The Ontario Provincial Police has launched an investigation into the iPro Realty scandal, the Star has learned.
“To protect the integrity of the investigation, we are unable to provide further details at this time,” OPP spokesperson Erin Cranton told the Star on Tuesday afternoon.
The confirmation arrived just before 5 p.m., about six hours after former iPro Realty agents took to the Real Estate Council of Ontario’s Toronto headquarters, demanding the immediate disbursal of lost commissions, which ranged from $30,000 to $150,000 per person.
The Real Estate Council of Ontario’s investigation of real estate brokerage iPro Realty determined in May that iPro 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.
In mid-August, RECO notified the public of the shortfall and closed iPro on Aug. 19.
More than a week later, RECO issued a freeze order for iPro’s trust accounts, meaning money can no longer go in or out of their accounts.
While the regulator has the legal authority to charge and fine Alves and Colucci, RECO told the Star that its registrar Joseph Richer had struck a deal with the men to avoid these disciplinary actions. The co-founders “voluntarily” terminated their registrations with RECO on Aug. 19. The regulator’s CEO Brenda Buchanan subsequently announced Richer had left his position on Aug. 22.
“Trust has been broken between the public and real estate practice and we need big action to show the public in this moment what action has been taken,” said Samuel Habib, a former iPro agent who had been with the brokerage for almost four years. “What are the consequences?”
Out $30,000 in commission, Habib says RECO has provided no instruction to him other than to file an insurance claim.
“I’m a full-time real estate agent, my income is my commission. I have a mortgage, car insurance, and family to feed … I don’t know what to do,” he said. “Pay us our money. Why hold it? For months they’ve been aware of it. By now, we should know what’s going on financially.”
Building security workers outside RECO’s office barred the real estate agents from entering the building, saying it was private property.
In mid-August, RECO facilitated the transfer of 2,400 iPro employees in 17 offices across Greater Toronto to iCloud Realty. The regulator also struck a deal with the iPro 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.
Nitin Hira, was with iPro for more than three years, said that agents are demanding to know why RECO waited months before notifying the public and other realtors of iPro’s $10.5 million shortfall.
“Why wait three months? Why continue to have transactions with the brokerage? Why not notify us right away?” Hira said.
Star data analysis shows that RECO allowed for more than 700 transactions and around $700 million in home sales to proceed after uncovering the shortfall.
“Our trust has been breached and we look up to RECO. They’re the governing body,” said Hira. “We don’t want to be subject to the pain of insurance. Who is taking care of us? We want the buyer and sellers’ money disbursed. There are a lot of people subject to the trust accounts being frozen.”
Nazie Moseni, who had been with iPro for the last four years, said she was out $150,000 in commissions and is frustrated by the lack of communication with RECO, and is unsure if she’ll receive her full commission back.
“The insurer is assessing registrant commission claims with the goal of ensuring fair and equal treatment for all affected registrants,” a RECO spokesperson wrote in an email on Tuesday afternoon.
“They are working tirelessly to expedite assessments and have brought on additional resources to support the review process.”
RECO’s CEO Brenda Buchanan previously told the Star that transactions that have completed an agreement of purchase and sale are continuing through the insurance claims process via ClaimsPro LP, not through iPro’s accounts.
“ClaimsPro is processing eligible transactions to allow buyers, sellers, and agents to close deals,” she said.
At this time, Buchanan said she does not know if agents will get their full commission back.
“The insurer and claims adjuster are working as quickly as they can,” she said.
Claims are assessed under the professional liability insurance program, which has a $4 million limit, or $200,000 per individual, she said.
“Every effort is being made to identify what portion of the commissions can be paid via insurance and other recoveries,” Buchanan added. “Agents are asked to file claims as soon as they are able so they can be assessed promptly.”
On Friday, the Ontario government put its real estate watchdog on formal notice 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, Ford cabinet 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.
Crawford’s office did not responded to the Star’s requests for comment regarding the OPP’s involvement.
RECO’s board announced last 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.
