The distance from the gleaming towers of Canada’s financial district is not just physical: horses, feed stores and winding roads surround First Leaside. The large, black-gated property that housed First Leaside Group of Companies was also where the firm’s chief executive, David Phillips, lived.
Yet, about 1,200 investors, some in the prime of their professional lives and others in retirement, poured their savings into the unlikely spot, to the tune of some $370-million.
In reviewing how they came to invest in First Leaside, which owned and was refurbishing multi-unit real estate properties in Ontario, British Columbia and Texas, some investors now wonder why they received so many phone calls — or cold calls — trying to entice them. Others who were referred by family members or co-workers remark now that the firm’s operations did not resemble a typical investment office.
First Leaside was run from buildings on a property in rural Uxbridge, including the home of Mr. Phillips, the firm’s co-founder and chief executive.
In light of the revelations in the Grant Thornton report, some investors with their life savings on the line say they think the regulators were too slow to act. They wonder why they were able to make investments in First Leaside in the first place, especially since they have now been told protection under the Canadian Investor Protection Fund that comes with IIROC membership may not apply to them.
- read the details in ‘Investment firm First Leaside Group seeks protection, as former clients raise spectre of Madoff’, by Barbara Shecter, Financial Post, 25 Feb 2012 and ‘First Leaside enters creditor protection’, FP, 23 2012
Thanks for the links to the above via e-mail from ‘CM’, who adds:
“This jumped out at me:
But, according to the court filings, the economic downturn created or exacerbated problems at First Leaside, where real estate investments were highly leveraged as a result of the business model.
“Unfortunately, due to the recent recession and its negative impact on the real estate markets in Ontario, British Columbia, and Texas, it has become difficult to achieve First Leaside’s estimated rental revenues,” the court document states.
Maybe everybody bought and there was nobody left to rent to? Also:
In a startling series of revelations beginning in early November, First Leaside told investors that a probe by regulators had resulted in a curtailing of the firm’s operations.
The regulatory concerns came with a warning that it was “not appropriate to be using money raised from new investors to fund operating losses, rehabilitation costs and distributions to existing limited partnerships.”
It sounds like it started out legit, then as the losses stacked up, new money was used to plug holes in older accounts. Same old same old.”
On September 8, 2011, First Leaside also acquired The Shores Retirement Residence, Cherry Park Retirement Residence and Orchard Valley Retirement Residence in British Columbia from PrimeTime Living for an aggregate purchase price of $25.4 million.
The purchase price for the British Columbia properties was paid in cash and financed by a $19.4 million mortgage provided by The Toronto-Dominion Bank.
- Borden Ladner Gervais website
[Any other known BC projects for First Leaside? -ed.]
Archived here because any news associating ‘BC Real Estate’ with distressed investors, and words like ‘Madoff’, is noteworthy at this time, given the developing skittishness and widening acceptance of the existence of our ‘bubble’.