Another property investment scam in Alberta?

Investors allege a $160-million conspiracy at Platinum Equities.


Offering 6% annual returns, the limited partnerships in office buildings and other properties promoted by Calgary-based Platinum Equities never seemed too good to be true. They sounded like solid, income-yielding investments to some 2,200 investors, including Larry, 67, who asked that his last name not be used. The retiree felt that, with his decades of experience as a mechanical contractor, he understood real estate.

“The [Platinum] presentation was no big mystery,” he says. “Here’s a building, here’s a mortgage, here’s tenants, tenants pay rent, rent pays mortgage, there’s money left over.” The promised return “was not fantastic. But I said, ‘Hey, that’s OK. Six per cent over the long haul and a mortgage paydown and building appreciation. I’m pretty comfortable doing that.’”

He’s not comfortable now. On Sept. 10, Larry joined 500 disgruntled Platinum investors at a Calgary church hall where many signed on to a $160-million class-action lawsuit against Platinum. The investors allege Platinum’s deals in some 20 projects in Western Canada went bad not because of market conditions but corruption.

A statement of claim filed by law firm McGuigan Nelson LLP alleges, in essence, that Platinum CEO Shariff Chandran and his sister Chitra Chandran, a director, colluded with Calgary businessman Riaz Mamdani to drive Platinum properties into bankruptcy. At the time of writing, none of the defendants had filed a statement of defence.

Mamdani is the CEO of Strategic Group, which claims to be the largest private landlord in Calgary. A company spokesperson denied the accusations levelled at him, saying, “We are victims of this fraud similar to the limited partners.”

Companies under the Strategic umbrella owned mortgages on every property Platinum acquired, according to the plaintiffs’ statement. Platinum sold investors $25,000 or $50,000 partnership units in those holdings as exempt securities, without a prospectus.

Platinum proved a shoddy manager. Buildings began losing tenants and revenue. In time, Mamdani foreclosed on loans Strategic entities made to Platinum and bought back buildings at much-reduced prices, say the plaintiffs. Many lost their entire investment.

If this sounds familiar, it is. Earlier this year the Alberta Securities Commission sanctioned four principals for offences related to the 2009 collapse of Calgary-based Concrete Equities. One of them, Dave Humeniuk, was fined $3.3 million, the heaviest individual penalty ever levied by the ASC. According to the Platinum plaintiffs, Humeniuk also sold Platinum securities and is named as a defendant in that lawsuit. Strategic Group was also involved, though never implicated, in the Concrete affair, and ended up with two of Concrete’s buildings.

And there have been still more, unrelated property investment debacles in Alberta since the market correction in 2008. Real estate accounts for about 8% of all deals done through the exempt market, says ASC chairman and CEO Bill Rice. “Obviously, we are seeing a disproportionate number of problems arise in that one industry.”

On Sept. 12, the ASC issued a notice of hearing against Shariff and Chitra Chandran and another Platinum employee alleging that between 2005 and 2010 they illegally sold securities and made misleading statements regarding their safety and profitability. Kevin McGuigan, lawyer for Platinum’s investors, hopes publicity surrounding the case will serve as a warning to others. But removing the rot from Calgary’s property market is far from done.

4 comments on “Another property investment scam in Alberta?

  1. Big deal they pilfer millions and get fines that they will never pay.The writer of this article should contact the ASC and find out how many of these fines are paid.None.

  2. I like getting the letters, but please usually do not go telling folks they are heading to receive about one particular a week. We have been lucky to get 1 a month. You need to do a little better than that….or halt the pinocchio stories at the very least. If a single a month is what it is, then that’s what it is.

  3. Do you know how I avoid duplicate iCal alerts? (Apple support does not, so far…) I think b/c of iCloud calendar sharing between my husband and i, I’m getting two alerts for every event on the iMac and on the iPhone. every little thing is up to date and i possess a new MacBook Pro and the new iPhone 4s.

  4. It isn’t often easy to remain optimistic, but encompassing myself with great mates as well as a suportive household generally causes it to be less complicated. I remind myself frequently that each day is really a present, and we have been lucky to wake up each early morning and consider portion in it…