What Happened with the SkyCity Project in Winnipeg?
Were you ever involved in the now infamous Sky City project in Winnipeg? We would love to hear your comments on the experience.
Quick Read Summary for those that want a quick synopsis on the SkyCity Case:
The SkyCity condo project in Winnipeg ultimately did not proceed
Fortress executives were convicted for misleading investors about syndicated mortgage risk
Buyers reportedly recovered deposits
Approximately 800 investors were directly affected in the projects before the court
Regulatory oversight of syndicated mortgages has since tightened
The case underscores the importance of transparency in real estate investments
Does anyone remember the SkyCity project in Winnipeg, or were you personally involved?
The proposed SkyCity condominium tower in downtown Winnipeg was once marketed as a landmark luxury development. Many buyers placed deposits, investors participated through syndicated mortgage investments, and the project generated significant local interest.
When the development ultimately collapsed, it left questions — and for some, financial and emotional fallout.
Recently, the legal case tied to the project reached sentencing.
We’ve seen multiple pre-construction condo projects over the years in Winnipeg. From what we’ve heard locally, buyers did receive their deposits back, which is important. But it doesn’t erase the emotional rollercoaster of thinking you’re buying a new condo, planning for the future, and then watching the project unravel after years of waiting. And like buying a condo in Winnipeg isn’t scary enough with all of the rules and paperwork you need to navigate!
For those impacted, there’s at least some sense now that accountability has caught up.
Two senior executives at Fortress Real Developments, Jawad Rathore and Vince Petrozza, were sentenced to five years in prison and ordered to repay $12.2 million for fraud tied to syndicated mortgage investments connected to projects including:
SkyCity (Winnipeg, Manitoba)
Collier Centre in Barrie, Ontario
The ruling reinforces accountability in Canada’s real estate investment sector.
What Is a Syndicated Mortgage Investment?
Before we get into what they actually did wrong, I think it is important to explain what a syndicated mortgage investment actually is. A syndicated mortgage allows multiple investors to pool funds to finance a real estate development project.
Instead of a single lender, many investors share in the mortgage, typically in exchange for interest returns.
Syndicated mortgages are legal and commonly used, but they carry risk, particularly when tied to early-stage development projects.
What they actually did wrong
Fortress sold syndicated mortgages to everyday (“mom-and-pop”) investors. These products let many small investors pool money to finance early-stage real estate developments.
The problem wasn’t that syndicated mortgages exist, it was how the risk was represented.
The court found that Fortress:
Misrepresented loan-to-value (LTV) ratios. They calculated LTVs using future, projected values of developments instead of the current “as-is” value of the land or project.
Failed to disclose material risk. Investors were led to believe their loans were far more secure than they actually were.
Induced people to invest based on misleading information. The judge explicitly said this wasn’t accidental, it was intentional.
In other words: Investors thought their money was well-secured. In reality, the projects were overleveraged and far riskier than disclosed.
The Impact
About 800 investors were directly affected in the two projects before the court
Many suffered catastrophic financial losses
Some experienced serious mental and physical health consequences
Across Fortress as a whole, 14,000 investors put in ~$920 million across 80 projects
Some projects succeeded. Many didn’t. The losses in these cases were severe.
Why they Didn’t Get 10 Years
The Crown wanted 10 years in prison and $26 million forfeiture. The judge imposed 5 years, citing:
This was not a pure Ponzi scheme. (The projects existed; this wasn’t fake investing.)
The men had no prior criminal records
The court believed they had rehabilitation potential
Still, the judge emphasized this was serious, planned, long-running fraud.
There’s also a backup penalty: If they don’t pay the fine within 10 years of release, they face another 5 years in prison.
Why this Matters Beyond Fortress
This case has become a regulatory turning point in Canada. Because of scandals like Fortress:
Ontario tightened syndicated mortgage rules in 2018
Oversight shifted to the Ontario Securities Commission in 2021
There has been trickle-over effect to other provinces (MB included)
Regulators now scrutinize:
LTVs over 100% on an “as-is” basis
Deferred repayment priority
Related-party transactions
Sales to non-sophisticated investors
These changes were designed to prevent exactly this kind of harm from happening again.
Frequently Asked Questions About SkyCity and Fortress
Was SkyCity a scam?
SkyCity was a real proposed development project. However, the court found that investors were misled about the security and risk profile of syndicated mortgage investments tied to projects including SkyCity.
The fraud ruling focused on how risk was represented, not on the concept of development itself.
Did Winnipeg condo buyers lose their deposits?
From local reporting and conversations, buyers reportedly received their deposits back. The primary financial losses involved syndicated mortgage investors.
How Did SkyCity Impact Winnipeg Buyers?
From what has been shared locally, condominium buyers in Winnipeg did receive their deposits back. However, projects like SkyCity often involve:
Years of waiting
Planning life transitions around a future home
Financial uncertainty
Emotional investment
For many, the collapse represented more than just a cancelled development. It disrupted long-term plans.
What is the difference between buying a condo and investing in a syndicated mortgage?
Buying a condo typically involves purchasing a registered unit in a completed or pre-construction development.
Investing in a syndicated mortgage means lending money to a development project in exchange for expected returns. This carries a different risk profile and regulatory structure.
Has regulation changed since the Fortress case?
Yes. Regulatory oversight of syndicated mortgages tightened significantly after 2018, particularly in Ontario, with broader scrutiny across Canada.
What does this mean for Winnipeg real estate today?
This case reinforces the importance of transparency, due diligence, and understanding risk. Particularly in investment products tied to real estate.
It does not suggest that real estate as a whole is inherently unsafe. Rather, it highlights the difference between market risk and misrepresented risk.
The Big Takeaway
This wasn’t about real estate failing. It was about risk being dressed up as safety.
The court’s message was clear: You cannot sell high-risk real estate investments to everyday investors while downplaying or obscuring the true risk, even if the projects are real.
Questions or thoughts? We’d love to hear them.
Email us anytime at hello@queenteam.ca.
Your Friend in Real EstaTe,
Jennifer Queen
Phone: (204) 797-7945
Email: Jennifer@QueenTeam.ca
About the Author
This article was written by Jennifer Queen, REALTOR® and Team Lead of The Queen Team at Ethos Realty in Winnipeg, Manitoba.
With over 30 years of combined team experience in the Winnipeg real estate market, Jennifer closely follows local development projects, regulatory changes, and investment trends that impact buyers and investors.
Her approach to real estate centers on transparency, due diligence, and long-term client protection. Principles that are especially important when evaluating pre-construction developments and investment opportunities.