Ontario Real Estate Scandal: $10M Trust Missing, RECO Official Resigns Amid Industry Outrage

Ontario Real Estate Industry Shaken by Missing Trust Funds and RECO Controversy

The Ontario real estate sector is in turmoil following the sudden closure of iPro Realty Ltd., one of the province’s largest brokerages. Over $10 million in trust funds have reportedly gone missing, and a controversial agreement by the Real Estate Council of Ontario (RECO) not to pursue legal action has sparked public fury.

Steve Tabrizi, COO of Re/Max Hallmark, remarked, “I’ve never seen such a widespread public outcry from agents and brokerages on social media—RECO is under unprecedented pressure.”

RECO Under Fire After Trust Scandal Unfolds

On August 14, RECO revealed that more than $10 million had disappeared from iPro Realty’s trust accounts. The firm had over 2,400 agents. RECO’s registrar, Joseph Richer, announced that co-owners Rui Alves and Fedele Colucci would close the firm within five days and relinquish their licenses.

Shockingly, the agreement also included a clause that RECO would not investigate or prosecute the two owners further, triggering accusations of a regulatory cover-up.

Resignations and Emergency Legal Review Launched

In response to the uproar, RECO announced that Richer had resigned immediately. RECO has now retained top law firm Dentons Canada LLP to conduct an independent audit of the situation and reassess the controversial agreement, with a report due by September 30.

RECO also froze iPro’s bank accounts and confirmed that compensation would be handled through its insurance program. However, it admitted to knowing about the trust fund shortfall as early as three months ago.

Transactions Continue Despite Crisis, Public Reaction Fierce

TRREB data shows that iPro completed nearly $1 billion in transactions from May to July, involving 1,000+ deals and potentially over $20 million in new trust deposits. Executives admitted diverting some funds to repay investors and cover operations.

The case has alarmed downstream sectors like construction, mortgage lending, and interior design. Social media users voiced strong opinions:

• “The worst of the housing crisis is yet to come.”

• “This is just the beginning—developers and brokerages will fall next.”

• “What happened to the laws protecting trust accounts?”

• “They’ve probably already moved the money to the Caribbean. Nobody will go to jail.”

One user warned: “Many firms offered 5–8% interest to lure money a few years back. It was a trap. Even signed legal documents won’t protect you.”

Government Deflects, Industry Demands Accountability

Ontario’s Ministry of Public and Business Service Delivery denied involvement in RECO’s decisions, urging reporters to direct questions to the regulator. Meanwhile, agents and clients alike are demanding a thorough investigation.

RECO’s board pledged to review all active compliance cases. Chair Katie Steinfeld stated, “We are committed to enforcing accountability across the industry and restoring public trust.”