Hamptons of Canada Is Ensnared in Alleged Mortgage Fraud Scheme

The wooded lake lands north of Toronto are dotted with vacation homes that have made the region — known as Cottage Country — a favorite getaway of the city’s elite. And for years, mortgage broker Sandy Sussman offered Torontonians a lucrative and seemingly safe way to invest in its real estate.

Now Sussman faces allegations of fraud after his decades-old business collapsed, bringing echoes of Bernie Madoff’s famous Ponzi scheme to the Canadian housing market’s recent boom and bust.

Investors are scrambling to locate more than C$100 million ($72 million) they gave Sussman to invest in syndicated mortgages after he stopped making interest and principal payments, and ...