Monday, April 27, 2015


In the latter part of 2014, a name cropped up on local radar, prompting me to devote a blog post to a potential problem in our midst. One good thing that came out of the exposure of convicted investment scam artist Gary Fraser is that he resigned from the Crystal Beach BIA Board. However, he still remains as an investor/developer for many local projects. 

This brings us to examine what is known as a Syndicated Mortgage which is the vehicle by which Gary Fraser has been able to "buy" many properties. By definition, a syndicated mortgage is one that is funded by several investors. Most definitions come with warnings such as:

Now look at syndicated mortgages.  In this arrangement, a broker puts together several investors into a single mortgage to secure loans on real estate – often development land.  The rate of interest seems wonderful, 8% or 10% or higher.  As a further enticement, the borrower may agree to pay a bonus, so the return is even higher.  Sounds too good to be true? Well, it often is.  There are many things that can go wrong – the land is worth less than appears (even with an appraisal).  Market conditions may change.  The borrower may be an asset-less numbered company.  The mortgage may be on land that is different than that promised.  There may be other lenders who rank ahead of this mortgage.  © 2012 John Hollander & Harold Geller
One of Gary Fraser's corporations is listed as the developer for a project funded by Lexon Mortgages Ltd. at the corner of Mitchener Road and Schooley Road in Crystal Beach. Fraser also has many other holdings in Crystal Beach and Ridgeway under either Starboardview Homes, Black Bear Homes or Clapboard Construction which is operated out of Ridgeway. Gary has bought three parcels of land, which includes two houses on Ridge Road under the name of Black Bear Homes. He paid $300,000 for the house at 613 Ridge Road North. The property is mortgaged for $800,000, a difference of $500,000. We have to question how a home can be mortgaged for more than twice its purchase price. 

Some of us are very wary of this man and his business dealings. We can't help but remember when Fraser pled guilty to 29 fraud-related charges in 2008. He served 30 months in jail.  While awaiting trial, Fraser managed to convince a fellow inmate to invest in one of his schemes. His own aunt, at Fraser's sentence hearing, said:
"I have been searching deep within myself for the past seven years to find forgiveness for Gary, but I can't," said Cheryl Fraser.
"I didn't see any remorse in his eyes. I looked right at him and he looked right through me."

Fraser has been in town for about a year and has overseen the purchase of many properties. Some are now considered eyesores, like the shell of a building left at Queen's Circle that was once listed at $1 Million for an executive-style mansion and the boarded-up former Pines Restaurant. Houses that one of his companies is constructing on Rebstock Road have a mortgage that is double the purchase price. The selling price for the houses is greatly inflated as are many of the houses that are occasionally listed. Same too with the new proposed development on Michener and Schooley which has a mortgage three times its purchase price. 

The syndicated mortgage company that holds the mortgages is represented by Raymond Hau. It is believed that some locals have invested in this syndicated mortgage group.

To which we can only recount what was revealed at Fraser's sentencing in 2008:

Fraser was ordered to repay his victims, but
 those who attended court don't expect to get their 

money back.
"Our lives now are all about second mortgages,
 lines of credit, credit cards, interest rates and liens," 

said Grace.*

*One of the 13 victims of Fraser's $2 million scam who wished to be identified only as "Grace."

So, does anyone still believe that Gary Fraser paid back 
the over $2 million that he scammed in the early part of 
this century?

If you believe that, there's a great investment opportunity with a convicted fraudster with
connections to a syndicated mortgage company.

Don't say we didn't warn you.