There is very little that nauseates me more than creepy deadbeat scammers who go after soft targets—people who really are unable to protect themselves from this human trash that infests their communities.
Nebraska philanthropist Terrance K. Watanabe may hold the record for being the biggest deadbeat high roller in Las Vegas ever prosecuted by the district attorney’s office. He owes the casinos $14.7 million. However, Toronto gambler Semion Kronenfeld, 38, is giving Watanabe a run for his money. I will get to him later but first I will deal with another deadbeat scammer.
Rick Rizzolo
At a court hearing, an attorney for a Kansas City area man paralyzed as a result of an altercation outside the ‘Crazy Horse Too’ owned by Rizzolo alleged that a man named McDonald is ‘dissipating assets’ for Rizzolo and is hiding other assets he received from Rizzolo over the years rather than paying the award to Kirk Henry as ordered by the court.
Henry’s attorney, Don Campbell, has filed suit in federal court against Rizzolo on behalf of quadriplegic Kirk Henry, alleging that the former topless club operator has been concealing assets to avoid paying Henry the remaining $9 million of a $10 million District Court settlement.
Rizzolo has stated that he had been hoping to pay Henry from the proceeds of the sale of the Crazy Horse Too. But the government — which now has possession of the closed strip club as part of a 2006 criminal plea agreement with Rizzolo — has had little luck marketing the club.
Now I am going to present to you a tragic play, one you can watch but should never participate as a member of the cast. First, I will tell you about the characters in this play.
Semion Kronenfeld
He was born in the Soviet Union, raised in Israel and moved to Canada as a teen. He was married and the father of four, including two from a previous marriage. He established successful investment real estate business and lived a lifestyle to match, with nine-bedroom mansion, part ownership of two condominiums and fleet of luxury cars.
He was the former president of AJGL Developments, and was the president of Electronic Liquidators, which declared bankruptcy in 2008. He is listed as an ‘incorporator’ of the numbered company that rented the appliance business space at 430 Tapscott Rd., and which also shares the same address as AJGL Developments.
He declared personal bankruptcy in February 2009, blaming the global recession. He also claimed his gambling debts — more than $21 million, according Kronenfeld’s list of creditors which he acquired due to his extravagant and constant incentives provided by the casinos.
Bankruptcy documents include testimony from two addiction counsellors he has visited since 2010. But according to one, Dr. Albert de Goias, Kronenfeld “did not have a gambling addiction. He had a lifestyle addiction.” Kronenfeld has signed up for the Ontario Lottery and Gaming Corp.’s self-exclusion list.
Hilary Salmon
She was the pastor of Greater Works Ministry, a Pentecostal congregation, and also a licensed real estate agent. In 2008, she led a group of her parishioners including Joyce Williams, Pat McLaughlin and June Douglas to purchase 430 Tapscott Rd. for the purpose of establishing a church.
She says that she borrowed $100,000 off the value of her home to finance the church. She also collected a $74,000 commission on the purchase of 430 Tapscott Rd, according to her former brokerage that fired her.
She owns two houses, one of which is collateral for the $1.25-million mortgage the group took out with Kronenfeld.
Vincent Salvatore
The 62-year-old says he buys and sells mortgages for a living. He and his wife, Elena, run several companies between them, including Vincorp Financial, Salvatore Empire Investments, Bostion Inc. and Arnach Inc.
He claims that he brought Kronenfeld’s mortgage on 430 Tapscott for $1.3 million. He also claims that when the mortgage first went into default, he advised Hilary Salmon to sell the Tapscott property and release the five homes attached as collateral, but she did not.
Joyce Williams, Pat McLaughlin, and June Douglas
The three women were all part of group that put in money for down payment and renovations on 430 Tapscott Rd.
Williams, a retired nurse, and her sister McLaughlin, a house cleaner, together provided $100,000, part of which came from Williams remortgaging her home.
Douglas, a single mother of four, borrowed $100,000 for church down payment. Salmon, their pastor, promised she would make the monthly payments on the loan.
And now, the play.
Joyce Williams, 70, and Pat McLaughlin, 63, who are sisters suffered from their financial ruin brought about by their faith in a pastor they put too much trust in and who herself put too much faith in Semion Kronenfeld who is notorious as a hopeless gambler who owes casinos tens of millions of dollars in unpaid gambling debts. Kronenfeld who is a real estate investor says he’s not responsible for his gambling debts. His explanation for his denial of responsibility is that he claims the casinos did not advise him to obtain legal advice before he entered into credit arrangements with them. Give me a break. That excuse may be acceptable to an uneducated person who is conned into borrowing money from a bank or other source by a third person but it certainly isn’t a justifiable excuse for not paying off a gambling debt.
The pastor, Hilary Salmon, denies any wrongdoing, claiming her parishioners collectively agreed to pursue church group’s vision by helping to purchase the building the church was to be in. Because of the money that the sisters invested in a church they thought would help others, the sisters, their children and other parishioners are in danger of losing their own homes which they put up as security.
Though the sisters did not attend her church, Salmon had been extremely close to Williams’ and McLaughlin’s mother, Daphne, before Daphne died 10 years ago. Many mornings since then, Salmon joined the two sisters in prayer over the phone.
Eventually Salmon presented the idea of a community that would include youth outreach — a pet cause of McLaughlin’s — along with a daycare centre, a restaurant and space for Sunday services to the two sisters. They were enthusiastic upon hearing Salmon’s proposal.
Salmon had asked the sisters to help out financially. Williams is a retired nurse living off her pension. McLaughlin is a house cleaner. They balked at first. “Oh my god, I don’t have any money!” McLaughlin remembers telling Williams. But eventually, both relented — a decision they now call “foolish.” They assumed they would be paid back in due course. How many times have innocent people been duped by others who claim that eventually they will be paid back their investment?
“We thought we could be of service, or help, to others,” says Williams. “But now, in retrospect, we think: how did we get here?” Williams remortgaged her Scarborough house, and the sisters tapped lines of credit, credit cards and an accident insurance payout to lend $50,000.
Another parishioner, June Douglas, says Salmon asked her to borrow $100,000 for the church: “She called me to tell me what the Lord is doing, and asked if I could help.”
Douglas, 47, is a single mother of four who had quit her job because her dementia-stricken mother needed full-time care. Though Douglas was already borrowing $30,000 to put her mom in a nursing home, she eventually gave Salmon what she wanted. “She just kept pulling — it’s like a magnet,” says Douglas. Salmon said she would provide the monthly payments for both loans. That was another promise that would die on the vine.
Salmon did not answer questions posed to her by the Toronto Star, responding only that the allegations presented in the Star’s story are “falsified.” Previously, in response to a lawsuit brought by Douglas, she said that she, too, suffered financially after borrowing more than $100,000 to finance the church. She also said that she did not call Douglas to ask for a loan, and that the loan was “voluntary.” Are we to believe that Douglas didn’t want to be repaid her money back?
The parishioners’ money was plunged into the down payment on their church-to-be, a huge, one-storey strip of brick at 430 Tapscott Rd. in Scarborough. Since 2006, the property had belonged to AJGL Developments, a North York-based real estate development company. The president of AJGL was Semion Kronenfeld, a man of extravagant tastes.
Kronenfeld lived in a gated, nine-bedroom, $4-million dollar mansion in North York with a driveway big enough to park his small fleet of luxury cars: a Rolls-Royce Phantom, a Ferrari Spider and two S-Class Mercedes-Benzes, among others. He was also part owner of two condominiums. According to one casino executive, Kronenfeld, 40, wore very expensive white Louis Vuitton shoes, collected expensive watches and liked to smoke cigars.
Blackjack was his game of choice. Vincent Salvatore, an occasional business associate and acquaintance of Kronenfeld said, “He was a whale.” (a term used by casino owners with respect to big spenders in their casinos)
Kronenfeld meanwhile was selling the 46,000-square-foot Tapscott property for $3.7 million.
The church of which Salmon was the pastor, was given a conventional mortgage, for the Tapscott property but it covered only $2.3 million of the purchase price. So Kronenfeld offered a vendor take-back mortgage, a type of private loan offered by the seller of a property to the buyer.
There was one condition: Kronenfeld would only provide a $1.25 million mortgage if the group offered five properties as collateral. Under pressure from Salmon, Williams and McLaughlin both agreed to include their own property as collateral and their children (both have two sons), who own their homes on paper, agreed to include their property also as collateral.
After resisting, Douglas caved and agreed to add her property as collateral at the last-minute. Somewhere down the line, Salmon told her church members that they could lose all the money they had already invested and that more was needed. Another couple who knows Salmon personally agreed to offer their property as collateral also. Salmon herself put up one of her properties, in Markham. She owns another on tony Balliol Street in downtown Toronto.
The mortgage didn’t seem risky because of one crucial detail. As a condition of the sale, Kronenfeld guaranteed ‘Greater Works Ministry’ a five-year lease for an appliance business that was renting half of the building, an arrangement that would supply the church with thousands of dollars in income.
So, every month, when the ministry wrote Kronenfeld a cheque for $10,417 in mortgage payments, it would receive more than $15,000 in rent payments from the appliance business. The ministry could then put the extra money towards its mortgage payments to the bank. However, the balances on both mortgages were due in a year, not uncommon in commercial real estate. How Salmon planned to come up with the money by then is unclear.
The deal closed on August 8, 2008, with Salmon acting as the agent for her own church. Salmon’s former brokerage, ReMax Crossroads Realty, confirmed that she received a commission of $74,000 on the sale. I don’t know what she did with that money. In any case, she was terminated from the brokerage last month for lagging sales, according to the branch manager.
That same week that the Tapscott deal closed, according to legal documents, Kronenfeld went to Casino Niagara and Niagara Fallsview Casino and took out a $1 million line of credit plus another $1 million line of credit at Casino Rama.
Salmon’s ministry moved in and, for a few months, the small church’s attendance grew. The sisters attended prayer meetings, breakfasts and services. Williams and McLaughlin say Salmon asked for more money to renovate the space. They loaned her another $50,000.
Then suddenly, in the fall of 2008, the rent cheques from the church’s tenant stopped appearing. Salmon called a meeting to say that the appliance business had moved out. Without the extra income, the church group began struggling to make their monthly mortgage payments.
Meanwhile, what no one knew was that in a matter of months, Kronenfeld had racked up millions of dollars in betting debts while living the life of a high roller. According to charging documents in the U.S., bankruptcy files in Ontario and lawsuits filed by casinos, between August and November of that year Kronenfeld jetted across North America, allegedly piling up debts at a different casino nearly every weekend.
In September, he was in Las Vegas, where he lost $1.2 million at the MGM Grand and $700,000 at Caesars Palace. In October, Kronenfeld gambled $5 million over two days at the Trump Taj Mahal in Atlantic City. Kronenfeld claims he was induced to gamble because casino executives lavished him with limousines, private jets and a diamond watch for his wife (the casino denies this). Later that month, he was in Las Vegas again, gambling away $7.9 million at the Venetian and another $5 million at the Green Valley Ranch casino. In November, he lost $2.1 million at the Niagara casinos and Casino Rama.
By the New Year of 2009, his lifestyle was crumbling. Casinos were after him for $21 million. The Taj Mahal, the MGM Grand, Casino Rama and the Ontario Lottery and Gaming Corp., which operates the Niagara casinos, were all suing him, claiming he failed to repay his debts. A warrant for his arrest was issued in Nevada after two Las Vegas casinos brought cheque fraud charges against him.
His bank, RBC, also sued him and froze his account after he allegedly deposited two cheques in December 2008 worth $1.1 million and immediately wired the money to a Swiss bank account before the cheques bounced. In his statement of defence, Kronenfeld states he was just as shocked as the bank when the cheques were dishonoured. He denies he defrauded RBC. How can anyone deny defrauding a bank under those circumstances?
In February 2009, Kronenfeld filed for bankruptcy. His list of creditors includes, besides the casinos and RBC, vehicle leasing companies for eight different cars, $7,000 at Best Buy and hundreds of thousands in credit card debt. His nine-bedroom mansion and two condominiums were sold off. He claims that he and his wife separated and he moved in with his sister — although, in an unrelated lawsuit, Kronenfeld states that nine months after his bankruptcy filing he and his wife were living in a rented five-bedroom mansion when it caught fire and burned down. The owners of the house are suing the couple for $3 million; Kronenfeld and his wife deny responsibility.
By the time the district attorney’s bad check unit is through investigating Kronenfeld, he is expected to face theft and bad check charges stemming from $12.9 million in unpaid gambling markers.
Chief Deputy District Attorney Bernie Zadrowski, who runs the bad check unit, said an arrest warrant was issued in Las Vegas Justice Court last month for Kronenfeld on a six-count criminal complaint, charging the Toronto businessman with failing to pay $5 million in gambling debts in October at Green Valley Ranch Station Casino. And the Venetian, Zadrowski said, has since asked him to file criminal charges against Kronenfeld, who also spells his last name Cronenfeld, for his alleged failure to pay another $7.9 million debt at the Strip casino in October.
Kronenfeld, who has an Israeli passport, lists his occupation on casino credit records as the owner of AJGL Developments LTD, an investment real estate company.
The Toronto area phone number of the company listed on the records is disconnected, and other attempts to reach Kronenfeld were unsuccessful.
The church group, meanwhile, fell into default on their mortgage, and the situation quickly deteriorated. In early 2010, Salmon reneged on her promise and stopped paying for the $100,000 loan Douglas had taken out for the church. The Tapscott property was seized by the bank and sold, which paid off only the first, conventional mortgage. In June, the church members were mailed warning letters noting that they were in default on the second mortgage, and that power of sale proceedings would be issued on their homes imminently.
But the letters came from a company they had never seen before: Vincorp Financial. Unbeknownst to the church group, in November 2008 Kronenfeld sold the second mortgage on 430 Tapscott Rd. to a company called Vincorp Financial. Vincorp’s president is Vincent Salvatore, Kronenfeld’s business associate. Salvatore told the Star they had also been on gambling trips together.
On the same day that the Taj Mahal sued Kronenfeld for $5 million, the casino also filed a complaint against Salvatore, claiming $3.5 million in unpaid gambling debts. In his statement of defence, Salvatore says he was at the casino on a trip arranged by Kronenfeld, and those millions were actually gambled by his friend, who is therefore liable for the debts.
Salvatore says he bought the Tapscott mortgage from Kronenfeld for $1.3 million. “I guess he needed the money,” Salvatore says. Salvatore, 62, told the Star their relationship soured after Kronenfeld went belly up. “Kronenfeld screwed me too,” says Salvatore. According to records, when Kronenfeld declared bankruptcy, he owed $100,000 to a company called Salvatore Empire Investments, whose president is Salvatore’s wife.
The fate of McLaughlin, Williams, Douglas and the other church members is in Salvatore’s hands, he says, “Right now I actually can bankrupt them.” But he notes that he paid $1.3 million for the Tapscott mortgage. As it stands, if he collects on all five homes tomorrow, he still won’t make that back, because the equity in the properties is only around $400,000.
“I really feel bad for the people. That was my main concern right from day one. People like them should not lose their houses,” Salvatore says. But, he adds, “I can’t walk away from a million three (thousand dollars) . . . that money is my family’s money.” Salvatore says he is open to negotiating a new payment plan. “Who created the problem was Hilary (Salmon) by getting into a deal that was too big for her,” he says. “I trusted her, we all trusted her,” says Douglas. “It almost destroyed me.” For more than a year now — since Salmon abandoned her promises of repayment — Douglas has been forced to use her mother’s monthly pension cheques to pay down ballooning interest on the $100,000 loan. She can’t afford to put her mother in a nursing home anymore.
Douglas filed a lawsuit against Salmon but later dropped it when she, Williams and McLaughlin retained a lawyer, hoping to bring a larger lawsuit against their former pastor. But the group abandoned that plan when the legal bills became too much for them. They would like to pursue further legal avenues, but their finances won’t allow it.
The sisters both say that Salmon had good intentions. But Williams adds: “I really trusted her that everything was going to be okay, and she knew what she was doing. But when I look back at it, the fact that she’s a leader . . . to bring us through (but) that was the hardest part.”
Their eviction notices could come any day.
There you have it folks. As we all know, not all plays have happy endings. There are lessons to be learned from this fiasco. They are as follows:
1. Never put your own property up as collateral on something as unsure as a church being installed in a rundown building.
2. Make enquiries on those people you are going into business with. Find out how their businesses are related to other businesses.
3. Be suspicious of investors who are also real estate salespersons who are trying to get you to put up your property as collateral in a joint venture.
An investor should apply prudence instead of going head on into loquacious folly. These investors went full speed into their folly and now what they got for their investments are nothing but wreckage.
Nebraska philanthropist Terrance K. Watanabe may hold the record for being the biggest deadbeat high roller in Las Vegas ever prosecuted by the district attorney’s office. He owes the casinos $14.7 million. However, Toronto gambler Semion Kronenfeld, 38, is giving Watanabe a run for his money. I will get to him later but first I will deal with another deadbeat scammer.
Rick Rizzolo
At a court hearing, an attorney for a Kansas City area man paralyzed as a result of an altercation outside the ‘Crazy Horse Too’ owned by Rizzolo alleged that a man named McDonald is ‘dissipating assets’ for Rizzolo and is hiding other assets he received from Rizzolo over the years rather than paying the award to Kirk Henry as ordered by the court.
Henry’s attorney, Don Campbell, has filed suit in federal court against Rizzolo on behalf of quadriplegic Kirk Henry, alleging that the former topless club operator has been concealing assets to avoid paying Henry the remaining $9 million of a $10 million District Court settlement.
Rizzolo has stated that he had been hoping to pay Henry from the proceeds of the sale of the Crazy Horse Too. But the government — which now has possession of the closed strip club as part of a 2006 criminal plea agreement with Rizzolo — has had little luck marketing the club.
Now I am going to present to you a tragic play, one you can watch but should never participate as a member of the cast. First, I will tell you about the characters in this play.
Semion Kronenfeld
He was born in the Soviet Union, raised in Israel and moved to Canada as a teen. He was married and the father of four, including two from a previous marriage. He established successful investment real estate business and lived a lifestyle to match, with nine-bedroom mansion, part ownership of two condominiums and fleet of luxury cars.
He was the former president of AJGL Developments, and was the president of Electronic Liquidators, which declared bankruptcy in 2008. He is listed as an ‘incorporator’ of the numbered company that rented the appliance business space at 430 Tapscott Rd., and which also shares the same address as AJGL Developments.
He declared personal bankruptcy in February 2009, blaming the global recession. He also claimed his gambling debts — more than $21 million, according Kronenfeld’s list of creditors which he acquired due to his extravagant and constant incentives provided by the casinos.
Bankruptcy documents include testimony from two addiction counsellors he has visited since 2010. But according to one, Dr. Albert de Goias, Kronenfeld “did not have a gambling addiction. He had a lifestyle addiction.” Kronenfeld has signed up for the Ontario Lottery and Gaming Corp.’s self-exclusion list.
Hilary Salmon
She was the pastor of Greater Works Ministry, a Pentecostal congregation, and also a licensed real estate agent. In 2008, she led a group of her parishioners including Joyce Williams, Pat McLaughlin and June Douglas to purchase 430 Tapscott Rd. for the purpose of establishing a church.
She says that she borrowed $100,000 off the value of her home to finance the church. She also collected a $74,000 commission on the purchase of 430 Tapscott Rd, according to her former brokerage that fired her.
She owns two houses, one of which is collateral for the $1.25-million mortgage the group took out with Kronenfeld.
Vincent Salvatore
The 62-year-old says he buys and sells mortgages for a living. He and his wife, Elena, run several companies between them, including Vincorp Financial, Salvatore Empire Investments, Bostion Inc. and Arnach Inc.
He claims that he brought Kronenfeld’s mortgage on 430 Tapscott for $1.3 million. He also claims that when the mortgage first went into default, he advised Hilary Salmon to sell the Tapscott property and release the five homes attached as collateral, but she did not.
Joyce Williams, Pat McLaughlin, and June Douglas
The three women were all part of group that put in money for down payment and renovations on 430 Tapscott Rd.
Williams, a retired nurse, and her sister McLaughlin, a house cleaner, together provided $100,000, part of which came from Williams remortgaging her home.
Douglas, a single mother of four, borrowed $100,000 for church down payment. Salmon, their pastor, promised she would make the monthly payments on the loan.
And now, the play.
Joyce Williams, 70, and Pat McLaughlin, 63, who are sisters suffered from their financial ruin brought about by their faith in a pastor they put too much trust in and who herself put too much faith in Semion Kronenfeld who is notorious as a hopeless gambler who owes casinos tens of millions of dollars in unpaid gambling debts. Kronenfeld who is a real estate investor says he’s not responsible for his gambling debts. His explanation for his denial of responsibility is that he claims the casinos did not advise him to obtain legal advice before he entered into credit arrangements with them. Give me a break. That excuse may be acceptable to an uneducated person who is conned into borrowing money from a bank or other source by a third person but it certainly isn’t a justifiable excuse for not paying off a gambling debt.
The pastor, Hilary Salmon, denies any wrongdoing, claiming her parishioners collectively agreed to pursue church group’s vision by helping to purchase the building the church was to be in. Because of the money that the sisters invested in a church they thought would help others, the sisters, their children and other parishioners are in danger of losing their own homes which they put up as security.
Though the sisters did not attend her church, Salmon had been extremely close to Williams’ and McLaughlin’s mother, Daphne, before Daphne died 10 years ago. Many mornings since then, Salmon joined the two sisters in prayer over the phone.
Eventually Salmon presented the idea of a community that would include youth outreach — a pet cause of McLaughlin’s — along with a daycare centre, a restaurant and space for Sunday services to the two sisters. They were enthusiastic upon hearing Salmon’s proposal.
Salmon had asked the sisters to help out financially. Williams is a retired nurse living off her pension. McLaughlin is a house cleaner. They balked at first. “Oh my god, I don’t have any money!” McLaughlin remembers telling Williams. But eventually, both relented — a decision they now call “foolish.” They assumed they would be paid back in due course. How many times have innocent people been duped by others who claim that eventually they will be paid back their investment?
“We thought we could be of service, or help, to others,” says Williams. “But now, in retrospect, we think: how did we get here?” Williams remortgaged her Scarborough house, and the sisters tapped lines of credit, credit cards and an accident insurance payout to lend $50,000.
Another parishioner, June Douglas, says Salmon asked her to borrow $100,000 for the church: “She called me to tell me what the Lord is doing, and asked if I could help.”
Douglas, 47, is a single mother of four who had quit her job because her dementia-stricken mother needed full-time care. Though Douglas was already borrowing $30,000 to put her mom in a nursing home, she eventually gave Salmon what she wanted. “She just kept pulling — it’s like a magnet,” says Douglas. Salmon said she would provide the monthly payments for both loans. That was another promise that would die on the vine.
Salmon did not answer questions posed to her by the Toronto Star, responding only that the allegations presented in the Star’s story are “falsified.” Previously, in response to a lawsuit brought by Douglas, she said that she, too, suffered financially after borrowing more than $100,000 to finance the church. She also said that she did not call Douglas to ask for a loan, and that the loan was “voluntary.” Are we to believe that Douglas didn’t want to be repaid her money back?
The parishioners’ money was plunged into the down payment on their church-to-be, a huge, one-storey strip of brick at 430 Tapscott Rd. in Scarborough. Since 2006, the property had belonged to AJGL Developments, a North York-based real estate development company. The president of AJGL was Semion Kronenfeld, a man of extravagant tastes.
Kronenfeld lived in a gated, nine-bedroom, $4-million dollar mansion in North York with a driveway big enough to park his small fleet of luxury cars: a Rolls-Royce Phantom, a Ferrari Spider and two S-Class Mercedes-Benzes, among others. He was also part owner of two condominiums. According to one casino executive, Kronenfeld, 40, wore very expensive white Louis Vuitton shoes, collected expensive watches and liked to smoke cigars.
Blackjack was his game of choice. Vincent Salvatore, an occasional business associate and acquaintance of Kronenfeld said, “He was a whale.” (a term used by casino owners with respect to big spenders in their casinos)
Kronenfeld meanwhile was selling the 46,000-square-foot Tapscott property for $3.7 million.
The church of which Salmon was the pastor, was given a conventional mortgage, for the Tapscott property but it covered only $2.3 million of the purchase price. So Kronenfeld offered a vendor take-back mortgage, a type of private loan offered by the seller of a property to the buyer.
There was one condition: Kronenfeld would only provide a $1.25 million mortgage if the group offered five properties as collateral. Under pressure from Salmon, Williams and McLaughlin both agreed to include their own property as collateral and their children (both have two sons), who own their homes on paper, agreed to include their property also as collateral.
After resisting, Douglas caved and agreed to add her property as collateral at the last-minute. Somewhere down the line, Salmon told her church members that they could lose all the money they had already invested and that more was needed. Another couple who knows Salmon personally agreed to offer their property as collateral also. Salmon herself put up one of her properties, in Markham. She owns another on tony Balliol Street in downtown Toronto.
The mortgage didn’t seem risky because of one crucial detail. As a condition of the sale, Kronenfeld guaranteed ‘Greater Works Ministry’ a five-year lease for an appliance business that was renting half of the building, an arrangement that would supply the church with thousands of dollars in income.
So, every month, when the ministry wrote Kronenfeld a cheque for $10,417 in mortgage payments, it would receive more than $15,000 in rent payments from the appliance business. The ministry could then put the extra money towards its mortgage payments to the bank. However, the balances on both mortgages were due in a year, not uncommon in commercial real estate. How Salmon planned to come up with the money by then is unclear.
The deal closed on August 8, 2008, with Salmon acting as the agent for her own church. Salmon’s former brokerage, ReMax Crossroads Realty, confirmed that she received a commission of $74,000 on the sale. I don’t know what she did with that money. In any case, she was terminated from the brokerage last month for lagging sales, according to the branch manager.
That same week that the Tapscott deal closed, according to legal documents, Kronenfeld went to Casino Niagara and Niagara Fallsview Casino and took out a $1 million line of credit plus another $1 million line of credit at Casino Rama.
Salmon’s ministry moved in and, for a few months, the small church’s attendance grew. The sisters attended prayer meetings, breakfasts and services. Williams and McLaughlin say Salmon asked for more money to renovate the space. They loaned her another $50,000.
Then suddenly, in the fall of 2008, the rent cheques from the church’s tenant stopped appearing. Salmon called a meeting to say that the appliance business had moved out. Without the extra income, the church group began struggling to make their monthly mortgage payments.
Meanwhile, what no one knew was that in a matter of months, Kronenfeld had racked up millions of dollars in betting debts while living the life of a high roller. According to charging documents in the U.S., bankruptcy files in Ontario and lawsuits filed by casinos, between August and November of that year Kronenfeld jetted across North America, allegedly piling up debts at a different casino nearly every weekend.
In September, he was in Las Vegas, where he lost $1.2 million at the MGM Grand and $700,000 at Caesars Palace. In October, Kronenfeld gambled $5 million over two days at the Trump Taj Mahal in Atlantic City. Kronenfeld claims he was induced to gamble because casino executives lavished him with limousines, private jets and a diamond watch for his wife (the casino denies this). Later that month, he was in Las Vegas again, gambling away $7.9 million at the Venetian and another $5 million at the Green Valley Ranch casino. In November, he lost $2.1 million at the Niagara casinos and Casino Rama.
By the New Year of 2009, his lifestyle was crumbling. Casinos were after him for $21 million. The Taj Mahal, the MGM Grand, Casino Rama and the Ontario Lottery and Gaming Corp., which operates the Niagara casinos, were all suing him, claiming he failed to repay his debts. A warrant for his arrest was issued in Nevada after two Las Vegas casinos brought cheque fraud charges against him.
His bank, RBC, also sued him and froze his account after he allegedly deposited two cheques in December 2008 worth $1.1 million and immediately wired the money to a Swiss bank account before the cheques bounced. In his statement of defence, Kronenfeld states he was just as shocked as the bank when the cheques were dishonoured. He denies he defrauded RBC. How can anyone deny defrauding a bank under those circumstances?
In February 2009, Kronenfeld filed for bankruptcy. His list of creditors includes, besides the casinos and RBC, vehicle leasing companies for eight different cars, $7,000 at Best Buy and hundreds of thousands in credit card debt. His nine-bedroom mansion and two condominiums were sold off. He claims that he and his wife separated and he moved in with his sister — although, in an unrelated lawsuit, Kronenfeld states that nine months after his bankruptcy filing he and his wife were living in a rented five-bedroom mansion when it caught fire and burned down. The owners of the house are suing the couple for $3 million; Kronenfeld and his wife deny responsibility.
By the time the district attorney’s bad check unit is through investigating Kronenfeld, he is expected to face theft and bad check charges stemming from $12.9 million in unpaid gambling markers.
Chief Deputy District Attorney Bernie Zadrowski, who runs the bad check unit, said an arrest warrant was issued in Las Vegas Justice Court last month for Kronenfeld on a six-count criminal complaint, charging the Toronto businessman with failing to pay $5 million in gambling debts in October at Green Valley Ranch Station Casino. And the Venetian, Zadrowski said, has since asked him to file criminal charges against Kronenfeld, who also spells his last name Cronenfeld, for his alleged failure to pay another $7.9 million debt at the Strip casino in October.
Kronenfeld, who has an Israeli passport, lists his occupation on casino credit records as the owner of AJGL Developments LTD, an investment real estate company.
The Toronto area phone number of the company listed on the records is disconnected, and other attempts to reach Kronenfeld were unsuccessful.
The church group, meanwhile, fell into default on their mortgage, and the situation quickly deteriorated. In early 2010, Salmon reneged on her promise and stopped paying for the $100,000 loan Douglas had taken out for the church. The Tapscott property was seized by the bank and sold, which paid off only the first, conventional mortgage. In June, the church members were mailed warning letters noting that they were in default on the second mortgage, and that power of sale proceedings would be issued on their homes imminently.
But the letters came from a company they had never seen before: Vincorp Financial. Unbeknownst to the church group, in November 2008 Kronenfeld sold the second mortgage on 430 Tapscott Rd. to a company called Vincorp Financial. Vincorp’s president is Vincent Salvatore, Kronenfeld’s business associate. Salvatore told the Star they had also been on gambling trips together.
On the same day that the Taj Mahal sued Kronenfeld for $5 million, the casino also filed a complaint against Salvatore, claiming $3.5 million in unpaid gambling debts. In his statement of defence, Salvatore says he was at the casino on a trip arranged by Kronenfeld, and those millions were actually gambled by his friend, who is therefore liable for the debts.
Salvatore says he bought the Tapscott mortgage from Kronenfeld for $1.3 million. “I guess he needed the money,” Salvatore says. Salvatore, 62, told the Star their relationship soured after Kronenfeld went belly up. “Kronenfeld screwed me too,” says Salvatore. According to records, when Kronenfeld declared bankruptcy, he owed $100,000 to a company called Salvatore Empire Investments, whose president is Salvatore’s wife.
The fate of McLaughlin, Williams, Douglas and the other church members is in Salvatore’s hands, he says, “Right now I actually can bankrupt them.” But he notes that he paid $1.3 million for the Tapscott mortgage. As it stands, if he collects on all five homes tomorrow, he still won’t make that back, because the equity in the properties is only around $400,000.
“I really feel bad for the people. That was my main concern right from day one. People like them should not lose their houses,” Salvatore says. But, he adds, “I can’t walk away from a million three (thousand dollars) . . . that money is my family’s money.” Salvatore says he is open to negotiating a new payment plan. “Who created the problem was Hilary (Salmon) by getting into a deal that was too big for her,” he says. “I trusted her, we all trusted her,” says Douglas. “It almost destroyed me.” For more than a year now — since Salmon abandoned her promises of repayment — Douglas has been forced to use her mother’s monthly pension cheques to pay down ballooning interest on the $100,000 loan. She can’t afford to put her mother in a nursing home anymore.
Douglas filed a lawsuit against Salmon but later dropped it when she, Williams and McLaughlin retained a lawyer, hoping to bring a larger lawsuit against their former pastor. But the group abandoned that plan when the legal bills became too much for them. They would like to pursue further legal avenues, but their finances won’t allow it.
The sisters both say that Salmon had good intentions. But Williams adds: “I really trusted her that everything was going to be okay, and she knew what she was doing. But when I look back at it, the fact that she’s a leader . . . to bring us through (but) that was the hardest part.”
Their eviction notices could come any day.
There you have it folks. As we all know, not all plays have happy endings. There are lessons to be learned from this fiasco. They are as follows:
1. Never put your own property up as collateral on something as unsure as a church being installed in a rundown building.
2. Make enquiries on those people you are going into business with. Find out how their businesses are related to other businesses.
3. Be suspicious of investors who are also real estate salespersons who are trying to get you to put up your property as collateral in a joint venture.
An investor should apply prudence instead of going head on into loquacious folly. These investors went full speed into their folly and now what they got for their investments are nothing but wreckage.
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