The Ontario government put its real estate watchdog on formal notice Friday with a ministerial letter stating it will not hesitate to “assume control” of the regulator if it is “not satisfied with the conduct or the findings” of a sweeping audit into the iPro Realty scandal.
In a two-page letter obtained by the Star, Minister Stephen Crawford outlined the government’s expectations and conditions for an upcoming review to Real Estate Council of Ontario (RECO) board chair Katie Steinfeld.
Crawford, minister of Public and Business Service Delivery and Procurement, said the audit should be “broad in scope.” He said it should “examine the roles, responsibilities, actions and decisions” of all RECO staff, management and board members involved in handling the iPro Realty case.
RECO’s investigation of iPro Realty determined in May that co-founders Rui Alves, a former RECO board member, and Fedele Colucci “illegally disbursed” $10.5 million from the brokerage’s consumer deposit and commission trust accounts. Three months later, RECO facilitated the transfer of 2,400 iPro employees in 17 offices across Greater Toronto to iCloud Realty and struck a deal with cofounders that allowed both men to escape charges and fines. RECO has told the Star that the financial breach is the largest its office has ever investigated.
RECO’s board announced earlier this week it had hired Dentons Canada to conduct the audit, which is scheduled to be completed by late October. Crawford’s letter states he expects regular briefings on its progress.
RECO had said it would publish the recommendations from Dentons’ final report but Crawford’s letter states he expects the findings to be made public as well.
“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.”
Crawford’s letter did not order RECO’s board to initiate a police investigation, which the Ontario Real Estate Association’s president found concerning.
“Trust in our regulator has been destroyed,” OREA President Cathy Polan wrote in a statement on Friday, “and without decisive reform it will continue to undermine the businesses of hardworking agents, the confidence of consumers, and the stability of Ontario’s housing market.”
Polan said if RECO will not request police involvement, “the Minister of Public and Business Service Delivery and Procurement must ask the OPP to proactively investigate.”
OREA is also asking the ministry to extend the Ontario ombudsman’s oversight to RECO.
“Over 1,000 other arms-length government agencies are overseen by the Ontario Ombudsman, but RECO remains exempt from this independent oversight and accountability,” Polan’s statement said. “RECO must be placed under ombudsperson oversight.”
In an email on Friday night, Steinfeld confirmed the board had reviewed Crawford’s letter and is working to restore public confidence in the sector.
“We appreciate that the Minister has set out clear expectations for how the important work of the independent comprehensive audit is to be conducted,” she wrote. “The RECO Board will do everything in its power to protect the rights, deposits and commissions of the affected homeowners, agents, and brokerages … and to ensure that RECO emerges as a more transparent organization and with enhanced consumer protection measures in place.”
