Ford government threatens to take control of RECO

Realtors across Ontario are looking for answers after many discovered they couldn’t access huge sums of client deposits. Jon Woodward has the latest.

The Ford government is threatening to intervene and take over the province’s real estate watchdog if an audit doesn’t get to the bottom of a scandal that enveloped a large Ontario brokerage and then the watchdog itself.

Minister of Public and Business Service Delivery Stephen Crawford weighed in late Friday night on the chaotic situation surrounding the collapsed company iPro Realty, whose co-founders were accused of taking approximately $10 million from the company’s trust account.

“Following this, I will assess whether further oversight measures or remediation are warranted,” Crawford wrote. “If I am not satisfied with the conduct or the findings of the audit, I will not hesitate to take further measures, including through the appointment of an administrator to assume control of RECO.”

Realtors tell CTV News that they cannot access client deposits and commissions in the iPro trust account since it was frozen by the regulator, the Real Estate Council of Ontario (RECO), this month.

“This is not a joke,” said realtor Nazie Moseni, sharing that she is unable to access some $150,000 held in the iPro account.

Moseni said she and a group of other realtors visited RECO’s offices last week, only to be told they needed to make an insurance claim.

“They have dropped the ball so hard. They are playing with our financial lives,” she said.

These are the latest developments in a saga that started in May, when a RECO investigation found that Rui Alves and Fedel Colucci had used more than $10 million from trust accounts that are supposed to be for downpayments and realtor commissions.

Their investigation found that iPro’s owners paid operating expenses and gave payments to investors. Despite that, RECO didn’t charge or fine the pair, though they were disciplined, according to the posted documents. Alves is a former board member of RECO.

The company’s trust account continued to operate, for four months, amid some $720 million in real estate transactions, said mortgage broker Ron Butler.

“In the meantime, about $720 million of new real estate transactions took place, which all had deposits, which went into this trust account, which was shown to be tampered with,” Butler said in an interview.

He believes the trust accounts should have been stopped in May after an emergency board meeting, and the brokerage should have been shut down immediately.

“This is an unforgivable lapse that the regulator has experienced, and I believe the government must step in in a big way and take over RECO,” Butler said.

The RECO registrar, Joseph Richer, lost his job in mid-August amid the uproar, according to a statement from RECO’s CEO, Brenda Buchanan. RECO has now hired law firm Dentons to conduct an audit into how the decisions were made.

East-end Toronto Realtor Teuta Guci said she’s looking at almost a million dollars stuck in those frozen accounts, as she’s unable to access commissions and pay staff.

She says RECO should put the fund in the hands of a trustee to quickly allow it to be dispersed to those who need it to operate and to make sure no deals are put in jeopardy.

“We were all shocked at what happened,” she said. “They don’t have the money to pay their mortgages. Those that are affected, they don’t have money to buy houses.”

Another realtor, Nitin Hira, said what he is dealing with is “beyond belief.”

“Why should we take the brunt of someone else’s mistake? We are being left high and dry,” he said.

Moseni said she will join a group of realtors to visit RECO’s office on Tuesday if there are no answers and the money isn’t forthcoming.

The province’s five largest realtor associations issued a joint statement on Friday voicing their support for the government’s decision to intervene in the review of RECO.

“Our associations welcome a full review of RECO’s governance and practices. This process must deliver meaningful reforms, including Ombudsperson oversight, stronger accountability measures, and enhanced enforcement tools to safeguard consumer deposits and restore public confidence,” reads the statement from the Toronto Regional Estate Board, Ottawa Real Estate Board, Central Lakes Association of Realtors, Cornerstone Association of Realtors and OnePoint Association of Realtors.

“Recent events, including the iPro Realty investigation, have highlighted the need for enhanced transparency and accountability at Ontario’s real estate regulator.”

The statement went on to advocate for the government to bring RECO under the oversight of the Ombudsman Ontario, like its counterparts in British Columbia and Quebec.

“This recommendation reflects our associations’ commitment to protecting consumers, enhancing professionalism, and supporting continuous improvements within Ontario’s real estate regulatory system,” the realtor associations said.