More details about an alleged fraud by a B.C. condo developer were revealed in court as lawyers sparred during an extradition hearing Thursday.
Mark John Chandler of the Langley-based Newmark Group is facing a fraud charge in the United States related to a planned 21-storey condo tower in downtown Los Angeles between 2008 and 2011.
“There’s a line between a real estate developer and someone who commits fraud,” said John Gibb-Carsley, a lawyer with Canada’s Department of Justice, acting on behalf of the U.S. during the hearing.
“We say there are five different instances of fraud in the case,” he said.
Among the evidence collected by FBI investigators were bank records that showed the path of loans and Chandler’s spending afterward.
In March of 2010, Chandler’s partner and investor Dr. Paul Anile borrowed $240,000 towards the project.
After $199,000 of that money was wired to Chandler, money was transferred to a trust. That trust paid for the rental of a $90,000 vacation home in Hawaii days later, with withdrawals from the same account on March 15 at the airport in Hawaii.
Another loan, using the property of investors as collateral, came through on June 17, 2011, with $370,000 coming under Chandler’s control.
“What happened to those funds?” said Gibb-Carsley.
He alleged $32,000 was withdrawn, $51,000 was spent at a Mercedes Benz dealership, and more was spent at Feragamo, Holt Renfrew, and Ferrari-Maserati in Vancouver.
Gibb-Carsley also went through evidence that included the alleged creation of forged cheques made out to Chandler, and a letter claiming to show that a lender was prepared to loan Chandler $3.5 million with an allegedly forged signature.
“This is all to induce investors to invest,” said Gibb-Carsley.
He mentioned that several investors lost property they had pledged as collateral against loans towards the condo project.
One investor also lost cash.
Ketrina Harp was convinced to put up her house as collateral.
But according to Gibb-Carsley, when she offered to put up cash, Chandler went with her to two Chase bank branches, first withdrawing $15,000 at one, then $14,000 at another. She also gave him a cash inheritance she had received.
Ultimately, she lost $87,500.
Harp and another investor, Russell Rhodeman, who put up property as collateral, were allegedly told their land was safe because they were “last on the list” as collateral if the loans defaulted.
Both lost properties.
Chandler also allegedly told investors that he had $35 million coming to him as a result of a Canadian legal settlement, but that the money was tied up by his divorce proceedings.
In fact, Gibb-Carsley said that Chandler was being sued for $35 million, as well as another suit for more than $700,000 for defaulting on loan payments for a yacht.
None of the allegations made by the FBI has been tested in court.
Chandler’s lawyer Michael Bolton spent several hours attempting to show that the FBI case against Chandler is fatally flawed.
“Chandler rents an office for five years, occupies it with Anile,” said Bolton. “Why would he do that if he didn’t have a bona fide intention of developing the Hill Street property?”
He pointed out repeatedly that documents showed Chandler had attempted to purchase the land.
Bolton dismissed the notion that Anile was a victim of fraud, insisting that he was a partner of Chandler in the development.
As for forged cheques or claims of loans, if they existed, Bolton said they didn’t make sense.
“There’s no ways cheques, whatever they were, would induce anyone [to invest],” Bolton said.
On the investors who lost properties and cash, Bolton insisted they weren’t victims.
“Rhodeman, if a victim, is a victim of Anile, and Harp is not a victim because she knew what she was getting into,” he said.
As for the personal spending on vacations, cars, and clothes that followed the loans, Bolton claimed there is no evidence that money from investors was used for that purpose, saying it’s unknown how much money was in the accounts before cash from the loans was transferred in.
“The reliability of the case is very much in doubt,” Bolton said.
Outside of court, Chandler declined to comment on the day’s proceedings.
After a day-long hearing, the lawyers had not completed their arguments, and the hearing will resume on Feb. 9.
Chandler is best known in Langley for his central and key role in the numbered company that developed the Murrayville House condo project. The 91-unit building was to have been finished in 2016.
After multiple lawsuits by creditors were filed, the project was placed in receivership, and a court-appointed firm is currently working out the ownership of the units, and court hearings are scheduled for later this year.
According to the receiver, the Bowra Group, the project owes approximately $62 million to creditors. A recent appraisal suggests it is worth about $38 million.