Airbnb hosts the latest target of alleged fraudsters seeking to steal identities, get mortgages
Toronto police arrest 42-year-old last month who investigators allege is part of larger criminal group
Imagine temporarily renting out your home on a short-term rental platform like Airbnb.
Except, instead of receiving a five-star rating from the person you rent it to, they steal your identity and take out a mortgage worth hundreds of thousands of dollars on your home — without your knowledge or consent.
That's exactly what investigators with the Toronto Police Service (TPS) are alleging a group of fraudsters is doing. It's allegedly the latest iteration of mortgage and title fraud scams targeting unsuspecting homeowners in the Greater Toronto Area, and costing insurers millions of dollars in claims.
On May 25, 42-year-old Jay Allen MacDougall was arrested and charged with five counts of fraud over $5,000 and one count of laundering the proceeds of crime.
Police allege MacDougall used a fake name to rent a home on an online short-term rental app and obtained the homeowner's identity information while inside. According to police, MacDougall then allegedly used that information to impersonate the homeowner and secure a mortgage from a private lender, making away with the proceeds.
MacDougall attempted to take out approximately $2.5 million worth of fraudulent mortgages on at least five homes, CBC Toronto has learned from multiple sources close to the investigation. While some of the alleged frauds were detected before money changed hands, one of the sources told CBC that lenders involved incurred actual losses of around $1 million.
None of the allegations have been proven in court.
"It took a lot of ingenuity," Det. Dave Coffey of the TPS financial crimes unit said in an interview.
"We believe there are other people involved. He was not working alone and this is an active investigation."
Airbnb investigating
A spokesperson for Airbnb said in a statement that the company is investigating.
"Helping our community to stay protected against scams is a priority for us. This kind of activity has no place on Airbnb, and we are currently investigating this report," the spokesperson said.
CBC Toronto published a series of reports earlier this year detailing how dozens of homes in the GTA have had mortgages placed on them without owners' consent or have been sold without their knowledge.
Often, these mortgage and title fraud scams involve organized crime groups paying "stand-ins" who use fake documents to pose as tenants so they can gain access to properties, and then paying others to impersonate homeowners to mortgage or sell the houses.
Authorities note that fraudsters often need physical access to the home to obtain identity documents, to conduct an appraisal, or to show the home to prospective buyers.
The use of short-term rental websites like Airbnb appears to be the latest version of this type of scam, offering alleged fraudsters a quicker and cheaper method of gaining access, investigators say.
"It's just a variation of the same game," Coffey said. "It's theft by trickery."
How the short-term rental scheme works
Private investigator Brian King, who is president and CEO of King International Advisory Group, says his firm is tracking around half a dozen criminal groups engaged in various forms of mortgage and title fraud in the Toronto area.
He's been hired by one of the largest companies in Canada that provides title insurance, which protects lenders and homeowners from financial losses related to issues with a property's title, or ownership, including fraud.
According to King, MacDougall is connected to a group whose "hallmark" is using Airbnb to gain access to the homes they're targeting under the guise of being short-term renters.
King wouldn't comment on the specifics of MacDougall's case while it's before the courts. But he said, generally, once they are inside the person's home, fraudsters search for identification information, such as credit card statements or bills, that can be used to make fake IDs, including driver's licences or passports.
Fraudsters then use the fake identification to impersonate the homeowner and apply for a mortgage on the property.
"Often, the identifications that are used will have all of the legitimate information about the homeowner," King said. "[Except] they will use the photo of the person that's going to be presenting himself, either virtually or in person, to the lawyers, real estate agents … that are involved in the process."
The fraudsters also use their access to invite an independent appraiser into the home to assess its value, he said, something private lenders require before providing funds.
"It sometimes takes months before the homeowners find out about these mortgages and the insurers are notified," said King.
Impersonation 'very sophisticated': private lender CEO
Several individuals and financial institutions are named as victims in court documents detailing the fraud charges against MacDougall. The list includes two entities of Cannect, a Toronto-based private lending company that provides home equity loans.
Marcus Tzaferis, CEO of Cannect, said the company paid out hundreds of thousands of dollars to three fake borrowers.
"What we saw was people impersonating homeowners to a very sophisticated degree," said Tzaferis.
The fraudsters were able to provide a wide range of documentation, he said, including mortgage statements, property tax, hydro and cell phone bills, and statements from bank accounts they opened in the homeowners' names.
"They had access to the homes. They were getting real identifications made with their images," Tzaferis said. "It's like nothing we've ever seen before."
King, the private investigator, said he expects to see more arrests and charges to be announced soon.
"The title insurers are being relentless in pursuing and following up on these," he said. "Word to the wise as far as these criminals are concerned — we're coming for you."
Protecting short term rentals
City regulations stipulate that residents can rent out rooms or homes on short-term rental sites only if it's their primary residence.
The rules mean it's likely that some of the 7,079 short-term rental operators currently registered in Toronto will have documents with identification information lying around the house or in the mailbox when guests stay there.
Coffey, of the Toronto police, said those who rent out their residences should be aware that some people could be renting their homes for the sole purpose of finding and obtaining the homeowners' identity information.
"You have to secure it. You have to put it in a safe. You have to stop your mail while you're gone, because these people will go through your mail. They will go through your drawers looking for credit card receipts or driver's licence documents, anything that pertains to your identity," Coffey said.
"You need to treat it like gold, because that's what it's worth to these people."
The financial crimes unit with the Toronto police has the following safety tips for those renting out their residences:
- Lock your confidential records in a safe or other secure location.
- Do not leave your mail on the property.
- Lock your filing cabinets.
- If you believe locked items have been stolen, report it to police.
Homeowners can also purchase title insurance, which can help protect victims of mortgage fraud.
ABOUT THE AUTHOR
