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Bank threatened to pull Algo Centre mortgage over disrepair

July 15, 2013, Elliot Lake, Ont. – An inquiry into a deadly mall collapse in Elliot Lake, Ont., is hearing the bank threatened to pull the mall's mortgage in 2008.

The problem was the severe state of disrepair that prompted three key tenants to say they would leave.

On the stand, the son of the mall's owner said he did not necessarily agree the damage was that bad.

However, Levon Nazarian did concede the company badly needed $3 million to make the repairs.

Nazarian also said he could not explain discrepancies in the mall's various financial statements.

He said the family fired the accountant because of the problems.

Commission counsel, Peter Doody, suggested the statements were tailored to their purpose, such as obtaining a bank loan or a property tax rebate.

"I'm not very fluent with financial statements," Nazarian, 29, a real-estate broker, said Monday.

"I wasn't really involved."

The Nazarian family paid $6.2 million for the property in 2005, putting up $2 million in cash and taking out a $4.2-million mortgage.

The inquiry has heard how the leaky mall deteriorated during their ownership until its roof-top garage caved in June 23, 2012, killing two women.

Much of the community's anger over the tragedy – the result of decades of water and salt penetration that rotted the steel supporting the garage – has been directed at the Nazarians.

"We were trying our best efforts to stop the leaks," Nazarian testified.

"We were in desperate need of funds to fix the roof."

The family did make $10 million profit through a series of property development deals over several years but Nazarian testified the mall was bleeding money.

Bob Nazarian, 67, who is due to testify later this week or next, owned the mall for its last seven years.

Witnesses have described him as someone who could be charming, but also as a tight-fisted bully who fired employees and contractors at will and badgered others into falsifying documents to downplay the mall's state of disrepair.

Evidence before the inquiry to date is that he either would not or could not do what was needed to save the mall, whose problems began with its poor design and construction in 1979.

Nazarian, of Richmond Hill, Ont., bought the mall through his company, Eastwood Mall Inc., from its second owner in 2005.

He has said he spent about $1 million repairing a roof beset with problems he inherited.

The inquiry has also heard Nazarian pressed an engineer to alter an inspection report to downplay the problems in the weeks before the collapse.