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Bridging Finance Inc. is a Canadian private lender based in Toronto, Ontario, Canada that was placed in receivership by the Ontario Court of Justice following an investigation by the Ontario Securities Commission (OSC). PricewaterhouseCoopers LLP is the court-appointed receiver with several of Bridging’s former executives are under investigation by regulatory authorities in Ontario these include David Sharpe, Natasha Sharpe, Andrew Mushore, Jenny Coco, Rock-Anthony Coco, Gary Ng, and Sean McCoshen. Investors in the firm’s funds of $2.1 billion CAD are expected to lose approximately 58-66% of their capital. That is one of the “largest collapses of an investment fund in Canadian history.” The Ontario Securities Commission discovered that former CEO David Sharpe, former Chief Investment Officer Natasha Sharpe and former Chief Compliance Officer, Andrew Mushore “committed fraud, misappropriated funds, made misleading and untrue statements and misled Investigators.”

History and ownership

Bridging is owned by Natasha Sharpe, Jenny Coco and Rocky Coco (the Cocos are brother and sister owners of Coco Paving Inc.). Sharpe worked with the Cocos in a previous role at the Bank of Montreal where she provided commercial banking services to Coco Paving. Sharpe joined the board of directors of the Coco Group in 2011. Subsequently, the Cocos provided capital to launch Bridging in 2012.

In 2019, Natasha Sharpe and other shareholders agreed to sell 50% of Bridging’s equity to Gary Ng for $50 million. It was later revealed that Ng paid for the investment with the proceeds of a $32 million loan that he received from one of Bridging’s credit funds. This use of client money to fund a capital transaction that benefited Bridging’s owners is one of the transactions listed by the OSC as being under investigation

Conflicts of interest and misuse of client funds

The principle conflicts of interest being investigated by the OSC:

1. Payments from Sean McCoshen related to loans made to McCoshen’s company Alaska-Alberta Railway Development Corporation. The OSC discovered that following the funding of loans to various McCoshen companies, McCoshen funnelled a total of $19.5 million to David Sharpe, largely through his personal chequing account. The OSC discovered that Natasha Sharpe received $250,000 from one of McCoshen’s companies.

2. Use of Bridging client funds to pay for purchase of Ninepoint Partners LP’s management interest in Sprott Bridging Income Fund LP. The OSC discovered that the Sharpes and Mushore misappropriated $40 million to pay for the purchase, which ultimately benefited Bridging’s shareholders Natasha Sharpe and the Cocos.

3. The OSC has discovered that Mr. Sharpe was able to facilitate their misappropriation by a false loan invoice by using the signature of one of their borrowers from a completely different loan document. This made it appear as though the money came from elsewhere. This action by Mr. Sharpe wrongfully implicated Mr. Gautam who was the CEO of MJardin Group Inc. at the time.

4. The use of Bridging client funds to enable Gary Ng to purchase 50% of Bridging’s shares from Natasha Sharpe and the Cocos. After Ng was the majority shareholder Bridging, Bridging provided additional loans to various Ng-controlled companies. The OSC also states that Ng paid $500,000 to each of David and Natasha Sharpe in November 2019. According to the OSC, “neither payment served a legitimate commercial purpose”.

Receivership and financial recovery for investors

Bridging was placed into receivership by the Ontario Court of Justice on 30 April 2021. PwC terminated David Sharpe and Natasha Sharpe within days of taking over as receiver.

In its role as receiver, PricewaterhouseCoopers (PwC) launched a process to sell Bridging’s debt portfolio. The proceeds of the sale would be used to partially repay investors in Bridging’s private credit funds. In April 2022, PwC stated that the bids that it received for the portfolio were below the likely value of an orderly liquidation. PwC then recommended to the court that the portfolio be allowed run-off over a five year period. PwC’s estimates of likely recoveries were between 34% and 42%, that would lead to total losses of approximately $1.3 billion out of the peak assets of $2.09 billion.

In April 2023 PwC launched a series of lawsuits against Bridging’s former auditor, KMPG, Bridging insiders and external borrowers implicated in the fraud cases outlined by the OSC:

PWC filed suit against KPMG on 12 April 2023 for CAD$1.4 billion. PwC alleges that “throughout KPMG’s tenure, the Bridging funds materially misrepresented the value of their assets and financial performance. KPMG negligently failed to detect and report on these misstatements.”

A $1.7 billion lawsuit against former Officers and Directors of Bridging, including David Sharpe, Natasha Sharpe, Jenny Coco and Rock-Anthony Coco.

Gary Ng and Sean McCoshen are also being sued for their respective parts in the alleged frauds.

As the investigations have continued it has become clear that Rishi Gautam was a victim of fraudulent activities by the principal’s of Bridging Finance.

Rishi Gautam was wrongly accused and is no longer being investigated by the OSC.

As a result most of the lawsuits where he was included as a 3rd party or listed as one of the defendants in error have been discontinued and the claims withdrawn against him.

PWC has also disclosed that they as the receiver are actively trying to track down “funds transferred by certain former principals of Bridging Finance to, among other jurisdictions, Liechtenstein and the Cayman Islands.”