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Globe & Mail
Oct 15, 2015


Real estate lawyer guilty in 'flip' fraud



A real estate lawyer has been found guilty of mortgage fraud in connection with a dozen Ottawa area properties.

Luigi Savone committed professional misconduct for "participating in or knowingly assisting in fraudulent or dishonest conduct by his clients to obtain mortgage proceeds under false pretenses," the Law Society Tribunal ruled in a recent decision.

The tribunal did not find it credible that Savone was "unaware of the usual features of the transactions which he handled, and in particular, the unexplained and undocumented credits and additional deposits."

Savone should have reviewed and checked statements properly to make sure that they were not fraudulent, but his actions "fell below the standard expected of an experienced lawyer," the decision states.

Instead, the statements contained "clear indications of reverse engineering and fraudulent entries," which were made so transactions could close on a "no money down" basis.

The 12 properties were scattered in the Ottawa and surrounding area, including Nepean, Almonte, Vanier, Rockland, Fitzroy Harbour and Smiths Falls.

An analysis of transactions heard that "each of the flip transactions began with a legitimate acquisition transaction, before the same property was "flipped" in an allegedly fraudulent second transaction.

Savone testified that he did about 50 real estate transactions a month, and that most of his clients came from referrals.

He testified there were "no alterations to the documents in the transactions he was involved with, and that all documents were registered and part of the public record and all land transfer taxes required to be paid were paid," according to the tribunal.

Yet the tribunal ruled otherwise, finding he is guilty of professional misconduct, contrary to the Law Society Act.