Dennis Khanna

Dinesh (Dennis) Khanna (Hamilton Police Service)

When provincial regulators moved to shut down mortgage broker Dennis Khanna in December, it had been more than a year since they had flagged dozens of violations of Ontario mortgage regulations in a review in the summer of 2014. 

But if you had looked on the Financial Services Commission of Ontario's website anytime before last month, you would see no sign that the province had concerns about the business. Khanna had assured them in fall 2014 all would be proper going forward.

A more extensive follow-up provincial review last fall raised allegations of hundreds more violations in Khanna's file and led to the December suspension.

But in the time between the two investigations and the order suspending his license — more than a year — potential customers may have been unaware there was anything to worry about.

Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, said in general, the province's timing in dealing with allegedly dishonest financial agents leaves the potential for lives to be ruined.

"A lack of provincial regulation in Ontario has emboldened fringe financial services that prey on vulnerable consumers in desperate situations," he said.

Such companies "must be held to account before they ruin lives, not after," Cooper said.

'Homeless with three young children'

Outside of the provincial regulatory process, there were signs of trouble popping up elsewhere. 

People who said they'd used Khanna's Metro Financial Planning, Inc., complained in online message boards going back to summer 2014 about Khanna's purported business practices. 

"I DO NOT KNOW HOW COMPANIES CAN DO THIS TO PEOPLE!!!" wrote one customer. 

The Better Business Bureau issued an F in November 2012 to Metro Financial Planning Inc., saying that the business has claimed it was BBB-accredited and used the BBB logo when it wasn't, even after being told to stop.

The stories from the message boards sound similar to the incidents outlined in the province's justification for suspending the licence. The allegations have not been proven in front of the Financial Services Tribunal, and Khanna has filed an appeal.

The province alleges Khanna and Metro Financial operated under a "pattern of manipulation and exploitation" by practices like allegedly taking out mortgages in already financially distressed clients' names without their knowledge, charging significant fees and, when some borrowers couldn't make their payments, transferring the homes or titles into the names of his nephew and his wife.

Timeline of violations

Last month, citing "numerous complaints" going back to May 2014, the provincial regulator suspended the license of Metro Financial Planning Limited as well as Khanna's personal license in December, and recommended the licenses be revoked permanently.

Khanna filed an appeal for a hearing on the proposed revocation on Dec. 30, but his license remains suspended in the meantime. Dates have not yet been set for hearings on the province's bid to revoke Khanna's license permanently.

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Provincial regulators allege there were hundreds of violations of provincial mortgage law in the files of Metro Financial Planning, Inc. ((iStock))

The province first sent a letter to the broker in 2014 outlining allegations of more than 20 breaches of mortgage regulations in nine of his files based on a check in July 2014. According to the regulator, Khanna wrote back in October, assuring the province that the business would all be in order in the future.

FSCO came back in August 2015, this time with Hamilton Police and forensic investigators. This time, the investigation resulted in allegations of more than 300 more times the brokerage broke rules and laws, according to the suspension order. (Hamilton Police have charged Khanna with sexual assault but have not filed any charges related to the province's alleged financial schemes.) 

Some of the mortgage documents seized were from clients who'd used Metro Financial in the meantime, after the province found issues in 2014.

"During the inspection, original mortgage files were seized, including several that had been created after the 2014 examination and Metro Financial's response to the examination," according to the order.

Anti-poverty advocates at ACORN Canada say the practices that the province is alleging were commonplace at Metro Financial constitute "predatory banking" against people who can't qualify for prime-rate, conventional loans.

The case shows "how lax the regulations and enforcement are on sub-prime lenders in Ontario," said Donna Borden, ACORN spokeswoman.

Do borrowers have recourse?

For those consumers who used Khanna's services in the span during which the province first found violations in Khanna's books and when they called for his license to be revoked, their recourse is unclear.

FSCO said consumers who feel they've been wronged or scammed can fill out the Mortgage Business Activity Complaint Form. The province requires mortgage brokers to carry "errors and omissions" insurance, and FSCO suggested victims could sue to see if any of their damages would be covered.

FSCO did not comment specifically on the timing of this investigation, but it said the agency investigates allegations against licensed companies and individuals.

The agency did not comment on what consumer protections exist for anyone using the business services during the time that passed between its initial review of Khanna's files and the move to shut him down a year-and-a-half later.

"When there is evidence of non-compliance with legislation and regulations, FSCO takes the appropriate regulatory action," FSCO said. "This action may range from a letter of caution, administrative monetary penalties, suspension or revocation of a license, and/or charges under the Provincial Offences Act."

kelly.bennett@cbc.ca | @kellyrbennett