The Ontario Provincial Police is investigating the iPro Realty scandal, which saw a record $10.5 million in agent commissions and consumer deposits “illegally disbursed” from the brokerage’s trust accounts, the Star has confirmed.
“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 evening.
The Real Estate Council of Ontario (RECO)will “co-operate fully” and provide “necessary information” to assist in the OPP’s investigation, a spokesperson said in an email.
The regulator added thatit has “been clear in confirming its support for a police investigation to hold any person or entity accountable for financial or other improprieties at iPro Realty.”
Since May, RECO has been the only agency actively probing what it described as the largest financial breach in the regulator’s history.
RECO’s conduct in investigating the brokerage has drawn widespread criticism from consumers and industry insiders, triggering a terse ministerial letter to its board chair last week.
While Cranton would not confirm who triggered the OPP’s probe, an email the spokesperson sent to the Star last week provides some clarity on the nature of the probe.
“The OPP is responsible for investigating alleged criminal activity, including financial crimes such as fraud, that occur within its jurisdiction,” Cranton wrote. “If the OPP receives a report of alleged criminal activity, including fraud or more complex financial crime or corruption, that has occurred in OPP jurisdiction, the OPP will investigate the matter to determine if a criminal offence has been committed.”
Cranton noted that “not all allegations result in criminal charges, and an investigation is required to assess the facts and determine if the threshold for a criminal offence is met.”
On Tuesday morning, more than a dozen iPro Realty agentstook to RECO’s ɫɫ headquarters with protest placards, demanding the immediate disbursal of lost commissions, which ranged from $30,000 to $150,000 per person.
Building security workers outside RECO’s office nearIslington Avenue and Bloor Street Westbarred the agents from entering the building, saying it was private property.
The Real Estate Council of Ontario’sinvestigation 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 trust accounts.
But the regulator didn’t notify the industry or public about its probe until mid-August. RECO also facilitated the mass transfer of 2,400 iPro employees to iCloud Realty.
RECO subsequently 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 declined to do so. He had struck a deal with the realtors to avoid disciplinary action. Alves and Colucci “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 commissions, Habib said RECO has provided no instruction to him other than telling him 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.”
More than a dozen iPro Realty agents, protesting lost commissions, were stopped by security Tuesday from entering the Real Estate Council of Ontario offices in ɫɫ.
Andrew Francis Wallace/ɫɫ StarNitin Hira, who has worked 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.
A data analysis by the ɫɫ Star shows that RECO allowed iPro agents to conduct more than 700 transactionsand around $700 million in home sales 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.”
“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 CEO Buchanan previously told the Star that transactions which 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.
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.”
Stephen Crawford, provincial minister of Public and Business Service Delivery and Procurement, which oversees RECO, did not respond to the Star’s requests for comment regarding the OPP’s involvement. Crawford’s press secretary told the Star the ministry would provide a statement on Wednesday.
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