New revelations have come to light that fill gaps in what may be 2025’s biggest Canadian real estate story, the $10-million iPro Realty Ltd. trust account scandal.
Equally studied and scrutinized as the trust fund fraud itself has been the handling of it by the Real Estate Council of Ontario (RECO).
A new report by Dentons Canada LLP, commissioned by RECO, offers a picture of how things went wrong, placing former registrar Joseph Richer at the centre.
Secrets and a culture problem
Dentons found RECO’s culture and structures failed to support accountability or its consumer-protection mandate.
The report finds Richer’s decision to address the $10-million iPro trust shortfall solely through an undertaking agreement was a major departure from RECO’s established enforcement practices. The deal he eventually struck saw iPro’s co-founders lose their real estate licences, but did not include either fines or charges.
“The Registrar deviated from RECO’s standard process in responding to the shortfall in iPro’s trust accounts and did not commence a formal investigation. Instead, the Registrar attempted an out-of-the-ordinary resolution that he explained was an attempt to prioritize financial recovery through the sale of iPro’s assets and goodwill,” reads the report.
The report found that RECO’s response to the iPro matters was largely attributed to the “unilateral and sheltered decision-making” of an “empowered registrar.”
Broad discretionary powers, combined with a lack of policies and documentation, allowed Richer to act unilaterally and without meaningful scrutiny, reads the report. Almost three months passed before Richer notified the board of the trust shortfall.
Richer described as ‘intimidating’; staff discouraged from raising concerns
The report refers to Richer as “experienced, strong-willed, intimidating and protective of his authority,” adding that this had the effect of discouraging people from challenging him or raising their concerns to senior management or the board.
The report found this culture led to Richer entering into the undertaking agreement with iPro’s principals without an appropriate level of visibility from the board or senior management.
Conflict-of-interest safeguards, whistleblower channels and internal governance processes were found to be inadequate.
The Ontario government is considering taking control over RECO after reviewing the findings of the report.
RECO has said it accepts the report’s recommendations.
How it unfolded
The following is timeline of events according to the report written by Dentons LLP. The report was sent to Minister Stephen Crawford two weeks before being made public on Nov. 13.
April 2 – RECO notifies iPro of an inspection, which scheduled for April 30.
April 16 – iPro asks that the inspection be delayed, and it is rescheduled for April 20.
May 13 – iPro co-founder Fedele Colucci emails RECO requesting a cancellation of the scheduled inspection due to the pending sale of iPro to another brokerage. RECO responds and advises Colucci that the inspection will occur as scheduled.
May 19 – RECO receives two letters from Colucci’s lawyer. The first letter, addressed to Richer and a member of RECO’s inspections team, requests postponement of the audit “pending urgent negotiations of a legal issue with RECO.”
The second letter, addressed to a lawyer in RECO’s legal team, discloses a shortfall of $6.5 million in iPro’s trust account, and a further shortfall of $3.5 million in iPro’s commission funds.
The letter further discloses that iPro has received a purchase offer from “Ms. Terry” who has offered to purchase iPro’s assets for $10.5 million.
The Dentons report doesn’t give Terry’s full name, but Joan Terry was identified by The Star as a registered director of iCloud Realty.
The letter from Colucci’s lawyer was forwarded to Richer, who upon receiving it responded: “This would be a good one to get an undertaking to resign and never reapply.”
On the same day, the Richer advises the CEO, Brenda Buchanan, that he is dealing with a matter concerning a former RECO board member named Rui (Alves).
May 22 – RECO concludes its onsite inspection of iPro.
May 23-27 – RECO receives the following anonymous complaint and is referred by the inspections team to Richer, his team and RECO’s legal team: “I want to highlight an important incident regarding Rui and Fidelle [sic]. We are fully aware that they have breached the trust fund at Ipro Realty, and it’s crucial that this matter is addressed”.
May 28 – Richer attends the last meeting of the former RECO board and does not mention iPro in his oral or written report.
A new RECO board meets for the first time the following day at the annual general meeting.
June 5-11 – An in-person meeting is held at RECO’s offices between Richer and his team members, RECO’s legal team, Colucci and his lawyer and Alves. Two days later, RECO’s inspections team presents the results of the inspection at iPro to members of RECO’s regulatory division and litigation team.
June 12-July 22 – RECO receives a letter from Terry, in which she explains that she is aware of the trust account issues at iPro. Days later, RECO learns from iPro that the sale agreement between iPro and Terry may not proceed. On July 2, iPro advises RECO of a potential deal with another brokerage to acquire iPro, but that deal ultimately fails, and iPro informs RECO that Terry is now willing to pay only $3 million to acquire iPro’s assets.
On July 22, the deputy registrar holds a kick-off meeting to discuss the pending wind-up of iPro operations. iCloud submits its new brokerage application and supporting documents to RECO.
July 29 – A meeting is held of RECO’s audit, risk and insurance committee, but there is no mention of iPro.
Aug. 8 – The undertaking agreement is signed between RECO and iPro. On the same day, iCloud is registered as a broker with RECO.
Aug. 10-13 – Richer has a call with the board chair and the CEO to advise that an undertaking agreement has been reached.
This is the first time the board chair learns of the situation with iPro. The chair understands from Richer that he wishes to notify the RECO board at the same time as the public is notified.
The CEO sends an email to the RECO board about the undertaking agreement, the circumstances that gave rise to it, and the transaction between iPro and iCloud. This is the board’s first time learning of the situation.
RECO briefs ministry staff on the circumstances on the same day.
Aug. 14 – RECO publishes a news release on its website advising of its agreement with iPro to shut down its brokerage.
iPro publishes its announcement regarding its closure and transfer of operations to iCloud, and also sends an invitation to its brokers for a special meeting; the invitation advises that “after nearly 45 incredible years, Fedele & Rui are (semi) retiring.”
The meeting, held the same day, advises participants that iPro has been sold to a “wealthy private financier” and will be rebranded as iCloud.
The same day, RECO notifies the Peel Regional Police’s fraud unit that it wishes to report serious fraud allegations related to iPro.
Aug. 19 – iPro’s registration with RECO is terminated, along with the registration of Alves and Colucci.
Aug. 20 – RECO resumes its attendance at iPro’s site to inspect and collect documents.
Aug. 22 – Richer departs from RECO.
Aug. 24 – An order request to freeze iPro’s accounts is delivered to iPro’s bank by RECO,
Aug. 25 – RECO places a freeze order on iPro’s accounts.
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.