withdrawn and resolved in their entirety, including the spurious claims of Romspen’s alleged involvement in the borrower’s management or operations or allegations concerning Romspen’s provision of financing. The confirmed plan is a matter of public record, and the reporter was made aware of the fact that the court confirmation rendered the allegations in the trustee’s motion material meaningless.”
“The Ponzi scheme allegation is a serious matter, but preposterous. It is factually incorrect and an unsupported assertion in a court filing,” said Roitman. “Ponzi schemes don’t invest investors’ money in anything. Romspen invests in mortgage assets, and its multi-billion-dollar balance sheet is audited annually by a top international accounting firm. The other untrue statements in the article are too numerous to rebut point by point, and will be refuted, if necessary, by adducing evidence in the ongoing court proceedings.”
“For over 50 years, Romspen, our employees and investors have conducted our business on the foundations of professional integrity and ethical business practices,” said Roitman. “We are highly disciplined in our underwriting, enabling us to deliver consistent cash yields for our thousands of investors, and have invested over $8 billion in real estate mortgages over the last 25 years alone. We take great pride in our business model and our investors expect nothing less than principled and transparent operations. This includes using all available loan recovery remedies, as any prudent mortgage lender would do, and which is exactly what we are doing.”
“We are confident we will be successful in resolving both the U.S. and Canadian litigation in our favour. In the meantime, we will aggressively protect our reputation when falsely portrayed by others,” said Roitman.
View the Statement of Claim