Fortress Real Developments co‑founders get five‑year sentences, $12.2M fines each
Founders Jawad Rathore and Vince Petrozza were sentenced to five years and ordered to pay $12.2 million each after being convicted of defrauding retail investors.
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By Torontoer Staff
A judge has sentenced Fortress Real Developments co‑founders Jawad Rathore and Vince Petrozza to five years in prison and ordered each man to pay $12.2 million after they were convicted of defrauding investors in the syndicated mortgage business they ran. The sentence was handed down by Justice Daniel Moore on Monday.
The sentencing includes an additional five years of imprisonment if either man fails to pay the fine within 10 years of release, and a prohibition on holding positions that give them authority over other people’s money or property. The men have appealed their convictions and were granted bail pending that appeal.
What the court found
Rathore, Fortress’s former chief executive officer, and Petrozza, the former chief operating officer, were found guilty last year after a criminal trial. The Crown said the pair deceived investors about the security underpinning syndicated mortgage loans, allowing projects to proceed on an overleveraged basis and exposing investors to losses.
The criminal proceedings focused on two projects: the Collier Centre in Barrie, Ontario, and SkyCity, a proposed 45‑storey tower in Winnipeg. Justice Moore concluded the offences involved significant planning and complexity and took place over roughly four and a half years.
No sentence that I impose is going to get the investors their money back or undo the significant financial and psychological harms caused.
Justice Daniel Moore
The judge identified a number of aggravating factors, including the scale of the fraud, the number of people affected and the duration of the conduct. He said almost 800 investors were directly defrauded in the matters before the court, and that many victims experienced severe financial and psychological harm.
Scale of Fortress and investor impact
Fortress, founded in 2008, popularized syndicated mortgages for retail investors, allowing individuals to pool funds to finance early‑stage real estate projects. Over its lifespan, more than 14,000 retail investors provided approximately $920 million to finance about 80 construction projects across Canada, according to evidence at trial.
Some Fortress projects were completed, while others failed. Prosecutors sought a 10‑year jail term and the forfeiture of $26 million. Defence lawyers had asked for a conditional sentence of two years less a day, which would allow custodial conditions such as house arrest.
This was not a pure scam or Ponzi‑type scheme where the investment does not even truly exist. That said, the fraud did allow the projects to proceed on an overleveraged basis, meaning that the losses suffered were directly attributable to the fraud.
Justice Daniel Moore
Sentencing details and restitution
Justice Moore ordered restitution for victims who testified at trial, and said any restitution paid would reduce the fines imposed. The judge also allowed for a five‑year custodial extension if the fines are not paid within a decade of release, and he prohibited the men from roles that control other people’s money or property.
Moore noted mitigating factors, including that neither man had previous criminal records and that both showed potential for rehabilitation. He also referenced their family situations as a factor in mitigation.
Appeal and next steps
Both men have appealed their convictions to the Court of Appeal for Ontario. In court filings, their lawyers argue the trial judge misapprehended evidence, erred in taking judicial notice and misapplied legal tests, leading to an unreasonable verdict.
Counsel for Rathore said the appeal will argue that the trial judge misunderstood the evidence on valuation opinions used across Fortress projects. Defence counsel for Petrozza said they look forward to presenting their arguments at the next stage of the process.
Our appeal alleges that the trial judge seriously misapprehended the evidence related to the opinions of value used on all Fortress projects, including the two projects that were the focus of the trial, leading to an unreasonable verdict.
Scott Fenton, counsel for Jawad Rathore
The two men were released on bail pending the appeal. Court documents state each has sureties who pledged $275,000 in support of release. Defence lawyers have said their clients are not flight risks and will surrender into custody if required.
Why this matters to investors and the market
The case highlights risks tied to syndicated mortgage structures when disclosures and valuations are flawed. Regulators and market participants monitor outcomes closely, because retail investor confidence in alternative lending and private real estate finance depends on transparent safeguards and accurate security assessments.
- More than 14,000 retail investors put roughly $920 million into Fortress projects.
- The criminal case focused on two projects, but the company financed about 80 developments.
- Sentences include fines that can be reduced by court‑ordered restitution to victims.
As the appeal proceeds, affected investors and creditors will be watching for restitution orders and any further court rulings that could alter the financial remedies available. The legal process may still change how much, and how quickly, victims can recover funds.
Fortress Real Developmentsfraudcourtreal estateinvestors
