RECO disclosed on Aug. 14 that iPro was being shut down, despite the organization knowing since May that iPro had mismanaged its legally protected trust accounts holding millions of dollars.Evan Buhler/The Canadian Press
The collapse of the fourth-largest real estate brokerage in Ontario, with close to $8-million missing, is raising questions in the industry about whether its financial oversight regulations are adequate.
According to Joseph Richer, the registrar of the Real Estate Council of Ontario (RECO), which acts as the licensing body and regulator in the province, his organization has known since May that iPro Realty Ltd. had mismanaged its legally protected trust accounts that held millions of dollars worth of consumer downpayments and realtor/agent commissions. It wasn’t until months later, on Thursday, Aug. 14 that RECO disclosed that the brokerage, owned by Riu Alves and Fedele Colucci, with its 2,400 agents, was being shut down by Aug. 19. Mr. Alves and Mr. Colucci had their licences to trade real estate suspended as of that same date.
“They should have shut them down sooner. It’s crazy they allowed this to happen; the public should have been aware,” said Domenic Manchisi, a realtor who left iPro to join a Re/Max West brokerage as soon as RECO went public with iPro’s financial issues. He said he had to scramble to get his clients away from the damaged brokerage in the days following. He’s also critical of RECO’s role in facilitating a new brokerage called iCloud Realty Ltd. – created on Aug. 8 as part of an agreement between RECO and iPro – that automatically transferred to it any iPro agent who hadn’t already left by Aug. 18.
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“To me, it’s like going from the Titanic to jumping to that submarine that blew up under the water. … It’s crazy,” he said.
To those outside iPro, the issues exposed by its collapse speak more to RECO’s flaws than to those of an individual brokerage.
“This is the biggest trust account failure in the history of the Toronto Regional Real Estate Board,” said Steve Tabrizi, a broker/owner chief operating officer for the Re/Max Hallmark Group of Companies. He noted a key point of failure on trust accounts under the Trust in Real Estate Services Act and RECO regulations is that all brokerages only require a single signing authority – the broker of record usually – on the trust accounts. “The industry needs a complete overhaul regarding multiple signatures for trust accounts. I can walk into the bank and empty the account,” he said.
Others in the industry echoed the call for reform, not least because the insurance caps for misappropriated funds seem inadequate to the amount of money that large brokerages handle in a given month.
“I have always labelled the trust account as the ‘Go To Jail’ account because, honestly, that’s what you’re looking at,” said John Lusink, the former broker of record for Right at Home Realty, Ontario’s largest single brokerage with more than 6,100 realtors. “At the top of the market, when it was overheated, we had close to $100-million in the trust accounts.” Compared to that, RECO’s combined insurance cap appears paltry; a single event is limited to $4-million in coverage for the consumer down payment and realtor commission claims.
In an e-mailed response to questions from The Globe and Mail, Mr. Richer confirmed, that prior to May, iPro had not been subject of a financial inspection since 2021. According to iPro, the missing money – initially reported as $10-million but later revised to just under $8-million – had been used “to repay investors in the brokerage owner’s separate holding company and to cover operational costs.”
RECO’s slowness to act on or complete inspections had been noted as an area in need of reform by Ontario’s Auditor-General back in a 2022 report on the arms-length agency (RECO is one of several delegated authority organizations the province has established over the decades, which are self-funded and provide a regulatory function for an industry). At the time, the AG found RECO had “never performed a full on-site inspection at 27 per cent of registered brokerages” and hadn’t inspected another 35 per cent of brokerages in more than five years.
“If you take a look at the regulatory standard, why would you do an inspection of an account only every two years; Why don’t you ask for a monthly reconciliation?” said Mr. Tabrizi, who argues mandatory electronic reporting on trust accounts would be better than the current honour system. Today, RECO’s rules make it an offence if brokerages don’t self-report any shortfalls in their trust account reconciliations, but in the absence of mandatory filing requirements, Mr. Tabrizi argues it’s unlikely anyone engaged in deliberate malfeasance would tell on themselves.
The 2022 AG report also found that RECO didn’t make an issue of 88 per cent of the 2,643 inspections where it found violations between 2017 and 2021. In only 12 per cent of cases were brokerages referred to RECO’s investigations department or had follow-up inspections.
According to Mr. Richer’s statement, RECO changed its inspection regime following the AG report: “In 2023 RECO launched a new, robust, risk-based inspection program that incorporates both risk-based and routine inspection cadence. Brokerages presenting a higher risk of consumer harm are inspected more frequently and to a higher degree than brokerages that consistently demonstrate higher levels of compliance.” According to Mr. Richer, there were 1,065 inspections in 2024, and with 774 completed in 2025 it’s on pace to complete 1,250 this year.
RECO’s latest annual report says in 2024, there were 40 claims against commission insurance (in the event of misappropriation of funds or insolvency of a brokerage), up from 26 claims in 2023. According to RECO, it’s too soon to assess how many claims could be made related to iPro, but Mr. Tabrizi noted that just at his brokerage there are about 10 agents owed $100,000 by iPro.
“The vast majority of registrants with RECO comply with the law,” said Mr. Richer. “However, this situation will be thoroughly assessed to ensure we incorporate learnings into our future compliance and enforcement initiatives.”
“Since the initial inspection of iPro in May, 2025, RECO has closely monitored its trust account activity,” said Mr. Richer, adding that RECO’s focus has been to “recover the greatest amount of trust money possible.” As part of that effort, Mr. Richer said RECO is finalizing its own engagement with an independent firm to ensure “the highest level of oversight through the windup process.”