'Staggering' reach of 'shadow' mortgage broker revealed as B.C. real estate agents lose licences

B.C.'s financial regulator has cancelled the licence of a real estate agent who used the services of a so-called 'shadow' mortgage broker to buy a house using fake financial statements a year after declaring a negative annual income of $459.

Molenia Golshani is one of three real estate agents stripped of their licences in recent weeks for their dealings with Jay Kanth Chaudhary — a man who earned millions acting in an unregistered capacity to secure mortgages for unqualified homebuyers with altered tax and bank documents.

Golshani, Sayna Sadat Mirzadeh and Homayoun (Sam) Haji Karimloo have also been fined tens of thousands of dollars as part of the five most recent orders to emerge from a multi-year B.C. Financial Services Authority investigation into more than two dozen industry professionals.

After years of referring to Chaudhary in its decisions as 'Individual 1,' the regulator has also publicly linked him to 19 of its completed files for the first time in years as part of a change in policy to increase transparency. Four more files are still under investigation.

BCFSA director of investigations Raheel Humayun told CBC the scope of Chaudhary's unregistered activities was "staggering" — as was the number of licensed mortgage brokers and real estate agents who violated ethical and professional codes to help him.

'Remarkably forthright' testimony

Like Golshani, Karimloo referred clients to Chaudhary in addition to using the shadow broker's services for his own property purchases in deals secured with tax documents reflecting income multiple times above Karimloo's actual declared earnings.

According to a consent order, Mirzadeh got a mortgage in 2017 using fraudulent tax documents created by Chaudhary and an application submitted by Mana Erfani — Chaudhary's wife — a former mortgage broker who was herself banned from the profession for life in 2020.

The regulator has been investigating Chaudhary and his associates since at least 2019 when he was ordered to cease and desist from acting as a submortgage broker — using licensed professionals to front his unregistered activity.

Chaudhary spoke firsthand about his black market business in 2021 at a public inquiry tasked with investigating money laundering in British Columbia, delivering what the Cullen Commission report described as "remarkably forthright" testimony.

He worked as an accountant and was also licensed as a real estate agent before registering as a mortgage broker in January 2007. 

His registration was suspended in October 2008 after a co-worker reported that he had been arranging financing using altered documents. Chaudhary never applied for reinstatement.

'There always will be a need'

Chaudhary told the Cullen Commission he developed a word-of-mouth reputation as someone who could arrange mortgages for people who could afford to make payments but who might not meet an institutional lender's qualifications.

He said he helped clients avoid the dangerous world of private lenders by using the services of four registered mortgage brokers and about 20 real estate agents who referred customers, telling the commission he advised them of the risks involved.

Chaudhary claimed none of his clients ever defaulted on a loan, none of the banks who gave them money were ever hurt, and a booming B.C. real estate market meant he was always busy.

He is estimated to have secured more than half a billion dollars worth of financing for approximately 900 people.

"In reality, I don't think it can be prevented," he told the commission at one point.

"Because there always will be a need for individuals like us and what we did, and because the demand itself is there. The demand comes from the borrowers themselves. The demand comes from people who want a house and do not fit in the traditional guidelines."

Police referrals 'early and often'

The five most recent Chaudhary-related orders also include what amounts to a lifetime ban and a $50,000 penalty against Shane Ballard, a former mortgage broker who admitted facilitating 165 mortgage applications for Chaudhary.

"Ballard would submit mortgage applications to lenders as though prepared by himself," Ballard's consent order reads.

"Ballard never met with the borrowers on these files."

The bulk of the discipline proceedings have been resolved through consent orders, but at least one real estate agent is appealing her licence cancellation.

According to the Cullen Commission's report, Chaudhary's case "illustrates the money laundering risk that can arise when an unscrupulous actor engages in mortgage brokering (registered or unregistered)."

His lawyer told the commission that Chaudhary was subject to the scrutiny of the Canada Revenue Agency, but "he does not appear to have faced any other legal consequence for his actions."

Humayun rejected the idea that no one was hurt by Chaudhary's activities, pointing to the damage done to the reputation of the real estate industry as a whole and the risk to both lenders and individual consumers.

He confirmed that the B.C. Financial Services Authority made referrals to police emerging from its Chaudhary-related files "early and often."

A representative for the regulator told the Cullen Commission, "he brought the Chaudhary file to the leadership of the RCMP's E-Division, but that the RCMP ultimately declined to take on the matter."

"To his recollection, the reason given was that the matter did not fall within their mandate," the commission's report says.