An Ontario mortgage broker who arranged tens of millions of dollars in funding for a financially troubled real estate enterprise run by a former child actor is now facing nine lawsuits from lenders, including one of her employees.
The lawsuits target Claire Drage, a mortgage broker with the Windrose Group who helped arrange funding for a real estate empire run by former child actor Robby Clark. Mr. Clark filed for court protection under the Companies’ Creditors Arrangement Act (CCAA) in January as his network of companies, which owns 405 rental properties in Northern Ontario, struggled to pay off debts of $144-million.
Ms. Drage used a company she controls called Lion’s Share to collect promissory notes from investors. She provided those notes to the now-insolvent real estate empire of Mr. Clark, a U.S.-born actor who in 2000, as a 13-year-old, began starring in YTV’s The Zack Files.
According to reports by court-appointed monitor KSV Consulting, Mr. Clark’s companies had been provided with 802 promissory notes, totalling $54-million in value. Lion’s Share is the lender on 602 of them, worth $37.6-million. The remaining notes were from small investors, provided directly to a Clark company or associate, for the most part with Lion’s Share as a facilitator.
So-called “prom notes” are not mortgages, and while they can look like simple loans between parties they are treated as securities – like stocks or bonds – under Canadian law. According to the CCAA filings, Mr. Clark’s companies were typically contracted to pay their lenders between 15 per cent and 20 per cent interest monthly. Unlike a first or second mortgage, these debts were not registered or secured against any of the homes.
Lawyers for Mr. Clark’s secured lenders have warned the amount of debt his companies racked up before going insolvent could leave little room for repayment of unsecured debts, such as the promissory notes.
On Feb. 9, Ms. Drage sent her investors an e-mail that said she had to “pause redemptions and interest payments” for the notes, because 45 per cent of them are no longer paying interest, a result of them being tied up in Mr. Clark’s insolvency. The message concluded by asking lenders to give her “breathing room.”
The e-mail kicked off a series of demand letters and legal claims. In the past two weeks, nine claims have been lodged in Ontario civil courts against Ms. Drage and her company alleging those notes are now in default, with four of the claims explicitly citing the Feb. 9 e-mail.
Together, the claims are seeking the return of $3.65-million.
The lawsuits contain allegations that haven’t been tested in court. Ms. Drage, who has yet to file statements of defence in any of the cases, has declined to respond to requests for comment about Mr. Clark’s insolvency and the legal claims against her.
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The first to file was Rob Noble of London, Ont., who says in his statement of claim that he loaned Lion’s Share $450,000 on Jan. 10 of this year, less than a month before Ms. Drage would stop paying all the Lion’s Share lenders. The promissory note Mr. Noble financed foresaw a 12-month repayment schedule that would have earned him $72,339 in interest. Mr. Noble’s lawyer, Randolph Mills, said his client was not prepared to comment.
Erin Abbatangelo filed a statement of claim earlier this month seeking repayment of $500,000 shared between two promissory notes signed on June 2, 2023. Ms. Abbatangelo claims she has not received any payments from Lion’s Share since Sept. 2, when the loans were to mature. She says she is owed a monthly interest payment of 15 per cent of the principal for those months in default.
Ms. Abbatangelo, who describes herself on her website as a self-employed brand strategist, declined to comment.
Some claims show lenders had been extending Lion’s Share high-interest loans – typically at 15-per-cent rates – for some time. Another claim, by a B.C.-based company called Premier Choice Investments Ltd., lists three promissory note loans: $50,000 loaned on Feb. 4, 2022; $50,000 on Aug. 18, 2022; and a $310,000 loan on Oct. 6, 2023.
The $310,000 loan was supposed to be repaid by Jan. 3 of this year, less than three weeks before the Clark insolvency was filed. Premier Choice’s lawyer did not respond to a request for comment.
Sharon King, an Ontario entrepreneur with Starfield Consulting Ltd., filed a claim seeking repayment of three promissory notes signed with Lion’s Share by her company, Transformation Management Consulting Ltd., in November. Two of the notes are for $40,000 each, and another is for $35,000. Ms. King declined to comment.
Another investor, Clayton Procter, has filed a lawsuit seeking repayment of $60,000 he loaned Lion’s Share and Ms. Drage in September. Mr. Procter could not be reached for comment.
Ms. Drage sent an e-mail to her investors on Feb. 21 warning the payment pause had to continue. In that message, she said she anticipated being able to restart interest payments, “subject to the expected repayment from our borrowers in coming weeks.” But she warned that the payments “may be reduced” to 55 per cent of the regular amount.
The promissory note agreements reviewed by The Globe don’t include any provisions for a partial payments plan.
“It is becoming increasingly difficult to hold it together and stay focused on this with all the external ‘noise’ that is occurring. Even me writing this e-mail is against the wishes of my lawyer, in fear it gets shared with the media and then misconstrued,” Ms. Drage wrote in the e-mail. “All this negative news and reporters targeting Lion’s Share specifically is only going to encourage borrowers NOT to repay us at all if they think they can get away with it.”
The e-mail concludes with a word of assurance: “I will do everything in my power to ensure all my lenders are made whole.”
After that, more civil claims followed: Six people – Elizabeth Ferraiuolo, Vince Ferraiuolo, Nichole Ferraiuolo, Vincent Ferraiuolo, Steven Zecchin and Kyle Eastwood – joined together to file a claim for a combined $1.535-million. They say their lending began as far back as 2020, for terms initially as short as four months. There are 11 notes at issue in the claim, which range from as little as $35,000 to as much as $450,000. The group’s lawyer did not respond to a request for comment.
Three other claims were filed in the past week, each by individual investors: one for $200,000, one for $205,000, and a third for $175,000.
The latter claim was brought by Ashley and Luke Bingham. Ms. Bingham is an administrative assistant at the Windrose Group and has appeared in court documents confirming receipt of money transferred to Lion’s Share. She did not respond to requests for comment.
On Feb. 15, Ontario Superior Court Justice Jessica Kimmel extended a stay of proceedings against Balboa Et. Al – as the Clark companies are known in the CCAA proceeding – until March 28. The justice also approved an amended order empowering KSV Consulting to conduct a tracing investigation to account for the loaned funds and properties of the insolvent companies.
Shane Dingman