In a flash, Judy Allen, 75, had $1.5M in mortgages on her bungalow, and she faces ‘financial ruin.’ We asked Tony the Contractor and Harold the Jewellery Buyer, how did this happen?

“I want to age in place,” Allen, a retired nurse, told Tony Sinopoli. They sat on the cramped front porch of her small bungalow at Highway 401 and Yonge Street, drinking Tim Hortons coffees that Sinopoli brought. The contractor has a salt-and-pepper beard, and wears thick glasses because of a medical condition he says has made him almost completely blind. Allen is 75, stooped, white-haired. She uses a walker to get around.

Allen told Sinopoli: “I have bad arthritis, cardiac issues, and I want to make my little bungalow a safe, happy home.” She hired him to expand her small garage, widen her porch, make the interior “open concept” and build a solarium at the back.We can do that,” Sinopoli told her. He later told the Star that before that job, he had mainly done small basement renovations.

To pay for the work, Sinopoli says he connected her with a “mortgage finder” for the first mortgage, then, for the next four mortgages, brought in Harold Gerstel, the man known from television commercials as “Harold the Jewellery Buyer,” promising “cash for gold” and “fast, no hassle” mortgages.

In just eight months, five mortgages totalling $1.52 million were placed on Allen’s home, four of them (the Gerstel mortgages) at 22 per cent interest with other hefty “lending fees” attached. Most of the money was split between Sinopoli’s renovation charges, and fees and prepaid interest on the mortgages. A generous estimate of the actual work done — which appears shoddy and unfinished — is $300,000, according to a realtor with knowledge of the property and the area.

Bottom line: There is no equity left in Allen’s North York property, and Gerstel has recently moved to foreclose and take her home. Allen says she did not realize what was happening until it was too late.n her own words, she is “financially ruined.” Her hope of “aging in place,” something more and more seniors hope to do these days, has ended. She is moving to a retirement home in June, having scraped together enough money for one year’s rent.

The renovation work on her bungalow? Unfinished. Wood joints are coming apart; there are several plumbing leaks; no safety railings on a narrow deck; her backyard is now inaccessible to someone with a walker; there is crumbling stone work; the narrow “heated ramp” off her porch barely accommodates her walker; and the electric heating coils in the cement never worked. It was an uneven, sloped ice path this past winter.

There’s also a growing black mould problem in the new garage because it leaks and the drywall was installed tight to the floor. Rats have moved into her basement, and a water leak during the renovation destroyed many of Allen’s possessions. Sliding doors in the solarium do not open properly. One handle broke off immediately. The new addition was installed without a full foundation — and a rickety plywood “skirt” surrounds the bottom of the addition, the underside already open in places to the elements.

Allen has no children to look out for her. During much of the eight-month renovation, Allen was in and out of hospital for heart and other conditions. The one saviour in this situation has been Jamie Erlick, a local realtor who by chance learned of Allen’s situation and has been trying to help. Erlick called the Toronto Star and we investigated.

“The sad thing for Judy is that the house is a disaster, it’s worse than it was before, and it’s not worth any more than it was before this all started,” said Erlick. He’s paying out of his own pocket to send cleaners and an exterminator over.

To put this story together, the Star interviewed Allen (the homeowner); Sinopoli (the contractor); we have exchanged questions and answers with Melvyn Solmon, Gerstel’s lawyer (Gerstel would not agree to be interviewed); and we have been given access to all of Allen’s banking and renovation records. The Star has spoken to one of the lawyers referred to Allen to provide “independent legal advice.” The other declined comment. Abraham Jonas, Gerstel’s real estate lawyer, hung up on a Star reporter when the first question was posed.

Judy Allen purchased the bungalow near Yonge and Highway 401 in 1987 for $211,000. She bought it with savings from a career as a nurse, help from her brother, plus a $150,000 mortgage from Canada Trustco Mortgage Co. She paid that off over time. She’d been married once, but has mostly lived on her own. A good friend had purchased nearby and she decided it was time to be a homeowner. It became her home base for jobs in health care, and at night she enjoyed gardening and relaxing on the porch.

By 2020, she owned one of the last bungalows on Johnston Avenue. Most other bungalows had been replaced by two-storey homes. She had a $119,000 line of credit against title, but lots of equity. She did not want to move, though she figured her home could fetch $1.5 million-$1.6 million, even as a building lot. That’s when she called Tony Sinopoli and hired him for the renovation project. She’d spotted his company (AFS Contracting and Design — A for Anthony, S for Sinopoli) at the top of contractor ads in a local weekly.

To Allen, all seemed fine at first. Using sub trades — “I don’t actually do any of the work,” Sinopoli told the Star — walls were knocked down, the interior was cleared out, the old garage was demolished. Construction waste bins showed up, provided by Sinopoli’s sister. Allen was billed for 32. Sinopoli told the Star there were really only 18. Allen says she would be surprised if there were 10 used in total.

Sinopoli said the sliding doors were provided by his brother. Sinopoli’s son built the uncompleted backyard shed. (It is filled with 500 square feet of boxed “Italian tiles” that Sinopoli ordered for the interior floors.) “I think he overestimated,” Allen says. Sinopoli also said his stepson did some of the work on the project.

City of Toronto building records show that shortly after that Tim Hortons coffee on the porch, Sinopoli applied for and was granted a permit — which gives legal permission to build a new garage and covered front porch. But the permit does not cover the majority of the work, including interior plumbing changes, knocking down the back wall, making structural changes in the interior, and constructing a 16-by-13-foot addition out back. The lack of a proper permit was news to Allen, when the Star told her.

A few weeks into the demolition, Sinopoli had a chat with Allen. “You need to pay for this somehow,” Sinopoli said. She had paid the first few weeks’ work out of savings. Sinopoli had a suggestion. He knew “a guy who does mortgages, Joseph.” Allen said she followed Sinopoli’s suggestion and did not seek a mortgage from a bank.

The First Mortgage: Dec. 15, 2020 — $400,000, 10 per cent interest

Enter Joseph Capogreco. In an interview with the Star, Capogreco called himself a “mortgage finder,” who told the Star he gets three per cent of a mortgage as a fee.

“Tony called me,” Capogreco recalled. “He said go see her. She said, ‘I need about $400,000.’ ” Capogreco, who is not a licensed mortgage broker, connected her with a lawyer he knew, Michael Collins. Collins represents the Cammalleri family, who provide private mortgages.

Collins told the Star that his clients provided a one-year, $400,000 mortgage at 10 per cent interest ($40,000). The interest was paid up front to the Cammalleri family.

While Collins represented the Cammalleri family, Allen required her own legal counsel. Capogreco, the mortgage “finder,” suggested “a lawyer I use,” Derek Sorrenti.

Allen did a video call with Sorrenti, using Capogreco’s cellphone. Sorrenti told the Star in an interview that he had several other calls with Allen (Allen does not recall these) as they worked through the terms of the deal. What Allen did not know was that, just two months previous, Sorrenti had received a practice restriction from the Law Society of Upper Canada, which is investigating Sorrenti on charges that he “may have knowingly participated in a fraud against his clients” in the Fortress Real Capital Inc. syndicated mortgage deal, according to law society documents.

Sorrenti is also alleged in the syndicated mortgage deal to have failed to “provide competent advice” to clients and to have acted for both the lender and the borrower. An interim ruling dated October 2020 (around the time he started working on the Judy Allen mortgage) permits him to do small residential legal work (as he did with Allen) but places restrictions related to syndicated mortgage deals with more than seven lenders. In an interview, Sorrenti told the Star that he provided good legal representation to Allen, and nothing in the legal regulator’s ruling required him to report to them about the ongoing law society case. None of the law society’s allegations against Sorrenti have been proven and the case is still pending.

In the case of this first mortgage, once prepaid interest and mortgage, lender and legal fees were deducted, Allen received $334,105 toward her renovation, according to her bank statements. Allen passed most of that money to Sinopoli, the contractor, through bank drafts.

The Second Mortgage: March 2, 2021, $445,000, 22 per cent interest, lender fee $47,100

Enter Harold the Jewellery Buyer.

As Sinopoli proceeded with the renovation, he told Allen he needed more funds, and he had a suggestion.

“I heard through the grapevine about a buddy who used Harold, so I said, ‘Let’s call Harold, see what he has to say.’ ”

Harold Gerstel is one of those larger-than-life Toronto characters. He’s been the target of robberies and a high-profile pistol whipping attack that made the nightly news; his old store was burned down in an arson attack that remains unsolved. Today, he operates out of a highly secure storefront office on Bathurst Street, south of Lawrence Avenue West.

Gerstel has long been known for offering to buy, or advance money against, “gold, diamonds, watches” and other jewellery. “Our vision is to help our clients leave with money in their hands,” he says on his website. Some years ago, Gerstel got into providing private mortgages through a licensed business, Harold the Mortgage Closer Inc.

“We know how difficult it can be to get a mortgage from the bank,” he says on his website. “Our process is different! All you need is equity in your home. Call Harold!”

Gerstel says he offers an “easy and hassle-free process.”

He would only respond to the Star through his lawyer, Melvyn Solmon, who provided written answers to written questions.

Sinopoli, the contractor, referred Judy Allen to Gerstel. Mortgage documents show that on March 2, 2021 — a little more than two months after the first mortgage (the one from the Cammalleri family) — the first Gerstel mortgage went on Allen’s property, a $445,000 charge. Similar to subsequent mortgages, Harold the Jewellery Buyer had a 22 per cent rate.

Here’s how the payments on that mortgage shook out. There was prepaid interest to Gerstel of $97,900, plus a “lender fee” to Gerstel of $47,100. Of the $445,000 face value of the mortgage, $300,000 was earmarked for the homeowner.

The Star has sifted through Allen’s bank statements and it is unclear exactly how much money from these and subsequent mortgages Allen actually saw. Allen said most went to the renovations, though she was able to pay off her $119,000 line of credit. Sinopoli, the contractor, told the Star that in the case of one mortgage, the money went directly to him, but he is not sure which one. Both Gerstel and Cammalleri (who advanced the first mortgage) say all money was advanced through the trust accounts of lawyers representing both sides.

As to Allen’s legal representation on the Gerstel mortgages, Allen said Gerstel recommended she use a lawyer named Kamele Barrett.

Barrett, who works out of a Pickering office, told the Star “it is not my practice to discuss with the public who has or has not retained me, or the legal services I may have provided to clients.” Gerstel, through his lawyer, said he does know Barrett from another legal file, but he did not say he recommended her.

The Third, Fourth and Fifth Mortgages from Harold Gerstel. March 18, 2021 ($270,000); June 14, 2021, $225,000; Aug. 11, 2021, $180,000. All at 22 per cent, with total “lender fees” of $76,500 to Gerstel for the three mortgages.

Sinopoli kept working on the renovation. To hear Sinopoli and Gerstel tell it, Allen had an insatiable desire for more and more work.

“She was like a little baby, more, more, more,” said Sinopoli.

“She overspent like a drunken sailor causing herself to be in this mess,” said lawyer Solmon, speaking on behalf of Gerstel, his client.

Allen, the homeowner, has a different take. “Tony just wanted more and more money.” Yes, she was particular about what she wanted. Having been raised on a farm, she loved barnboard and wanted most of the interior to be barnboard. Sinopoli has told one person he sourced barnboard from Kentucky, and told another he sourced it “from the Mennonites.” To the eye of a Star reporter and photographer, the grey barnboard does not look authentic. It also smells.

Despite being in and out of the hospital seven times during the eight-month renovation, Allen said she did her best to keep on top of what Sinopoli was doing.

The Star was not able to do a full financial review of the project, as Sinopoli and Gerstel did not provide an accounting of how the money flowed. (Cammalleri, the first mortgage holder, and his lawyer were more forthcoming than Gerstel.)

Based on the available documents for the eight-month span, this is what we could determine. The face value of the five mortgages total $1.52 million. Roughly $500,000 came off that amount for interest and lenders’ fees, plus other charges (most of it to Gerstel).

Of the roughly $1 million that was left for the renovation, Allen paid off the $119,000 line of credit, and most of the the remainder left Judy Allen’s bank account as “drafts” to Sinopoli. Some of the supplies she paid for directly.

Sinopoli told the Star he had “a signed contract,” but he did not provide it to a reporter. Allen gave the Star copies of three undated “contract” agreements over the eight months — each with only a few words of description. They total $749,761.30, significantly shy of the roughly $900,000 that apparently went into the renovation.

The Realtor

Jamie Erlick is a successful Toronto realtor. As realtors do from time to time, he puts flyers in homeowners’ mailboxes. Judy Allen was at wits’ end two weeks ago when she saw Erlick’s flyer.

Sinopoli, the contractor, had put two construction liens against her home, alleging unpaid bills totalling $105,861. Frantic, she said Sinopoli said he desperately needed the money, and she had gone to her bank and cashed in a mutual fund, which cost her $14,000 in early payout fees. She paid Sinopoli $36,000 (he insisted she deliver the draft to his home) and he dropped one of the liens. Still, with Gerstel now foreclosing, she needed help.

She remembered the real estate flyer and called Erlick, and he went over immediately. Erlick said he was appalled, and contacted the Star.

“This contractor convinced this naive older lady to keep mortgaging and paying him all this money,” Erlick said, standing beside Allen in her home. He had just done a full tour and spotted “deficiency after deficiency” in the construction. “She now has to sell because the mortgagee wants his money. She will be left with nothing and be on the street.”

Erlick is doing his best to help Allen navigate the problem. He’s arranging to have the house cleaned (it was left a shambles by the contractors) and deal with the rat problem as a start. “I think she needs a really good lawyer,” he said.

The Star asked both Sinopoli and Gerstel if they had any concerns that they took advantage of Allen.

“What was I going to do, leave her?” Sinopoli said. “I’ve got a heart, I can’t leave people in the hole.”

The Star asked Sinopoli about the quality of his workmanship and his cost. Sinopoli said most of the work was done by “Johnny” (he did not recall the last name) and he agrees that “some of the joints are twisted” (referring to the carpentry). He said the high costs were related to the price of plywood and two-by-four studs that rose during the pandemic. Asked about the high-interest rates, Sinopoli said “22 per cent is outrageous,” and people who provide high-interest mortgages are “vultures.”

Gerstel, through his lawyer, said he saw no problems with his own conduct. “She was acutely aware of what she was doing and she had independent legal representation for every mortgage. Along the way, I would query her about how she’s going to repay the mortgage debts. She kept reassuring me that there are other resources that she could draw upon to repay the mortgage debts.”

Two of the four mortgages Gerstel holds on Allen’s property (they are all closed, one-year terms) are past their date of maturity. Gerstel has moved to foreclose. The first mortgage is also past its maturity date. In the case of Gerstel’s mortgages, each one has a proviso that allows Gerstel to extend by three months the term of the mortgage and charge interest on the principal equal to 59.9 per cent. In Canada, the “criminal rate of interest” is 60 per cent.

Solmon said, responding on behalf of Gerstel: “As long as my client advanced money he was the nicest guy, and when she did not honour her obligations under the mortgages and he took steps, he became (the) villain.”

Kevin Donovan is the Star's chief investigative reporter based in Toronto. He can be reached at 416-312-3503 or via email: kdonovan@thestar.ca