Interim Compliance Order and Notice of Proposals to Impose Compliance Order and to Revoke Licence Against Armando (Dean) Artenosi and Artisan Financial Services Inc.

NOTE: This matter has been settled

 

Regarding the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the “Act”), in particular sections 2, 3, 11, 18, 19, 43, and section 10 of Ontario Regulation 409/07

 

And Regarding Armando (Dean) Artenosi and Artisan Financial Services Inc.

 

Interim Compliance Order

and

Notice of Proposals To Impose Compliance Order And To Revoke Licence

 

Interim Compliance Order

 
Subsection 35(2) of the Act provides that if, in the opinion of the Superintendent of Financial Services ("Superintendent"), a person or entity is committing any act or pursuing any course of conduct that contravenes or that does not comply with a requirement established under this Act, or has committed or pursued any course of conduct that contravenes or does not comply with a requirement established under this Act, the Superintendent may propose to order the person or entity to cease committing an act or cease pursuing a course of conduct identified by the Superintendent or to perform such acts as, in the Superintendent’s opinion, are necessary to remedy the situation.  Subsection 35(3) of the Act provides that where the Superintendent proposes to make such an order, he shall give written notice of the proposal to the person or entity, including reasons for the proposal.  A notice of proposal to make a compliance order is set out below.
 
Subsection 35(7) of the Act provides that, if in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in making an order as a result of the steps required by section 35, the Superintendent may, without notice, make an interim order and may do so before or after giving the notice required by subsection 35(3).
 
In the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in making a compliance order against Armando (Dean) Artenosi and Artisan Financial Services Inc. for the following reasons:
 
  1. The Act states that “No person or entity shall carry on the business of dealing in mortgages in Ontario unless he, she or it has a brokerage licence or is exempted from the requirement to have such a licence” (s. 2(2)).  No exemptions apply in this case.
  2. The Act states that no individual shall trade in mortgages for remuneration, whether direct or indirect, as an employee or otherwise, by engaging in an activity described in item 3 below, unless he or she has a mortgage broker’s or agent’s licence and is acting on behalf of a mortgage brokerage or is exempted from the requirement to have such a licence (s. 2(3)).  No exemptions apply in this case.      
  3. The Act states that a person or entity is “dealing in mortgages” when he, she or it engages in the following activities, or holds themselves out as doing so:
  • Soliciting another person to borrow or lend money on the security of real property;
  • Providing information about a prospective borrower to a prospective mortgage lender;
  • Assessing a prospective borrower on behalf of a prospective mortgage lender, whether or not this Act governs the lender;
  • Negotiating or arranging a mortgage on behalf of another person or entity, or attempting to do so.
  1. The Act states that no person or entity shall carry on the business of trading in mortgages in Ontario unless he, she or it has a brokerage licence or is exempted from the requirement to have such a licence (s. 3(2)).  No exemptions apply in this case.
  2. The Act states that no individual shall trade in mortgages for remuneration, whether direct or indirect, by engaging in an activity  described in item 6 below, unless he or she has a mortgage broker’s or agent’s licence and is acting on behalf of a mortgage brokerage or is exempted from the requirement to have such a licence.  No exemptions apply in this case.
  3. The Act states that a person or entity is trading in mortgages in Ontario when he, she or it engages in any of the following activities in Ontario, or holds themselves out as doing so:
  • Soliciting another person or entity to buy, sell or exchange mortgages;
  • Buying, selling or exchanging mortgages on behalf of another person or entity;
  • Buying, selling or exchanging mortgages on the person’s or entity’s own behalf.
  1. Section 11 of the Act further provides that no person or entity shall use in Ontario a description that might reasonably be expected to lead to the belief that he, she or it is a mortgage brokerage unless he, she or it is licensed as a mortgage brokerage.
  2. Subsection 19(3) of the Act states that if, in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21 of the Act, the Superintendent may, without notice, make an interim order suspending the licence and may do so before or after giving the notice required by subsection 21(2) of the Act.
  3. Armando (Dean) Artenosi ("Artenosi") was the director and President of Artisan Financial Services Inc. ("Artisan") until February 13, 2013.  Artenosi is licensed as a mortgage agent under the Act with the brokerage Mortgage Stream Inc.  Mortgage Stream Inc. dismissed Artenosi for cause as of February 13, 2013.  Artenosi’s licence expired on March 31, 2014.  Artenosi’s licence is now suspended by operation of the Act.
  4. Artisan was incorporated on October 23, 2001 and has its head office at 2174 Major Mackenzie Drive in Maple, Ontario.   Artisan has never been licensed under the Act.
  5. Artisan advertises its business in part through an internet site at www.artisanfinancial.ca.  The site contains statements such as:
  • Our revolutionary buyer programs work – it’s that simple.  As pioneers in the industry, we’ve been assisting families become home owners with our No Money Down, Lease-to-Own and Purchase Plus Improvements programs since 1995;
  • Unlike your local bank or broker, we get to know you and your situation and then customize a solution and refer you to a bank and or mortgage broker you need when you need it;
  • In short, Artisan provides complete representation in all negotiations regarding your property investment affairs, while carefully considering and precisely structuring a plan to ensure we best meet your personal needs and circumstances.

SI Transaction

 
  1. In the fall of 2010, an individual SI applied to Artisan for assistance in purchasing   a property located at 140 Hall Street in Richmond Hill, Ontario.  This was a townhouse that was part of a property that Artenosi was developing through another corporation for which Artenosi was director and President, Manors on Benson & Hall Inc.
  2. SI has sworn an Affidavit dated August 24, 2011, stating that SI asked Artisan/Artenosi to arrange the financing to purchase the above property.  The Affidavit states that in return for installation services provided by SI consisting of services and raw materials worth about $10,000, Artisan agreed to arrange the financing and provide the deposit on the property.
  3. A cheque dated December 5, 2010 was issued on the Bank of Montreal account of Reno Solutions Inc. ("Reno Solutions"), another corporation for which Artenosi was director and President, payable to SI in the amount of $27,135.00.  This amount was used as evidence that SI had funds to make the down payment in the application that another mortgage broker made to MCAP Service Corporation ("MCAP") (a licensed brokerage under the Act) for a first mortgage to finance the purchase of the property.
  4. SI signed an Acknowledgement and Indemnity to Artisan stating that in consideration of the “agent’s” agreement to act on behalf of the client in connection with the arrangement of mortgage financing to facilitate the purchase of a residence known at 140 Hall Street in Richmond Hill, certain matters were acknowledged and agreed upon.
  5. On December 2, 2010, MCAP approved the advance of funds in the amount of $566,396.65, the basic loan amount of $549,100.00 plus CHMC premium of $17,296.65. 
  6. The sale transaction closed but SI subsequently defaulted on the mortgage payments.  MCAP foreclosed on the property but was unable to collect anything from SI because SI had declared bankruptcy.
  7. While Artenosi was licensed as a mortgage agent under the Act, he was licensed as an agent on behalf of the licensed brokerage Mortgage Stream Inc., not Artisan.

DG & KG Transaction

 
  1. In September 2009, DG and KG responded to an advertisement by Artisan in a Hamilton, Ontario newspaper.  With the assistance of Artisan/Artenosi, DG and KG purchased a property at 112 Corman Avenue in Stoney Creek, Ontario.
  2. The arrangement agreed upon was that DG and KG signed over a promissory note to Artisan in the amount of $6,300 payable on December 18, 2009, in return for Artisan providing the necessary administrative services and advice to obtain mortgage financing and develop an overall financial plan.  This arrangement was described as a Consulting Agreement and was signed on November 16, 2009.
  3. While Artenosi was licensed as a mortgage agent under the Act, he was licensed as an agent on behalf of the licensed brokerage Mortgage Stream Inc., not Artisan.

Compliance

  1. The Financial Services Commission of Ontario ("FSCO") has sent letters to Artisan and Artenosi on January 16, 2013 and February 13, 2013, advising that Artisan is carrying on business without a licence under the Act and stating that all references to soliciting borrowers and dealing or trading in mortgages must be removed from Artisan’s web site within 10 and then 5 days.
  2. Artisan’s web site continues to show the representations referenced in paragraph 10 above.
  3. For all of the above reasons, the Superintendent of Financial Services (the “Superintendent”) is of the opinion that a delay in the issuance of a compliance order and a delay in the issuance of an order revoking Artenosi’s mortgage agent licence may adversely affect the public interest.

Interim Order

 
It is ordered that Armando (Dean) Artenosi and Artisan Financial Services Inc.:
 
  1. Immediately cease soliciting persons or entities to borrow money on the security of real property in Ontario or holding himself or itself out as doing so;
  2. Immediately cease providing information about a prospective borrower to a prospective mortgage lender or holding himself or itself out as doing so, in respect of real property in Ontario;
  3. Immediately cease negotiating or arranging a mortgage in respect of real property in Ontario on behalf of another person or entity or holding himself or itself out as doing so;
  4. Immediately cease accepting any fees or funds in connection with the solicitation, negotiation, or arrangement of a mortgage in respect of real property in Ontario;
  5. Immediately cease using a description that could or will be seen or heard by the public that might reasonably be expected to lead to the belief that he or it is a mortgage brokerage in respect of real property in Ontario;
  6. Immediately cease advertising as a mortgage brokerage or as associated with a mortgage brokerage, or the business of dealing in mortgages in Ontario.
This Interim Order takes effect immediately and will remain in effect until the expiry of the period for requesting a hearing about the Superintendent’s Notice of Proposal (15 days after the Notice is received, or deemed to have been received).  If a hearing before the Financial Services Tribunal ("Tribunal") is requested, the Superintendent may extend the Interim Order until the proposal is finally determined.
 
Pursuant to subsections 48(4) and 49(1) and (2) of the Act, every person who fails to comply with an order made under this Act is guilty of an offence and every individual convicted under the Act is liable to a fine of not more than $100,000.00 or imprisonment for a term of not more than a year or both a fine and imprisonment.  Every corporation convicted of an offence under the Act is liable to a fine of not more than $200,000.00.
 
Pursuant to subsection 48(5) of the Act, every director or officer of a corporation that commits an offence under this Act who directed, authorized, assented to, acquiesced in or participated in the commission of the offence, or who failed to take reasonable care to prevent the corporation from committing the offence, is guilty of an offence, whether or not the corporation is prosecuted or convicted.
 
Subsection 48(6) of the Act provides that every partner of a partnership and every individual who is a member of the directing body of an entity, other than a person or partnership, who directed, authorized, assented to, acquiesced in or participated in the commission of an act or omission by the partnership or entity which, if committed by a person, would be an offence under the Act, is guilty of an offence.
 
 

Notice Of Proposals To Impose Compliance Order And To Revoke Licence

 
Take notice that pursuant to section 35 of the Act, the Superintendent is proposing to order Armando (Dean) Artenosi and Artisan Financial Services Inc. to:
 
  1. Cease soliciting person or entities to borrow money on the security of real property in Ontario or holding himself or itself out as doing so;
  2. Cease providing information about a prospective borrower to a prospective mortgage lender or holding himself or itself out as doing so, in respect of real property in Ontario;
  3. Cease negotiating or arranging a mortgage in respect of real property in Ontario on behalf of another person or entity or holding himself or itself out as doing so;
  4. Cease accepting any fees or funds in connection with the solicitation, negotiation, or arrangement of a mortgage in respect of real property in Ontario;
  5. Cease using a description that might reasonably be expected to lead to the belief that he or it is a mortgage brokerage in respect of real property in Ontario;
  6. Cease advertising as a mortgage brokerage in Ontario or as associated with a mortgage brokerage in Ontario.
 
And take notice that pursuant to section 19 of the Act, the Superintendent is proposing to revoke the mortgage agent licence #M08008964 of Armando (Dean) Artenosi.
 
The reasons for these proposals will be served with this Notice.
 
And take notice that pursuant to subsection 35(4) of the act, a hearing before the Financial Services Tribunal may be requested within 15 days after this Notice is received, or deemed to have been received.  The request for a hearing shall be in writing (Form 1, Request for Hearing, sent to you along with this Notice) and shall be mailed or delivered
 
To:                        
Financial Services Tribunal                       
5160 Yonge Street, 14th Floor, Box 85                                                         
Toronto, ON   M2N 6L9
Attention:  Registrar
Fax:  416-226-7750
 
 
And to:      
Superintendent of Financial Services                                                        
c/o Regulatory Discipline Officer
Licensing and Market Conduct Division
5160 Yonge Street, Box 85
Toronto, ON   M2N 6L9
 
If you do not request a hearing or do not make the request in accordance with subsection 35(4), subsection 35(6) of the Act provides that the Superintendent may carry out the proposal to issue the orders.
 
If you request a hearing, subsection 35(5) of the Act provides that the Tribunal may, by order, direct the Superintendent to carry out the proposal, with or without changes, or substitute its opinion for that of the Superintendent and the Tribunal may impose such conditions as it considers appropriate in the circumstances.
 
At the hearing, your good character, propriety of conduct, or competence may be in issue.
 
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure of the Tribunal made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c.S.22.  The Rules of Practice and Procedure are available at the website of the Tribunal:  www.fstontario.ca [New Window].  Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416.590.7294, or toll free at 1.800.668.0128 ext. 7294.
 
You may be furnished with further or other particulars in respect of any matter herein or in respect of any other matter, including further grounds to issue a compliance and/or revocation order.
 
 
Dated at Toronto, Ontario March 28, 2014.
 
 
Original signed by by "Michael Doi", Acting Superintendent