Millions missing, lawsuits mounting, and regulators under fire—here’s the latest on iPro Realty
The collapse of iPro Realty, once one of Ontario’s largest brokerages, has sent shockwaves through the real estate and mortgage sectors.
More than $10.5 million reportedly vanished from trust accounts meant to cover down payments and agent commissions. Lawsuits alleging the missing funds helped pay for “significant renovations” to a waterfront property owned by the wife of a company co-founder, according to the Toronto Star.
A statement of claim filed in Ontario Superior Court by former iPro managers Philip Kocev and Perry Staikopoulos alleges that a portion of the misappropriated money was used to upgrade a property in Brechin, Ont., owned by Joselle Alves, wife of co-founder Rui Alves. The property, purchased for $720,000 in 2018, now carries $1.2 million in mortgages, according to provincial records.
The lawsuit, which also names Hippo Holdings, an investment vehicle founded by Alves and co-founder Fedele Colucci, claims that Joselle and Mariana Alves “had access to the books and records of iPro” and “have been unjustly enriched” through “disgraceful and dishonest” conduct. The allegations have not been proven in court, and as of September 17, no statement of defence has been filed.
Rui Alves and Colucci are alleged to have diverted over $30 million in trust accounts, with some of the money going to themselves.
The regulator, which shuttered iPro after discovering the shortfall, has faced public backlash for allowing the brokerage to continue operating for three months after the breach was discovered. RECO’s former registrar reportedly struck a deal with the founders to “voluntarily terminate” their realty registrations, avoiding charges and fines. RECO has also been criticized for facilitating the mass transfer of iPro employees to a new company, iCloud, where Joselle Alves is now a broker.
On September 11, RECO sought an emergency injunction to freeze iPro’s assets, alleging a “trust scheme” involving “systemic diversion, removal and misuse” of trust money. The Ontario Provincial Police are also investigating, and Dentons Canada has been hired for a forensic audit.
The iPro scandal comes at a time of heightened scrutiny for the real estate and mortgage sectors, as trust in regulatory oversight is tested. Ontario’s real estate sector is pushing harder for outside oversight of RECO, with close to 100,000 realtors now supporting calls for the Ontario Ombudsman to supervise the regulator. The Ontario Real Estate Association (OREA) and its nine biggest Member Boards have formally asked the government to focus on consumer protection and rebuild trust after recent scandals.
“Ontario realtors have been clear: protecting consumer deposits and restoring trust in our regulator must be the government’s top priority,” said OREA in a statement.
“Trust accounts are sacred, consumer protection is non-negotiable, and RECO cannot be left to police itself. It’s time for independent oversight of RECO through the Ontario Ombudsman.”
John Lusink, president and broker of record at Right at Home Realty, told Canadian Mortgage Professional that the scandal highlights why mortgage brokers and agents must be careful when choosing a real estate partner. "I think experienced mortgage agents and those entering in who are relatively new need to take the time to interview and meet with agents,” he said. “Take the manager or get the list off the internet. It’s easy enough to sit down and have a chat and find out if that’s someone they want to work with."
