Former Edmonton MLA Carl Benito set up 'straw buyers' mortgage fraud, lawsuit alleges

Before entering politics, former Progressive Conservative MLA Carl Benito orchestrated a "straw buyers" mortgage fraud that left an immigrant Filipino couple owing more than $130,000 on a property they never intended to own, a lawsuit alleges.

A statement of claim filed in September 2010 by Rolando and Emilinda Bautista alleges that in 2007, Benito, acting as a real estate agent, offered them $10,000 for them to get a mortgage to purchase a northeast Edmonton house.

Benito allegedly told the Bautistas the property "would be used to assist Filipino families immigrating to Canada who were unable to secure credit." He said he would assume responsibility for the property and all related costs, the lawsuit alleges.

But within two months, Benito reneged on that promise, the lawsuit claims, as part of a scheme that ended with the bank foreclosing on their property.

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The Bautistas filed the lawsuit in the middle of Benito's term as MLA for Edmonton-Mill Woods. Benito filed a statement of defence in which he denied the allegations, none of which were proven in court. The lawsuit remains unsettled and there has been no action on the file for years.

Benito was first elected in 2008 but lost the Progressive Conservative nomination to Sohail Quadri in 2012.

A spokesperson with the Real Estate Council of Alberta confirmed Benito was registered as a real estate associate from September 1997 to April 2009.

Benito is now an immigration consultant. On websites and Facebook pages filled with photos of beaming clients, "Kuya Carl" (Brother Carl) claims he can help fellow Filipino immigrants secure residency, study permits, and work permits.

But search warrant documents filed by the Canada Border Services Agency (CBSA) in June allege that since November 11, 2015, the self-proclaimed "best in immigration consulting in Edmonton" has counselled dozens of Filipino immigrants to improperly extend their stay through an immigration-fraud scheme that involved bogus applications for study and work-extension permits.

Border services agents raided Benito's home and office on June 28, seizing more than $250,000 in cash, most of it in bundles of hundred-dollar bills stashed in two floor safes. Agents also recovered cash-filled envelopes marked with what appeared to be clients' names.

Benito has not been criminally charged and none of the allegations in the search warrant documents has been proven in court. The CBSA has confirmed its investigation is ongoing.

Alleged mortgage-fraud scheme

The Bautistas purchased the Edmonton property for $485,000 in July 2007.

The statement of claim says the couple agreed to act as "straw buyers" for the property, meaning the mortgage would be in their name even though the couple had no intention of living in the house or paying the mortgage.

The lawsuit alleges Benito applied for and obtained the mortgage on behalf of the couple, "based upon the fraudulent representation that the [Bautistas] were in fact purchasing the property for their own use and enjoyment."

The lawsuit claims that Benito, "in using the plaintiffs' credit profile to obtain the mortgage, knowingly participated in mortgage fraud by wilfully deceiving RBC (Royal Bank of Canada) in relation to the financing of the property."

Less than two weeks later without the Bautistas' knowledge Benito instructed a lawyer to prepare a document giving the power of attorney on the property to another Edmonton real estate agent, the statement of claim alleges.

The Bautistas claim they signed the document without realizing exactly what it meant.

Benito and the other realtor then allegedly sold the property to another buyer for $66,000 more than the Bautistas had paid for it, and "failed to account" to the couple for the profit.

The statement of claim alleges Benito, through his own investment company, secured a second mortgage on the property for the new buyer without telling the bank even though the terms of the Bautistas' mortgage prevented this. Benito also acted as the real estate agent for the new buyera "potential conflict of interest" he allegedly did not disclose.

Royal Bank claimed the first mortgage was in default and in February 2009, it began foreclosure proceedings on the property.

The lawsuit claims Benito, "in an attempt to obstruct, hinder or delay RBC, then coerced the plaintiffs into transferring [the property] to a family member ... stating he would no longer assist the plaintiffs with the foreclosure proceedings" if they failed to do so.

Bank foreclosed on property

Despite the property transfer, the bank eventually foreclosed on the property and sold it. A court issued a writ of enforcement against the Bautistas for the shortfall of nearly $133,000, the lawsuit alleges.

The couple's lawsuit seeks to recoup the $133,000, along with another $225,000 in general damages.

In a statement of defence, Benito says the Bautistas' allegations are "frivolous, vexatious, and irrelevant."

Benito claimed the couple were "experienced buyers and owners of real estate," and he said they re-sold their property knowing full well what they were doing. Benito also claims he was not connected to the later default on the mortgage.

None of the allegations in the statements of claim or defence has been proven in court. Benito did not respond to several interview requests. The Bautistas, who are now believed to live in Texas, did not respond to phone calls.

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