Some investors in the Fortress Real syndicated mortgage debacle will be getting another approximately $1 million back in a class action settlement with a law firm.
The Ontario Superior Court of Justice certified a proposed class action on behalf of investors in syndicated mortgages promoted by Fortress Real Developments Inc. and Fortress Real Capital Inc. against lawyer Derek Sorrenti and his firm, Sorrenti Law Professional Corp., which were solicitors for certain syndicated loans. It also approved a settlement of the case for $1.65 million.
According to the court’s decision, the proposed class action alleged breach of contract, breach of fiduciary duty, negligence, negligent misrepresentation and breach of trust.
“The plaintiffs allege that the class members were misled about the value of the properties on which the mortgage would be registered, the risks involved in participating in the investment, how the mortgage proceeds would be used by the developers and the mortgage administrators, and that their interest in the mortgage would qualify to be held in registered accounts (which it did not),” it said. “The plaintiffs claim that had they been properly advised by the Sorrenti defendants they would not have invested their funds in the first place.”
Those allegations weren’t proven, but the court certified the claim as a class action for the purpose of approving a proposed settlement.
Under the terms of the settlement, the defendants will pay a total of $1.65 million to resolve five related actions — with almost $500,000 of that total going to the class counsel in fees and disbursements.
The decision noted that the settlement represents about 82% of the law firm’s liability insurance coverage, which the plaintiffs and their lawyers, “have concluded … is at the upper end of what the class could hope to recover, and as such is fair and reasonable and in the best interest of the class.”
As for the legal fees, which were also approved by the court, the decision said, “The counsel fee is well under the 33% typically approved as reasonable in class action cases, and reflects a reasonable fee given the time and effort invested by class counsel. Furthermore, the disbursements are relatively modest for this type of action.”
A series of other class actions on behalf of Fortress Real investors have also been settled, returning a total of around $30 million to harmed investors.
Two of the men behind the scheme were also recently convicted on fraud changes for misleading investors about the value of certain assets.