Home buyers at two Barrie residential projects have received assurances after developer StateView Homes was recently accused of multi-million-dollar fraud.
Toronto Dominion (TD) Bank launched a $37-million lawsuit against Woodbridge-based StateView Homes, alleging it wrote thousands of bad cheques for large sums from corporate and personal accounts at other banks, according to TD’s statement of claim filed in the Ontario Superior Court of Justice in Toronto on March 24, 2023.
“TD is the victim of a fraudulent cheque kiting scheme,” reads the lawsuit obtained by BarrieToday. “The StateView defendants were active or complicit participants.”
Among those named in the statement of claim are Carlo Taurasi, chief executive officer and president of StateView Homes, his brother Dino Taurasi, who's also StateView president, and Daniel Ciccone, StateView’s chief financial officer.
The allegations have not been tested in court.
As of May 12, StateView had not filed a statement of defence.
StateView Homes is involved in a pair of Barrie residential developments.
Near Ardagh Road and Wright Drive, StateView’s website says the project is 218 townhouses, known as BEA Towns, and is fully reserved.
Also at Ardagh Road and Wright Drive, Hampton Heights is to be 17 detached homes. They are under construction and sold out, the website says.
StateView Homes officials could not be reached for comment by BarrieToday, but did issue statements answering some questions.
The company was asked how this lawsuit will affect those who have bought or invested in Hampton Heights or at BEA Towns, and how this legal action will affect the construction and completion of these projects?
“Construction will be continuing at Hampton Heights,” Stateview said in its statement. “Should there be any further change in the status of construction or closing dates, (the purchasers) will be notified directly by StateView Homes with an update. Our first set of homeowners at Hampton Heights are tentatively scheduled to move in mid-2023.”
This information was sent to Hampton Heights homeowners on May 8, according to StateView.
Regarding BEA Towns, the project is currently in receivership with KSV Restructuring, which was appointed by the courts, StateView said.
Notification was sent to homeowners on May 5 by KSV, according to StateView.
“The receiver (KSV) is currently reviewing the status of each of the projects and, at present, no action has been taken by the receiver with respect to any of the projects or any purchase agreements between the companies and the home buyers on any of the projects,” the notification reads. “The receiver will provide further updates as soon as possible.”
StateView was asked how this information is being communicated to home buyers.
StateView said Hampton Heights home buyers were communicated with by email on May 8 with an update regarding the project and that the developer would be in touch directly to those home buyers, should there be a change in the status of construction or closing dates.
BEA Towns home buyers were communicated to directly by KSV on May 5, and KSV will contact home buyers with new information and updates as it becomes available, according to StateView.
From April 2022 to March 2023, TD says in its lawsuit that its bank accounts associated with the StateView defendants engaged in an "unusual" series of cheque transactions emblematic of what's referred to as cheque kiting.
One of the StateView defendants would deposit a cheque for a large sum from one of its other bank accounts, the lawsuit alleges, and TD would conditionally credit the StateView defendant's account with the amount of the cheque.
Immediately upon deposit, a StateView defendant would use the conditional credit from TD to disburse the funds, either through another cheque written to a different StateView defendant or to a third party, a wire transfer, or an inter-account transfer into another TD account held by a different StateView defendant, the statement of claim alleges.
A ‘stop payment’ would then be issued on the fraudulent cheque, the lawsuit says, prior to TD obtaining final settlement of the cheque through the automated clearing and settlement system.
In order to evade detection and to temporarily avoid an overdraft in the account, the lawsuit alleges, the StateView defendant would enter into another "sham transaction" to create the illusion of fresh funds coming in, either through the deposit of another bad cheque into the account or through a transfer using a conditional credit provided by TD in another of its TD accounts effected through a fraudulent cheque.
By March 2023, the lawsuit says, the TD bank accounts associated with the StateView defendants accumulated more than $37 million in overdrafts, as the StateView defendants would fund their business and pay themselves through the conditional credits provided by TD through the bad cheques.
The overdrafts were created through a series of cheques and wires paid to accounts of the StateView defendants held at other financial institutions, the statement of claim alleges, and payments made to third parties as part of their home construction business.
“The result was that the StateView defendants enjoyed over $37 million of unauthorized credit at TD's expense,” the lawsuit reads. “Cheque kiting is inherently fraudulent. There is no valid commercial purpose for the timing of the fraudulent cheques and impugned transactions.”