Watchdog takes aim at Harold Gerstel

‘Mortgage closer’ and jewellery buyer’ allegedly charged up to 76% interest

- KEVIN DONOVAN

Enforcement action by the province's financial services regulator comes on the heels of a Star investigation into a mortgage deal that Harold Gerstel and his companies had with the late Judy Allen, a senior who eventually lost her North York bungalow to Gerstel.

Ontario is moving-again-to shut down Harold the Mortgage Closer, alleging he has for years carried out a scheme that charged "vulnerable" people up to 76 per cent interest on mortgages.

Enforcement action by the Financial Services Regulatory Authority of Ontario comes on the heels of a Toronto Star investigation into a mortgage deal that Harold Gerstel and his companies had with the late Judy Allen, a senior who eventually lost her North York bungalow to Gerstel.

The regulator says it has now looked more deeply into Gerstel's activities and found five other cases. Among them, situations in which, the regulator alleges, Gerstel's effective interest rate was as high as 76 per cent. Canada's Criminal Code has set 60 per cent as the highest legal interest rate allowed.

The regulator alleges "Harold Gerstel has orchestrated a scheme under which he leveraged the credibility afforded to him" by being licensed as a mortgage broker and then advertised "to vulnerable consumers." "Gerstel is not suitable to be licensed as a mortgage broker," says Elissa Sinha, director of litigation and enforcement with the provincial financial services regulator in an enforcement proposal made public on Thursday.

"Gerstel has intentionally circumvented the protections provided to the borrowers" by provincial legislation.

The regulator is seeking to close down Gerstel's company and private lender Esther Gerstel Inc. (the sole director is his wife, Esther) and levy fines totalling $210,000. The regulator states that Gerstel's company arranges the deals, and his wife's company advances the funds.