The doctor and the judge: Why high school friends now accuse Vancouver real estate developer of fraud

A CEO once described as a ‘rising star’ of Vancouver’s real estate development industry is being sued by friends from his high school days

They were three friends who attended the prestigious St. George’s private school in Vancouver in the early 1990s and then went on to prominent careers: the CEO of a real estate development firm, the head of medicine at a major hospital, and a provincial court judge.

But now the judge and the doctor allege in a lawsuit that they lost hundreds of thousands of dollars after investing in the developer’s real estate projects, accusing the CEO and his companies of fraud and misappropriation of funds.

Meanwhile, the developer, according to court filings, is hiding in an attempt to avoid being served with the lawsuit.

The claim is one of more than 100 files in the B.C. Supreme Court civil registry naming Macario (Tobi) Reyes or his company, Port Capital Development, including other lawsuits and foreclosure actions involving various properties, most filed in the last few years.

Reyes has previously been described as a rising star in Vancouver’s development industry, appearing in Canadian and international media to discuss his business successes as well as his philanthropic and community-building efforts.

Reyes has not responded in court to the lawsuit.

But when Postmedia News contacted him by email this week, Reyes replied: “There have been hundreds of issues and we have settled them all except for a remaining handful or so. We intend to deal with this latest suit to the satisfaction of the law and the parties.

“But bigger picture is that we will focus on continuing what we have done over 20 years: build homes, innovate in our space and add more value to the community,” Reyes said. “I am extremely empathetic to how each side has felt while reserving details for our response. We hope to take all of these learnings and lessons and adapt them to a world where housing matters even more.”

Reyes, Dr. Gerald Da Roza, and Judge Derek Mah “met and became friends in high school,” the lawsuit says. Decades later, in 2012, Da Roza and Mah, through their respective holding companies, invested a combined $400,000 in a project Reyes’ company was developing in east Vancouver with a mix of commercial space and condos, the claim says.

The parties entered into a limited partnership, with a plan to own the commercial space after the development’s completion, the claim says. But Reyes obtained a second mortgage on the commercial space totalling $2 million from private lenders, apparently without Mah and Da Roza’s knowledge, and the lawsuit alleges Reyes defrauded the investors by using that money for his own “personal gain, either directly or through legal entities over which he had direct personal control.”

The investors suffered losses, they allege, after the private lenders behind the second mortgage initiated foreclosure proceedings in 2021 and took over ownership of the commercial space.

Between their initial investments in 2012 and the Kingsway foreclosure in 2021, Mah and Da Roza’s companies also invested in three other Port projects around Vancouver, the claim says.

None of the allegations have been proven in court.

Da Roza, Mah and their lawyers did not respond to requests for comment.

Other than Terrace House, the fate of Port’s other properties has so far received little if any public attention, but they have kept local insolvency lawyers busy in recent years with several properties tied up in litigation and subject to dozens of foreclosures and court-ordered sales.

Reyes’ company, Port Capital Group, was divided into two divisions: an investment arm called Port Living Properties and a development arm called Port Capital Development. At one time, the portfolio of Port Capital and related companies included more than 20 projects between Vancouver, the Okanagan and Toronto, including condos, motels, commercial and light industrial real estate. Before Port’s financial troubles, its combined portfolio was estimated in the hundreds of millions of dollars.

It is not clear which, if any, properties are still owned by Port and its related companies after all of the foreclosures.

Asked if he had any development projects or other business ventures in the works, Reyes said: “Yes many, and will come to market as soon as this year with those projects.”

Reyes pointed to his grandfather as his role model in a 2019 profile in The Manila Times, which described Port Living as “one of Canada’s most progressive and successful property developers.”

In his comments to BIV a decade ago, Reyes credited the support of his associates, including lawyer Robert Quon, “with enabling his achievements.”

Quon is named as a co-defendant alongside Reyes in the investors’ continuing lawsuit, identified as the lawyer for the limited partnership. The claim alleges that Quon failed to act in the partnership’s best interests and engaged “in a conflict situation where Mr. Reyes and his multitude of legal vehicles were previous, prolific clients of Mr. Quon’s,” and he had previously invested in Reyes’ companies, which was not disclosed to Mah and Da Roza.

In a response filed in court, Quon has denied all allegations of wrongdoing and any breach of duty.

Reached by phone, Quon declined to discuss the case and referred questions to his lawyer. His lawyer did not reply to messages.

Repeated fruitless attempts over the last 11 months to serve Reyes with the lawsuit are described in affidavits filed in court: the professionals who deliver legal documents visited his office and residence several times, left printed notices and voice messages, and received no response.

“The process-servers believe that Mr. Reyes is aware of the documents and is evading service,” according to an application filed in court earlier this month by the plaintiffs’ lawyers.

The plaintiff’s lawyers applied in early July for the court’s permission to serve the action “alternatively” upon Reyes, meaning they can deliver the documents to his office and residence and leave it with an adult there or affix the documents to the door, and send them by mail to both addresses.

Earlier this month, a B.C. Supreme Court judge agreed, meaning Reyes will have 21 days to respond in court after the documents are delivered, even if he does not receive them in person.

Asked about the allegation he had been “evading service,” Reyes said: “We have dealt with everything so I don’t know where that comes from.”

Regarding the future, Reyes said: “We have a lot going on that we are extremely excited by.”

Reyes did not reply when asked if the three former schoolmates were still friends.

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