Did Robby Clark Misappropriate Investor Funds?
In June 2024 news reports said that the landlords behind SID Developments had "misappropriated" investor funds. This page answers the question directly, from the court record.
No court has found that Robert (Robby) Clark or the SID companies misappropriated funds. The allegation comes from a report by the court-appointed Monitor, dated June 11, 2024. A Monitor's report is a document filed with the court. It is not a decision of the court. The court held that the companies were entitled to test the report by cross-examination, the matter was resolved on consent the next day, and the court recorded that "no approval is sought at this time with respect to the Fourth Report or the activities summarized therein".
Where the allegation comes from
The word comes from one sentence of the Monitor's report: "it appears to the Monitor that the Principals diverted, misused or misappropriated funds". It is a statement of how matters appeared to the Monitor.
The same report states that the Monitor "has not audited, or otherwise attempted to verify" the financial information, and that parts of the report "could be subject to revision".
What the same report says
- "The funds that were used to purchase and renovate the Applicants' properties do not appear to have been used for an improper purpose." Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 2
- "The Monitor accepts that some payments to the Principals may have been justified as reimbursement for the Principals' use of personal credit cards to make bona fide business purchases for the Applicants." Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 3
- The spending it says appears personal is "in excess of $1 million" over five years, which is 1.4 per cent of the $69.7 million of disbursements it reviewed. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 3 and s.2.5 para 1 The $1 million, in context
What the loan documents said about the use of funds
The companies' sworn evidence is that the promissory notes did not restrict how the money could be used. The affidavit sworn June 20, 2024 states that "all or substantially all of the Promissory Notes that resulted in proceeds being directed to the Applicants do not contain any covenants, representations and/or warranties regarding the use of the funds, whether in respect of a particular property or otherwise". It also states: "The Promissory Notes were prepared by Windrose/Lion's Share."
The companies' written response of June 19, 2024 states: "There were no constraints, including covenants, representations and/or warranties, in (i) all or substantially all of the unsecured promissory notes, and (ii) the syndicated second mortgage documents, on the use of funds." It adds that "the Applicants' use of the funds was consistent with the terms of the promissory notes".
The same response states that "all or substantially all of the Applicants' borrowed funds were used to acquire the properties and/or for renovations and operating expenses in the ordinary course of business", and that the proceeds of the first mortgage loans, about $81.5 million, "were used to acquire the Applicants' owned real property and were never available for any other use by the Applicants". Where the $144 million went
The Monitor's report sets out what it calls the "relevant provisions" of a sample promissory note. Paragraph 5 is a repayment term: "This Note will be repaid in full on or before September 01, 2024, or sale or refinance of 6 Bloor Street Sudbury ON P3C 2K2 whichever is soonest." Paragraph 8 is a security term. It gives the lender the right "to register this Note on title on all or any properties held by the Borrowers and Guarantors as security".
Neither provision says how the borrowed money was to be spent. The report describes the use of note proceeds as "contrary to Monitor's understanding of the Investors' expectations".
Who raised the investors' money
The investors' money was raised by a mortgage broker, not by the companies. In December 2025 the broker admitted to fraud in a settlement with the Ontario Securities Commission, and the Capital Markets Tribunal stated that she "committed a large-scale fraud". The settlement records that her statements to investors were "false and misleading" and that the borrowers "had little to no communication with the Investors". No borrower company was a respondent, and no borrower is named in the settlement.
The response, and how it was reported
The companies' filed response is that about $4.4 million of about $6 million paid to the principals reimbursed business expenses charged to personal cards, that card statements and a sample of receipts were delivered to the Monitor, and that management generally took no salary.
The Globe and Mail's feature of July 27, 2024 states: "None of the allegations of wrongdoing made in court filings have been proven in court." CBC News reported on June 14, 2024 that the companies "vigorously dispute" the report, and that their spokesperson said "the vast majority of these payments are actually reimbursements for business expenses such as renovations and utilities".
The June 2024 report · The response, item by item · Published claims, checked · Who raised the money · Robby Clark and SID Developments · Questions and answers
- The Monitor's report alleges that significant funds were regularly diverted to the principals and their corporations, and its own table puts net payments to related people and companies at $13,426,637. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 2 and Appendix 2
- The Monitor said the companies' response letter and motion record "do not change the principal conclusions reached in the Monitor's Fourth Report". Supplement to the Fifth Report (Jun 23, 2024), s.2.0 para 2
- The Monitor's report describes the companies' books and records as incomplete and says many transactions could not be traced. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.3
- The Monitor's report says investors "had expectations that the proceeds of the loan (and a corresponding sale) would be exclusively used (or disbursed) for that Property", that note proceeds "were not always used to purchase or renovate the property referenced in the promissory note", and that investors "appeared to have never received disclosure of this practice". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.4.4 paras 15 and 18
- The report says certain syndicated second mortgage documents "did not contemplate the funds being transferred to anyone other than the joint borrowers". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.4 footnote 15
- The statement that the notes and second mortgage documents placed no constraints on the use of funds is the companies' position. The court made no finding on it. Endorsement of Justice Osborne (Jun 25, 2024), para 8
- Control of the companies passed to the Monitor on June 25, 2024, under an order made on consent. Endorsement of Justice Osborne (Jun 25, 2024), paras 2 and 8