Take a spin on a financing merry- Merry-go-round
A mesh of mortgages led to limbo for investors, condo owners, church congregation
Safety may have been top of mind on Feb. 22, 2012, the day Leduc’s Fire Department ordered the evacuation of the Bellavera Green condos. But as nearly two years of court cases show, the development’s biggest problem wasn’t structural, it was millions of missing dollars.
The second stage at Bellavera stalled soon after the foundation was poured, leaving fire alarms and sprinklers disconnected, and piles of garbage behind. Leduc officials warned about “critical life-safety concerns” three months before the order, but the problems clearly weren’t getting fixed.
At Edmonton’s Court of Queen’s Bench, Justice Dennis Thomas was sorting through a host of competing claims.
“This is such a blooming mess,” one lawyer told Thomas on Jan. 23, 2012. “I’ve never seen anything as difficult as this, as twisted up as this.”
Mortgage companies were owed millions. A former developer had an $8-million caveat on the property. And despite sales worth tens of millions of dollars, condo purchasers had titles marred by outstanding liens and debts. None of it added up.
The man at the centre of those claims, developer Kevyn Frederick, had been ordered to appear for questioning at a TD Tower law office in mid-December 2011. A man with a penchant for ivory suits and flashy cars, Frederick was facing a barrage of legal claims, all of which threatened to dissolve a nearly $100-million real-estate portfolio he had assembled over two years of wheeling and dealing.
Two blocks away, the 24-storey Crowne Plaza Chateau Lacombe hotel Frederick bought a year earlier for $47.8 million was in receivership. Foreclosure had claimed his $1.4-million Leduc County estate, sports cars and luxury sedans, a dune buggy, snowmobile, racing bikes and other property. Writs had been ordered to cover many possible aliases, involving variations on his first, middle and last names: Kevin or Kevyn, or Portia, Ronald and Sheldon, Frederic or Frederick or Fredericks.
Frederick told the lawyers a basement flood had wiped out his financial records. There was no more money to pour into Bellavera’s first phase, let alone finance three additional stages promised in glossy brochures and a YouTube video.
Later, after the evacuation order became headline news, Frederick would tell a different story to a Global Edmonton reporter, voicing “shame, sorrow, and utter dismay of the disaster which is Bellavera Green.”
“As CEO of Bellavera Green, I take full and utter responsibility,” he said on March 1, 2012. “I am liable and my company is liable.”
It may have ended with an admission of culpability, but Frederick’s connection to Bellavera began nearly five years ago in an unlikely place — a white-stuccoed suburban church in south Edmonton.
According to court documents, Frederick attended only a few services at Victory Christian Center Inc., an aging-but-bright sanctuary on an eight-hectare chunk of prime real estate at 11520 Ellerslie Rd. But in personal meetings with Cal Switzer, the pastor, president and founder of the prosperity-themed church, Frederick pitched an $18-million landand-cash exchange.
The deal looked like a winwin. Switzer had ambitions to grow Victory; to move its services, Bible college and K-12 private school into a brand new facility farther into the suburbs. The church received $2.8 million and a 32-hectare chunk of land in Leduc County up front. Another $12.3 million would come once Frederick transformed the old land into Victory Green Common, an eco-friendly mixed-use development, which according to videos released a year later, would house 14 condo buildings, an outdoor rink, a small lake and green space.
The August 2008 deal was supposed to be guaranteed by a mortgage defaulting the land back to the church if something went wrong. However, within a few days, Frederick mortgaged half of $12.3 million to Ram Singh, his future partner at Bellavera, and the remainder to his other holdings.
In April 2009, Victory doubled down on Frederick without hiring a lawyer for the deal, agreeing to finance plans to buy out a partner at Bellavera Green so Frederick could pay off his debts. Switzer signed away what the church had received earlier: $2.8-million and a $2-million mortgage on its new land.
The mortgage went to Kasa Developments, the company that owned the Bellavera land and its preliminary plans. On April 15, 2009, a week after the mortgage were signed, Frederick flipped the land to Singh for $2.8 million, signing a $25-million option later that month to buy it back after the first phase was finished.
Singh hired engineers, an architect and a general contractor, negotiating with the City of Leduc to expand the project. Construction began that summer, and by the next year, the first phase was nearly 85 per cent complete. Frederick remained involved, appearing at photo ops and publicly identifying his company as the project’s developer.
Other deals were on Frederick’s radar. In August 2010, he leveraged the Victory property into his biggest acquisition yet, the $48.7-million Chateau Lacombe hotel. The Victory land was collateral for a $32-million mortgage. Another company loaned him more than $11 million.
Singh signed the first phase of Bellavera over to Frederick’s newly formed company, Bellavera Green Condominium Corporation. The May 2010 deal was for $10 million plus costs to finish the first phase, to be recouped through condo sales. Meanwhile, Frederick mortgaged Bellavera, negotiating loans from two companies: $4 million from Ironwood Financial Services and over $12 million from TCC Mortgage Holdings.
Highly leveraged in a fragile economy, Frederick still looked like a man with money to burn. He bought and sold luxury cars — Lamborghinis and Mercedes — and loaned his Crowne Plaza company car to a friend in Toronto. He played at philanthropy, donating a Smart car and a $40,000 bus to the Leduc Boys and Girls Club. He even offered to fly kids to Disneyland on a private jet. He hosted glitzy Fast Cars for Charity events in Edmonton to raise funds for Kids With Cancer.
It wasn’t until after December 2010, when Bellavera was granted partial occupancy, that his financial problems surfaced.
With a handful of mortgage fraud convictions from the 1990s, Kevyn Frederick is no stranger to legal problems or troubled real-estate deals. But in an Edmonton Journal phone interview in March 2012, he claimed his past was behind him.
“People make some mistakes in the past. My mistakes are 20 years ago,” he said. “I paid for them. I’m still going to be a good citizen, do what I can where I can.”
Between 1992 and 1993, Frederick had been involved in a $2-million mortgage scam in Edmonton. Buyers of 24 homes were given bonuses of up to $3,000 to sign falsified mortgage applications, while an appraiser inflated property values. He pleaded guilty to five charges of fraud and in September 1996 was sentenced to 30 months in jail.
Less than a year later, however, Frederick allegedly used a fake social insurance card to apply for a driver’s licence in the name of Kevyn Clarke. It took nearly 14 years for Service Alberta investigators to lay two charges of uttering a forged document.
The name on that fake SIN card — Kevyn Clarke — appears in a 2001 lawsuit claiming Frederick and two partners defrauded a company of stocks and a $180,000 commission in 1997. Frederick identified himself as Clarke, the suit claims, heir to the non-existent $10-million Clarke Family Trust.
There are other, more recent lawsuits stemming from troubled condo developments.
Between 2004 and 2006, Frederick and associate Nageb Ammache were found liable for diverting hundreds of thousands of dollars from a downtown Edmonton condo development, according to another lawsuit that wrapped up in 2011. The judge ruled the pair responsible for “fraud, embezzlement, misappropriation or defalcation” related to the sale of 36 condos.
While acknowledging his fraud and Bellavera’s sad state in the 2012 phone interview, Frederick was loath to discuss other allegations. chalked them up to lies,
and greed, insisting he had settled cases instead of fighting. No matter he still had God, family, an assurance that Bellavera condo owners would
return home. “I know very certainly they’re going back. They’re going to be returning their properties,” he vowed. “These suits don’t represent
People make some mistakes in the past. My mistakes are 20 years ago. I paid for them. I’m still going to be a good citizen, do what I can where I can.”
KEVYN FREDERICK
other allegations. He them up to lies, extortion and greed, insisting
settled cases instead fighting. No matter what,
had God, family, and assurance that Bellavera
owners would eventually return home. know very certainly going back. They’re to be returning to properties,” he vowed.
suits don’t represent the whole business.” In the months that followed, however, Kevyn Frederick wouldn’t bother disputing dozens of claims filed against him. The courts began sifting through most of the lawsuits, offering a partial postmortem of his portfolio.
One common claim unites financiers, contractors and debtors. Sometime in summer 2011, Frederick stopped making payments on the tens of millions of dollars of loans he had secured.
Ram Singh, a 70-year-old retired dentist who worked with Frederick, testified he halted construction of Bellavera after learning Frederick pocketed condo money, instead of paying back the more than $13 million owed for the condo’s first phase. Frederick told him the money was tied up with a Canada Revenue Agency problem, Singh said, which would be cleared up in the near future. He grew suspicious when people started showing up to occupy the condos they had purchased.
Frederick owed another $15 million for other projects, Singh claims, and altered the Bellavera papers — witnessed by Ammache — to seize Bellavera’s unfinished phases, pegged at $15 million in their option agreement. Similar tampering allegations were raised in the Chateau Lacombe deal, in which Singh says Frederick forged his signature to postpone his $6-million mortgage agreement on the Ellerslie Road property. Singh also sued Frederick’s wife at the time, Serena Fulks. Earlier this month, Singh received a $28.5-million judgment against Frederick.
Then there’s the condo sales. Frederick’s real-estate agent for Bellavera units, Wayne Beaton, was granted a $1.12-million judgment against Frederick in December 2011 for his outstanding 10-per-cent commission. Beaton claimed he sold 77 units for $19.9 million, receiving just $633,000 for his efforts.
But in another lawsuit filed in January 2013, CIBC Mortgage claims Beaton and Frederick falsely inflated the value of the condos by 20 per cent, convinced investors to falsely obtain mortgages with no down payment — a “conspiracy” to trick CIBC into lending millions of dollars without collateral. CIBC has sued 47 defendants, including the condo owners, Beaton, Frederick, and the City of Leduc, for $5.3 million.
Several condo owners have said they were offered tantalizing incentives to buy into Bellavera. Promotional materials boasted of a 20-percent down payment and a cash credit for each closing purchase. A rental pool managed by Beaton would hold the properties until they could be sold, when they’d “split the profit 50/50.” Owners chalked up the deal to the developer’s desire to fundraise for Bellavera’s next phase.
In 2010, Beaton was found civilly liable in a similar ‘incentives for rental units’ scheme for a Wetaskiwin condo conversion in 2004, the judge in that case ruling that he had speculated with other people’s money.
But in an email, Beaton said Frederick was the one who offered to pay 20-per-cent down payments and fund the rental pool. Beaton even sold three of the units to his children, and said buyers did nothing but “trusted agreements with lawyers.” Beaton chalks up his legal trouble in Wetaskiwin to his failure to hire a lawyer. Along with the condo owners, he says he was never notified of the CIBC lawsuit and only recently found out about it.
The courts are still sorting through the multimilliondollar mess left by Frederick. For small players, the sole remaining recourse may be a discretionary assurance fund administered by the Alberta Law Society, the regulatory body governing actions of Alberta lawyers.
Lawyers from most of Frederick’s cases have stopped representing him. One of his sole legal actions has been to relinquish a mortgage on Victory’s Ellerslie property back to the church. But when a deal for that land was approved on Friday, that mortgage was deemed worthless. Frederick also agreed to a consent judgment in favour of Victory for the loan and mortgage on the Leduc County site, for which the church faces an upcoming civil trial with Kasa Developments, Bellavera’s first developer.
The current whereabouts of Kevyn Frederick — and millions of missing dollars — aren’t known. At his last appearance in Edmonton Provincial Court for his forged documents case on Jan. 11, 2013, the 42-yearold walked in wearing an ivory suit, a brown suede jacket draped over one arm. In a soft voice, he informed the court he had hired a new lawyer. His next court date is in September.
A rumour cited in one affidavit says he’s in Europe. His former real-estate agent Beaton says “he’s nowhere to be found.”
Other Bellavera investors hear Frederick is in Ethiopia.
Wherever he might be, he couldn’t be reached for comment.