Adviser alleges he was ‘duped’
Caicco says he was persuaded by name, religion, but Assaly denies any wrongdoing
The financial adviser who recruited investors for two real estate projects promoted by Thomas G. Assaly that are now the subject of a court-ordered investigation alleges he was duped by Assaly’s assurances and his “religious transformation.”
“He took advantage of me,” Patrick Caicco alleged in an interview. Caicco — then running Advantage Wealth Building Strategies, a company he started in 2008 — raised more than $3.3 million from clients in 2009 and 2010 for the two Assaly projects.
One, billed as Ottawa’s first gated community, was called Nature’s Walk and included 20 condominium units on one-acre lots and a private nine-hole golf course. It was to be built on Assaly’s 56-acre farm near Kemptville and an adjacent 100-acre area of wetlands.
The other project, Villa Montague, involved the renovation and expansion of an existing retirement residence just outside Smiths Falls.
Neither project has proceeded, though Assaly offered to revive scaled-down versions of both in a settlement offer earlier this month.
Pursuant to an application under the Canada Business Corporations Act by 27 of the 44 Assaly investors, Superior Court Judge Paul Kane appointed Ottawa firm Doyle Salewski Inc. as inspector Feb. 6 to gather information, report its findings and make recommendations.
The investigation is ongoing and Kane has made no findings of wrongdoing to this point. Interim reports filed with the court by the inspector, Doyle Salewski, remain under a publication ban. None of Caicco’s allegations have been proven in court.
The 56-year-old Assaly — the eldest son of legendary Ottawa developer Thomas C. Assaly, who died in 2007 — strongly denied any wrongdoing in an affidavit filed with the court in March.
“At no time did I misappropriate any investor funds for my own personal use or benefit,” he said in the sworn statement. “All of the investors’ funds were spent on the projects they invested in and for no improper purpose.”
When he first met Assaly, Caicco said he was more interested in Assaly’s character than his projects. Assaly, a devout Roman Catholic and born-again Christian, “shared his transformation story,” he said.
Caicco, a 58-year-old evangelical Christian, was impressed but wanted to verify his positive impression. He had Assaly meet two of his mentors to get their take. “They said it looks like he’s made a huge transformation in his life.” That provided the reassurance he was looking for, Caicco said.
Caicco alleged that Assaly “represented himself as the successor of the Assaly name.” During his lifetime, the family patriarch, Thomas C. Assaly, built a development empire that produced 14,000 housing units and was Ottawa’s second-largest developer at its peak in the 1980s.
His son, Thomas G. Assaly, “made me feel he did a lot of the stuff for his dad,” Caicco alleged. “He raised money for his dad, he worked on projects for his dad. He was like his dad’s right-hand man.”
Moreover, Caicco alleged that Assaly told him he had “tons of money. He painted himself as the Howard Hughes of Ottawa.” So when Assaly presented the idea for Nature’s Walk, Caicco never doubted he could do it.
“Nature’s Walk was an awesome idea,” he said. “It had sex appeal. I fell in love with the concept, fell in love with the fact that here’s a guy that’s done all kinds of developments with his father. I felt really good about it. When I was talking to my clients, certainly my enthusiasm was pretty high.”
In a statement emailed to the Citizen Friday, Assaly alleged that Caicco originally approached him “to determine if I had any interest in working with him on real estate investments, since he had recently left his employment at the Royal Bank and he wanted to generate new business that would generate commissions for him.”
All the investors were friends and clients of Caicco “who knew their personal financial circumstances and risk tolerance levels,” Assaly alleged. “At no time did I meet or solicit any of these investors. I relied on Caicco’s representations that the requirements of the Ontario Securities Regulations were met.”
Assaly alleged that Caicco signed as the witness to the investors’ signatures on all the agreements, all of which “noted that the investor funds would be used to purchase the development properties (including my house and farm).”
Caicco, who acknowledged earning about $150,000 in commissions for recruiting investors in the two projects, said he thought they represented a good investment opportunity, and “perhaps still do. Kemptville is a growing community and a retirement project such as Nature’s Walk looked to be an excellent concept.”
As for Villa Montague, “studies showed that the need for an assisted living resident’s home would have worked,” he said. “I have raised money for other retirement living developers in the past and knew the success that would result if managed properly.”
Caicco alleged that Assaly needed someone like him to raise the money. “He took advantage of my salesmanship and my professionalism and my trust factor,” he alleged. “I really feel that he duped me big time.”
At the time, there were no signs of trouble ahead, Caicco said. “We’d have meetings about Nature’s Walk, how unbelievable this project’s going to be, how it was going to be the best real estate investment in Ottawa in years.”
Meanwhile, Caicco’s confidence in Assaly’s ability to deliver was off the charts. “I had no doubt in my mind that he was going to pull this off,” he said. “He’s the consummate, confident guy. If you add a faith journey along with that, it adds up to a pretty high level of trust.”
It wasn’t until 2010 that Caicco started to have doubts. Rob Lunan, another “good Christian guy” who Assaly had hired as his bookkeeper and comptroller, told Caicco that things weren’t as they appeared, he said.
Still, when Assaly proposed the idea of buying a rundown seniors’ home near Smiths Falls and renovating and expanding it into a luxurious modern retirement residence called Villa Montague, Caicco said he essentially doubled down his bet on Assaly.
“I saw that as a lifeline to the Nature’s Walk clients,” he said. “The way it was pitched to me and the team was that once Villa Montague was renovated and the project completed, the project was going to be worth $7 million or $8 million.
“I remember saying to Tom in a couple of meetings, ‘That will be awesome because we can leverage that property to get investors out of Nature Walk or maybe even have them switch their security to Villa Montague from Nature’s Walk.’ ” Caicco subsequently raised $1.5 million from his clients for Villa Montague.
When Lunan abruptly resigned on March 1, 2011 — alleging that Assaly wasn’t following accounting rules in an email filed as an exhibit with the investor group’s application — Caicco’s level of concern escalated. “It was panic, but not freaking-out panic,” he said. “More like, ‘This is not good. I better be more hands on.’ ”
Caicco alleged he started asking Assaly more hard questions about the projects. He and other members of Assaly’s team discussed their concerns. “We kind of kept Tom’s feet to the fire a bit more.”
Even though promised dividends and interest payments to investors had stopped, Assaly reassured them all was well, Caicco alleged. “Tom’s the king of spin-doctoring. He’d make you feel, ‘ OK, that sounds good.’ But at the end of the day, he kept everything close to his chest. We didn’t know what was going on.”
When Assaly announced in November 2011 he would not make a scheduled mortgage payment on the Nature’s Walk property, “My worst nightmares were realized,” Caicco said. “I decided it was time for action.”
He alleged he began devoting all his time to recouping his clients’ investments, neglecting the rest of his business. “I basically spent my waking hours trying to figure this out. I was working my butt off trying to put this thing on the rails.”
Those efforts meant his income essentially dried up, forcing him to declare personal bankruptcy last June, Caicco said. “My financial world was devastated.”
After a friend advised him to get a receiver involved, Caicco said he pitched the idea at a meeting of investors in January 2012. “It sounded like they were ready to move forward.”
The investors later decided they might be better off launching a lawsuit, Caicco said. He knew that was a bad idea, he said. “I still believed the receiver was the only way to get their money back.
“I have been the front-runner in trying to get this resolved,” Caicco alleged. “If it wasn’t for me, (the investors) would have had zero chance of getting any money back.”
Even so, Caicco said he feels responsible because he introduced his clients to Assaly. “I don’t feel like a hero,” he said. “I’m always going to feel responsible. I don’t like losing people money.”