A two-year suspension and $30,000 penalty has been upheld for a Kelowna mortgage broker who was caught providing false information to lenders on behalf of a client later charged with fentanyl trafficking.
A decision last month from the Financial Services Tribunal dismissed Jessica LaBonte’s appeal of the sanctions levelled on her in January.
The BC Financial Services Authority began investigating LaBonte after the B.C. government moved to seize the home of one of her former clients as proceeds of crime.
The investigation revealed misconduct by LaBonte on six deals involving four borrowers with mortgage application dates between March 2017 and March 2019.
False income statements submitted
The most severe case saw LaBonte admit to providing false or misleading income statements on behalf of Michelle Collins in relation to a 2019 mortgage application for a property at 2308 Lillooet Cres. in Kelowna.
Income information was knowingly submitted higher than Collins’ actual income along with inflated rental income. Two lease agreements and altered tax forms were also provided to lenders.
Collins’ Lillooet Crescent home was raided by police in 2020. Inside, Mounties allegedly found significant amounts of fentanyl, heroin, cocaine, cannabis, methamphetamine, psilocybin and a variety of prescription pills, as well as $27,000 in Canadian cash and about C$1,800 worth of Mexican pesos.
Collins and co-accused Nigel Byrne were charged with drug trafficking, but charges against Collins were dropped in March as a part of Byrne’s plea deal.
B.C.’s Civil Forfeiture Office is still trying to seize 2308 Lillooet Cres., an action opposed by Collins, who in a court filing said she operates a cleaning business and earns legitimate income through that business and by flipping houses.
While the matter of the seizure of the home remains before the courts, Byrne and Collins consented back in September 2020 to the seizure of Byrne's 2005 Infiniti G35.
'General deterrence' needed
The tribunal decision states the BC Financial Services Authority found LaBonte’s misconduct in helping Collins obtain the mortgage for the home “required general deterrence.”
“It must be made clear to mortgage brokers that although their role must be to promote the interests of their clients, the promotion of that interest cannot be allowed to take place to the detriment of the public as a whole,” says the ruling.
The BC Financial Services Authority also found LaBonte failed to “use reasonable diligence” to verify Collins income in a previous mortgage application, and knowingly submitted false or misleading information to lenders on behalf of two other borrowers.
LaBonte was also cited for failing to keep her records safe and secure.
In April of 2020, LaBonte stored her hard drive containing her mortgage records in her friend’s garage. That friend had “multiple criminal charges against him, including possession of a controlled substance for the purpose of trafficking,” said the tribunal.
“Some of [LaBonte’s] records were lost in a fire that occurred in the friend’s garage.”
LaBonte admitted this put borrowers’ private information at risk.
On appeal, LaBonte argued that the two-year suspension was unreasonable. She attempted to have new evidence considered — statements detailing the impact the sanctions have had on her — but the tribunal ruled it inadmissible.
“I find that the appellant’s application to admit new evidence was largely an attempt to reargue her cause on appeal,” said tribunal panel chair Mona Muker.
The tribunal’s review of similar cases found the penalty "imposed was not disparate from or outside the range of sentences imposed in those prior decisions.”
The panel came to a similar conclusion in regards to the two-year suspension, ruling it was “not disproportionately harsh, punitive or unreasonable.”
LaBonte was also given a $30,000 penalty, which was not appealed, along with an order that she pay investigation costs in the amount of $13,736.49.
