A Langley condo development firm allegedly funneled loans intended for construction into everything from restaurant bills to real estate deals to luxury homes, a lawsuit alleges.
A lawsuit was launched this spring by Forjay Management Ltd. and Reliable Mortgages Investment Corporation against Natalie Lauren Chandler, the wife of developer Mark Chandler, and several companies linked to him.
Those firms include 0981478 BC Ltd. (098), the company that built the 92-unit Murrayville House condo project.
That property was put into receivership last year after long delays and lawsuits by creditors and would-be buyers.
Documents filed in May by Forjay and Reliable say 098 borrowed $34.32 million in first- and second-mortgages in 2014 towards the Murrayville House project.
The lenders say that money was intended for development and construction of the condo project.
Some of the money was instead funneled to a number of firms controlled by Mark Chandler, or to Natalie Chandler, the suit alleges.
According to a May 24 court filing, money flowed out of 098’s bank accounts shortly after loans were deposited.
On Jan. 7, 2016, Forjay advanced more than $511,000 to 098 through the company’s lawyers.
Company bank statements show “the funds were subsequently used for a number of other purposes, including payments to various individuals, a cash withdrawal, a purchase from the Apple Store, a restaurant purchase, as well as other unidentifiable purchases,” according to the plaintiff’s recent filing.
A number of pages are missing from the bank statement after the deposit, and by Jan. 18, the account balance “had dropped over $400,000.”
Before the deposit on Jan. 7, there had only been $36,976.75 in 098’s bank account.
The May 24 court filing laid out some specific amounts spent, citing affidavits including those of Natalie and Mark Chandler, and of J.P. Dhaliwal – the chief financial officer for the Chandler Group of Companies.
According to the claims:
• 098 paid a little more than $1.2 million towards the purchase of a $4.25 million lake-front home on Bluebird Road in Kelowna, owned by Natalie Chandler.
• At least $550,000 was allegedly transferred from 098 to KGH Newmark Ventures, another Chandler firm, in deposits and extension fees in an attempt to buy a development lot on 208th Street and 80th Avenue.
• More than $200,000 was paid from 098 or its affiliates to contractors to develop the 208th Street property.
• $100,000 was paid by 098 to another numbered company, 0969311 BC Ltd. (311), controlled by Mark Chandler, so that 311 could buy a piece of property on 86th avenue near the Carvolth transit exchange in Willoughby.
Meanwhile, the defendants have denied any alleged misuse of funds, and also that there were any restrictions on the use of money loaned to 098.
Forjay and Reliable have placed certificates of pending litigation (CPLs) on properties linked to the Chandlers, including the land on 86th Avenue in Langley and the Bluebird Road property.
A CPL usually means that funds from any sale of land will be held in trust until the lawsuit is decided.
The 208th Street property in Yorkson has recently been sold, with the $5.2 million in proceeds placed in a trust.
Natalie Chandler and the group of companies is trying to have the CPLs lifted, arguing that they are selling both the Kelowna and Langley properties, but the CPLs are causing problems attracting buyers.
Both properties are in foreclosure proceedings, according to documents filed for Natalie Chandler and the other defendants. They also argued that the $5.2 million in proceeds from the Yorkson land sale be turned over to one of the Chandler companies.
Forjay and Reliable have opposed those measures.
They note that a “purported purchaser” of the Bluebird Road house is a numbered company that does not seem to exist.
“The defendants’ evidence shows that Ms. Chandler and the corporate defendants have facilitated and participated in the diversion of funds from 098 and other Newmark Group companies for undisclosed and unlawful purposes,” argues the court filing.
“There is therefore significant risk that any proceeds from the sales would be transferred by the defendants beyond the reach of the plaintiffs…”
The Bluebird Road house could be sold, if the proceeds of the sale are placed in trust pending the outcome of the lawsuit, Forjay and Reliable argued.
None of the allegations in the documents have been proven in court.
A call to Mark Chandler for comment was not returned.
Mark Chandler was ordered extradited to the United States earlier this year to face a charge of fraud related to a failed real estate venture in California. He is on bail awaiting an appeal of that order.
One of Chandler’s bail conditions is that he may not accept loans or other money for his development business, except through a trust account held by a lawyer.
The Langley RCMP is investigating Murrayville House, as well. With Murrayville House still the subject of numerous lawsuits, it sits completed, but empty.