Condo boards on road to recovery a year after manager charged in alleged $4.1-million fraud
The Hamilton Spectator
Teviah Moro
06 May 2016
Summit Avenue John Rennison
The condo board of 30 Summit Ave. is slowly recovering from an alleged
fraud scheme that police say involved several other buildings in
Hamilton and Halton.
The residents of a Mountain condo building are nursing their reserve
fund back to health after their corporation and 12 others fell victim
to an alleged multimillion-dollar fraud scheme.
"They're baby-stepping along and they are improving," said Donna Rexworthy, the current property manager for 30 Summit Ave.
Rexworthy is helping residents of the 38-unit building off Concession
Street recover after police laid a slew of charges against their former
property manager last year.
Brett Mackenzie Leahey, 46, owner of Integrated Condominium Management,
is accused of fraud, money laundering, forgery and possession of
property obtained by crime.
Leahey, originally from St. Catharines, was released on bail after his arrest last year.
The Spectator wasn't able to reach him for comment after knocking on
the door of a Milton address listed in court documents as his residence.
Halton police allege Leahey engineered the $4.1-million operation
between March 2009 and September 2014, bilking 10 condo corporations in
Halton and three in Hamilton.
"Just in terms of overall frauds, I think this is one of larger files
that we've had in some time," Det. Const. Derek Wilson said Wednesday.
None of the allegations have been proven in court.
The case is scheduled to go to trial in October, with regulations meant
to guard against condo fraud soon expected to flow from revamped
provincial legislation.
Reining in the unregulated industry is seen as critical amid a condo-building boom over the past few years in Ontario.
"Regardless of what they do, it's going to be better than what we
have," said Tom LePage, a condo consultant who appeared before a
standing committee last year to help lawmakers draft regulations.
Lorne Sabsay, Leahey's Toronto-based lawyer, said in an email to The
Spectator: "I will say that we are actively preparing for trial and we
look forward to having these allegations determined in a court of law.
"Until then, I can only remind you and your readers that my client
enjoys the presumption of innocence, no matter what the allegations,
unless or until the Crown proves his guilt beyond a reasonable doubt
after a fair trial."
Police allege Leahey forged property maintenance invoices and
contracts, fraudulently charging the condominiums for work not
completed and moving assets from the corporations to his business
accounts for personal use.
Left with deteriorating buildings, the condo corporations still have to
raise funds to pay for that work, whether it's through hiked condo
fees, a special assessment or debt financing, Wilson said.
"Any one of those options, if you're already in a difficult financial situation, it becomes only that much more difficult."
Rexworthy, the current property manager for 30 Summit Ave., said a new
board is following a five-year plan to replace lost funds and cover a
backlog in repairs.
She wouldn't say how much was allegedly siphoned from the corporation but noted the condo board was forced to increase fees.
And that hurts, says Bill Kilpatrick.
The retiree says the monthly fees on the one-bedroom unit he and his
wife bought for about $72,000 about nine years ago for their adult son
— who's had personal struggles — have spiked to more than $500 from
about $250.
"We really can't afford that condo, but we're keeping it there for him," said Kilpatrick, 89.
Dipping property values are another problem.
"They're half of what they should be," Rexworthy said.
A one-bedroom unit at 30 Summit Ave., for example, is listed on MLS for $69,900.
MAIN STREET WEST
John Rennison,The Hamilton Spectator
The owners of Highland Mews, 1983 Main St. W., are now managing their
own affairs after falling victims to an alleged fraud scheme.
Across town, Todd Walker recalls how Leahey stepped into the driver's
seat when the former property manager of his 1983 Main St. W. townhouse
complex died.
The new guy at Highland Mews had quite a presence.
"He was very flash. Suit, tie, big watch, fancy car," Walker recalled.
Police allege Leahey had a 2007 Mercedes Benz R35 and 2007 Lincoln MKZ knowing it was obtained through criminal activity.
The address for his Integrated Condominium Management (ICM) was listed
as a third-floor executive suite in a modern-looking office building at
Burloak Business Park near the QEW in Burlington.
ICM is no longer in business.
ROCKWOOD
John Rennison,The Hamilton Spectator
The condo corporation that oversees 9-11 Rockwood Place, just off John
Street South near St. Joseph's hospital, was one of several alleged
victims of a $4.1-million fraud scheme, police say.
The third Hamilton condo corporation hit by the alleged scheme involves
an older, four-storey brick complex at Rockwood Place, off John Street
South near St. Joseph's hospital.
Enfield, the current property management company, declined to comment on the fallout while the case is before the courts.
Former resident Andrew Whitney never met Leahey.
But a growing sense of unease contributed to his decision to sell his two-bedroom unit.
"It always made me nervous for resale."
How unsuspecting board members can fall prey to unscrupulous characters
can boil down to trust, says LePage, a former property manager who
founded Condo-Ology, a small consulting firm.
"That's how they get away with it, because you just never, ever assume they would do fraud to you."
It's hard to measure just how rampant condo fraud is because many are cases settled out of court.
"I think what we're seeing is just the tip of the iceberg."
A move to license condo managers and regulate the industry under a new
administrative authority will help weed out the bad apples, LePage says.
Regulations flowing from last year's Protecting Condominium Act, which
revamps legislation passed in 1998, are expected to be in place soon.
They are also to include training for condo boards to help prevent mismanagement.
"Ontario plans to move quickly to develop regulations and implement the
key commitments of this act," said Harry Malhi, a Ministry of
Government and Consumer Services spokesperson.
In a 2012 white paper, the Association of Condominium Managers of
Ontario (ACMO) urged regulation, specifically licensing managers.
"With a booming industry and over one million condominium residents in
Ontario, for ACMO this raises serious challenges and concerns."
Walker says Highland Mews hasn't hired another manager — they're managing themselves.
And the new board has done a great job of getting the finances back in order, he adds.
"They got control of our money back. They got control of our accounts back."
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