Missing In Action LENNY ROSENBERG
Judith Pereira
Friday, November 24, 2000
THE ACTION
If tech is the engine of today's economy, in the '80s it was real estate that made the wheels go 'round. High-rolling Hamiltonian Lenny Rosenberg typified the time when properties and mortgages were juggled in a giant game of Monopoly.
EARNED HIS STRIPES
A wheeling-dealing mortgage broker, Rosenberg acquired Greymac Mortgage Corp. of Toronto and turned it into Canada's fastest-growing mortgage company, building its assets from $2.5 million in 1976 to $50 million in 1980. In 1982, he sold the company to friend and fellow financier Bill Player, who in turn provided the mortgage for Rosenberg's acquisition of Crown Trust.
BUT THEN
Later that year, seeking the biggest deal of his career, Rosenberg orchestrated The Great Apartment Flip. Using $63 million from Crown Trust, Rosenberg purchased more than 10,000 apartment units from Cadillac Fairview Corp. Ltd. for $270 million. In a series of lightning-fast transactions, the apartments were resold twice that very day; first to Player, then to a shadowy group of numbered companies. The final price tag of $500 million provoked an outcry by tenants, who foresaw their rents rising to cover the payments.
THE BIG UH-OH
The Ontario government launched an investigation that concluded that the players in the flip had inflated market values. It calculated that Crown, having made loans on the basis of those inflated values, had exceeded its lending limits, and was in danger of collapse.
To protect depositors, Ontario took the unprecedented step of taking control of Crown Trust and Rosenberg's Greymac Trust. Both eventually went out of business. Rosenberg was charged with 13 counts of fraud.
BYE-BYE
Retreating to his gated Miami mansion, Rosenberg consulted for Elar Financial Services, Cami's Seashells restaurants and several other Florida businesses--all owned by his wife, Rene.
WHERE HE WENT
Represented by high-profile criminal lawyer Eddie Greenspan, Rosenberg pleaded guilty at his trial in 1993 and was sentenced to five years in Millhaven Penitentiary near Kingston. At the sentencing, Justice David Watt said Rosenberg's crimes, which "were fuelled by avarice," had undermined public trust in financial institutions. To restore it, the Canada Deposit Insurance Corp. raised deposit-protection levels to $60,000 from $20,000.
WHERE HE IS NOW
After serving less than a year of his sentence, Rosenberg received day parole in 1994 and full parole in 1995. He became a consultant to Florida-based Value Holdings Inc., whose subsidiary Network Forest Products Ltd. sells lumber and building materials in Ontario, the U.S. and the Caribbean. Rosenberg's daughter Alison Cohen is an executive of Value Holdings. The COO is Lyon Wexler, a former executive vice-president in the Greymac group who was convicted of fraud for his part in the affair. Rosenberg, who is now 61, did not respond to requests to comment on his current business dealings.
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