The $3-million settlement money paid to the Ontario Securities Commission by two executives behind Winnipeg's proposed SkyCity condo tower will be repaid to "investor victims" of their former companies.

Earlier this month, an Ontario court ordered forfeiture of the settlement money paid by Jawad Rathore and Vince Petrozza when they were directors of companies called Phoenix Credit Risk Management Consulting Inc. and Phoenix Capital Resources Inc. The court order will allow the cash to be repaid to investors.

"Mr. Rathore and Mr. Petrozza are very pleased that the Phoenix settlement funds will be distributed to purchasers and will certainly provide any assistance that may be required to facilitate the distribution," wrote Fortress spokesperson Jenni Byrne of Toronto-based Bayfield Strategy.

Rathore and Petrozza head up Fortress Real Developments, the company that wants to build SkyCity, which is touted as the tallest tower between Toronto and Calgary.

In 2011, Rathore, Petrozza and Phoenix entered into a settlement with the Ontario Securities Commission in which they admitted they contravened Ontario securities law by trading in securities without registration and by giving undertakings as to the future value of securities. They also admitted to have engaged in "conduct contrary to the public interest."

They were ordered to pay more than $3 million to the securities commission, including administrative penalties.

Lawyer Konstantina Chantzis of the Ontario Civil Remedies for Illicit Activities Office submitted an application for the forfeiture of $2,955,212 in order to distribute the funds to the "investor victims" under the Civil Remedies Act. The application was filed in the Ontario Superior Court of Justice in August and the forfeiture was ordered on Oct. 5.

This conceptual drawing shows SkyCity, a planned Fortress Real Developments project on Graham Avenue between Smith and Garry streets in downtown Winnipeg. Developers say if built, it'll be the tallest structure between Toronto and Calgary. (Fortress Real Developments) The application notes the nearly $3 million "constitutes proceeds of unlawful activity," and will be used to compensate "victims of unlawful activity."

According to the forfeiture application, the Phoenix companies "participated in an investment referral scheme involving the sale of shares in Great Pacific International Inc. and/or OSE Corp."

The agreed facts from the 2011 settlement stated Phoenix investors were, in many cases, told the future value of the shares would increase. Phoenix clients invested approximately $16.5 million in the shares, according to the settlement document.

"Approximately $3 million in compensation was paid to Phoenix [and its affiliated companies] for the sale of GPI and OSE shares to the Phoenix investors," according to the settlement, which also stated investors were not told that Phoenix received compensation.

When asked about the settlement by CBC News in May 2013, Rathore said "There was no findings of guilt or wrongdoing or anything else like that, so we are happy to have made a settlement on that non-related business."

​The 2011 settlement banned Rathore and Petrozza from trading in securities for the next 15 years, but it settlement allowed them to continue trading in mortgages. ​Rathore was also banned from selling mutual funds in 2005.

Fortress's spokesperson underlined the fact the OSC settlement involved Rathore and Petrozza's previous ventures.

"It's important to be clear that the order and the Ontario Securities Commission settlement it relates to have nothing whatsoever to do with Fortress Real Developments, SkyCity or any other projects Fortress is involved with."