Real estate industry veterans are calling on the provincial government to take over the embattled Real Estate Council of Ontario

Public and Business Service Delivery and Procurement Minister Stephen Crawford gave the regulator 15 days to respond to official notification that he was planning to appoint an administrator in its place. Crawford’s final decision hinges on what RECO has to say about a scathing auditor’s report on the iPro Realty scandal completed by law firm Dentons.

RECO closed iPro months after the regulator found that $10.5 million had been withdrawn, allegedly illegally, from the former trust accounts. The company later paid back $3 million and co-founders Rui Alves, who is a former RECO board member, and Fede Colucci agreed never to apply to certify a brokerage again or serve as brokers. As a result, they were not fined or charged.

Brandon Reay, an Ottawa realtor who writes about industry governance, told The Toronto Star that Dentons documented the symptoms of a “deep problem” with the regulator and how it operates.

But he disagreed with the report’s conclusion that the sole responsibility lies with the registrar. 

“We have a regulatory model that funnels almost all of its discretionary power through one office with no oversight,” Reay told the Star. “There’s no ability to distribute authority; there are no escalation pathways.”

Toronto-based mortgage broker Ron Butler told the Star that it’s “absolutely impossible” that an organization, which employs 170 staff, set up walls that kept executives and board members in the dark about the largest financial breach in its history.

“I don’t accept that, I just don’t,” he told his interviewer. “There’s no one person hiding in an office who makes all the decisions. That’s ridiculous. There’s dozens of people involved in the examination of malfeasance.” 

Butler is calling for RECO board members to be replaced by the proposed administrator.

RECO has alleged that former registrar Joseph Richer acted on his own in the delayed iPro shutdown and decision not to punish Alves and Colucci. The Dentons report states that Richer did not adhere to the standard process when he made a deal with Alves and Colucci. The report also asserts that, due to a poor culture, employees “did not feel empowered to challenge Richer, who was “strong-willed, intimidating of his authority.”

But the report also notes that Richer notified RECO’s top executive Brenda Buchanan after receiving a May letter from a member of Colucci’s legal team disclosing a $10-million shortfall in iPro’s trust accounts.

Nicole Koteff, a Toronto-based lawyer and real estate broker, told the Star that the Dentons report left many questions unanswered. And, the report’s findings on Richer contradicts her dealings with him when she was a RECO in-house lawyer.

“I never felt there was any resistance to my view,” she told the Star in an email. “In fact, he usually ended up agreeing with my positions. It would be interesting to find out what employees were interviewed [by Dentons.] Were they front-line registration or compliance employees, or were they the numerous lawyers [and two paralegals] who actually took instruction from Joe on disciplinary files?”

Koteff pointed out to the Star that Buchanan reports to the board and oversees everyone under her.

The Toronto Regional Real Estate Board and Ontario Real Estate Association have welcomed the province’s plan to appoint an administrator.

Pictured: Former iPro Realty listing.

Photo: Realtor.ca