Ontario’s real estate watchdog is seeking an emergency injunction from the province’s Superior Court to freeze the assets of iPro Realty and its principals in the wake of the brokerage’s $10.5-million shortfall from consumer and commission trust accounts.
The injunction filed by the Real Estate Council of Ontario (RECO) in Toronto on Sept. 11 alleges iPro’s co-founders and seven of their companies orchestrated a “trust scheme” that RECO said involved “the systematic diversion, removal and misuse of consumer deposit and agent commissions held in trust on their behalf.”
In a statement shared with news media on Friday afternoon, the regulator described the scheme as a “deliberate breach of the iPro respondents’ fiduciary, statutory and ethical obligations, and was executed at the expense of consumers, registrants, and RECO.”
The allegations have not been proven in court.
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 co-founders 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.
Alves and Colucci did not immediately respond to a request for comment on the injunction, and have not responded to previous attempts to contact them by the Star.
“This was a serious breach of trust by iPro’s former leadership. Our commitment is to explore every available legal step to protect consumers and registrants, including pursuing recovery of these funds through the courts,” Brenda Buchanan, CEO of RECO, said in a written statement.
RECO’s proceeding seeks the freeze of assets and requests a court order to allow RECO to trace the flow of trust funds that were “diverted” and “return them to the trust accounts from which they were taken.”
The respondents include: iPro Realty, Alves, Colucci, IP Holding Realty, Hippo Holdings Corp., Sutton Group Professional Real Estate Services, Alco Motors and Alco Rent-A-Car.
Sutton Group Professional Real Estate Services was incorporated in 1985 and became inactive on March 27, 2006, according to RECO’s court notice. Alves is the sole officer and director of this company.
Alves is the director of IP Holding Realty, which was formerly known as Sutton Group Professional Realty.
Hippo Holdings is a company that Alves and Colucci founded in 2005 as a vehicle to collect investments to expand the brokerage. Prior to June 1, 2024, Hippo Holdings held an 80 per cent controlling interest as a shareholder in iPro Realty.
Colucci and Alves are also the sole directors of Alco Motors and Alco Rent-A-Car, according to the notice. Business records show they incorporated in 2002 and 2005, respectively.
The respondents have seven days once they receive the court order to provide a statement describing the “nature, value, and location” of their assets in Canada and what assets are solely or jointly owned.
RECO is also asking that the court freeze and prevent the removal or transfer of money or assets held with TD Canada Trust, Bank of Montreal and National Bank.
The injunction seeks the help of the banks to provide all documentation on the respondents’ assets held in Canada.
“Consumers and agents placed their trust in iPro, and that trust was violated. RECO is committed to seeking justice for affected agents and consumers by using all available remedies to recover the funds that should have remained in trust,” Katie Steinfeld, chair of RECO’s board of directors, said in a statement.
The injunction comes a few weeks after RECO announced in late August that it had hired Dentons Canada to conduct a forensic, independent audit of iPro.
“RECO is fully co-operating with law enforcement to provide all necessary information in support of their investigations,” the release said. The Ontario Provincial Police told the Star on Sept. 4 that they had launched an investigation after receiving a request from the Ministry of Public and Business Service Delivery and Procurement, which oversees RECO.
“The matter has been assigned to the OPP Anti-Rackets Branch. As the investigation is still in its early stages, we are unable to provide further comment or details at this time,” OPP’s Eric Cranton said in an email to the Star last week.
