Real estate deals took advantage of vulnerable woman, suit claims
‘Harold the Jewellery Buyer’ denies Toronto family’s allegations
The day Katherine Divitaris’s father died, he left her three small houses in the east end of Toronto. Katherine, 37, was unemployed and long troubled by mental health issues and drug addiction. Income from the rental properties was meant to give her financial stability.
When Harold Gerstel — Harold the Jewellery Buyer — entered Katherine’s life, she lost significant value from one of those homes and came close to doing the same with another.
According to allegations filed in a court action, Gerstel flirted with Katherine, called her the Greek term for “baby doll” in text messages, and “concocted a scheme” that would see him purchase one house for $450,000 and then sell it two months later for more than twice that amount, earning a $585,000 profit. Gerstel is alleged to have taken advantage of Katherine, whom a judge recently called a “mentally ill woman.”
When Gerstel attempted to purchase a second house, Katherine’s mother, Triada, stepped in and stopped the transaction.
On behalf of her daughter (Triada is now her daughter’s litigation guardian), she is suing Gerstel for $1 million.
Neither Gerstel, Katherine nor her mother would comment when asked to by the Star, saying the case is before the court.
This is the second set of allegations the Star has found involving Gerstel. As reported earlier this month, the Toronto man well known for offering “cash for gold” and “fast, no hassle” mortgages is alleged to have taken advantage of the trusting nature of Judy Allen, a 75-year-old retired nurse.
With a series of four high-interest (22 per cent) mortgages — with hefty fees — now on Allen’s home, and a renovation nightmare thanks to the contractor she hired, Allen is facing the loss of her property. She has a Gofundme page set up to pay legal fees in a last-ditch effort to sort out the mess. Meanwhile, Gerstel has gone to court to take possession of Allen’s bungalow in North York under power of sale because the one-year term of his mortgages has expired and he says Allen is in “default.” Allen, who has no children, has scraped together enough money for 12 months in a retirement home.
Gerstel has said he did nothing wrong in the situation involving Allen. With regard to the Divitaris case, Gerstel has denied the Divitaris family’s allegations in his reply to their court action. His lawyer, Melvyn Solmon, said in an email to the Star that since the Divitaris case is in court, “it is inappropriate for counsel and their clients to communicate with the media.”
Katherine was born in 1979. Her father, Nicholos Divitaris, died in 2013. She has lived with her mother, Triada, ever since.
It was in her late 20s that, according to her mother, Triada, Katherine became unwell. Triada states in an affidavit filed in court that Katherine suffers from “serious mental health issues, including depression, OCD, schizophrenia, severe substance abuse addiction to oxycontin, opiates, and other narcotics.” Triada further states that “as a result of her mental illness, she regularly endangers herself and is unable to care for herself.” Katherine has, from time to time, been admitted to psychiatric facilities for treatment.
Triada oversaw Katherine’s obligations related to the home ownership, but the revenue was Katherine’s, the court documents state.
In November 2016, for a reason not explained in the public court file, Katherine decided she wanted to sell one of her three houses. (All are in East York, near Broadview and Danforth avenues.) She contacted an agent and an agreement was made to sell one of the houses (a two-storey on Floyd Avenue) for $675,000.
Around the same time as Katherine struck this agreement, she met Harold Gerstel. Long known for offering to buy, or advance money against, “gold, diamonds, watches” and other jewellery, Gerstel’s business now offers mortgages at high interest rates, and offers to purchase homes quickly.
Gerstel says in his pleadings that Katherine saw his ad on television and called him up.
“(Katherine) asked me about my advertisement on television, where I advertise that I purchase properties in the GTA with quick closings,” Gerstel states in his affidavit.
In her affidavit, Katherine’s mother, Triada, alleges that Gerstel went on a campaign to drive a wedge between mother and daughter, and convince Katherine to sell the home to him. Triada, in her affidavit, says there were multiple text messages from Harold (who was nearing his 60th birthday) in which he flirted with Katherine.
In some text messages, Harold called Katherine “Koukla,” which is Greek for beautiful doll. Katherine is of Greek descent.
Katherine abruptly cancelled the already-in-progress deal to sell the Floyd Avenue house for $675,000, paid a $75,000 penalty per that contract, and sold it to Gerstel in December for $425,000. When Katherine received her money she wrote a $100,000 cheque to a woman who is a well-known Toronto television show host — a woman Katherine had seen on television but never met. The television host, upon receiving the cheque, immediately returned it to Katherine. (She confirmed the story to the Star but asked that her name not be used.)
On Dec. 22, 2016, Gerstel took possession of Katherine’s former home on Floyd Avenue.
Gerstel then listed the house for sale and sold it on March 1, 2017, to a buyer for $1,012,000.
In his reply to the lawsuit, Gerstel said the real estate market went up “drastically” in that short period and he was surprised at how much the Floyd house sold for. He took in $587,000 more than what he paid Katherine for the home just over two months before.
When a real estate transaction takes place, both sides are to have their own lawyers. Katherine’s lawyer when she sold the Floyd house to Gerstel was Peter Grivogiannis. Grivogiannis could not be reached for comment. Gerstel’s lawyer was Abraham Jonas, who was the lawyer on the Judy Allen mortgage deals. Jonas has said he will not speak to the Star.
Triada, Katherine’s mother, has told court this happened very quickly and without her knowledge. Once she did learn that Katherine had sold the Floyd Avenue house, she then learned that plans were in motion for Gerstel to buy a second of Katherine’s homes, this one on Woodycrest Avenue in East York.
Triada states in her affidavit (there is supporting documentation in the court file) that Gerstel entered an agreement with Katherine to purchase the Woodycrest home in July 2017 for $595,000. That deal fell through, and a new agreement to purchase Woodycrest by Gerstel for $755,000 was struck a month later.
Katherine’s lawyer on that was Kamele Barrett, a Pickering lawyer, who was the lawyer Judy Allen used to provide independent legal advice in her mortgage deals with Gerstel. Allen told the Star that Gerstel recommended she use Barrett. In a reply to earlier questions from the Star, Gerstel’s lawyer (Melvyn Solmon) has said Gerstel knows Barrett from another legal file, but he did not say Gerstel recommended Allen use Barrett. How Katherine ended up using the same lawyer in her deal with Gerstel is not described in the court documents.
It was at this point that Triada stepped in and “terminated” the sale agreement between her daughter and Gerstel for the Woodycrest home. She hired lawyer James Zibarras (now of Miller Thomson LLP) and a lawsuit was commenced against Gerstel, seeking $1 million in damages for “breach of trust, negligent and fraudulent misrepresentation, fraud and deceit.”
Katherine’s mother is now her court-approved litigation guardian, meaning a judge has determined that an individual is “under disability” and the guardian is appointed to protect that person’s interests in a court action.
The case is making its way through court. Recently, Gerstel’s lawyer, Solmon, challenged the role of Triada as her daughter’s litigation guardian, saying that Triada was not acting in the best interests of her daughter. A hearing was held and Judge Jane Ferguson dismissed Gerstel’s challenge.
“First of all there is absolutely no evidence before the court that (Triada) is not acting in the best interests of her daughter,” Ferguson said in her ruling last year. She went one step further, chastising the Gerstel side.
“This court will not further the improper behaviour of the defendants who are attempting to circumvent the court process … it ‘appears’ (the justice added the quotation marks) that Harold has manipulated Katherine. For me to allow this motion would bring the administration of justice into disrepute.”
Soon after Ferguson made her ruling, Gerstel appealed. The Court of Appeal for Ontario is scheduled to hear Gerstel’s appeal Aug. 17.
Neither Triada nor Katherine would agree to be interviewed for this story. Their lawyer, Zibarras, also declined to comment.