It is not a lawyer’s usual role to alert the public about possible crimes being perpetrated by suspected criminals at large, but we feel compelled to do so when police and government fail to take action and leave condominium corporations vulnerable to a rogue.

Boards of small condominium corporations in Halton Region should check whether they have been victimized by potential rogue condo management firm operating in Burlington and surrounding area.

No police charges have been laid and no convictions have been entered, so we cannot name suspects without fear of defamation lawsuits, but we offer this warning as a public service to help condo boards protect themselves against fraud and to take effective steps to recover losses if they have been victimized.

To help avoid unnecessary alarm, we add that the firm at issue is a small one that does not hold ACMO membership or ACMO 2000 certification and is not led by persons with the Registered Condominium Manager (RCM) or Associate of the Canadian Condominium Institute (ACCI) designations. We may report suspects’ names when charges are laid or a court makes a finding of wrongdoing.

Until then, the easiest way to check for fraud is to review your condo corporation’s bank balances and recent transactions. If the balances and transactions provided by the bank meet your expectations, then you’re probably okay but should take this opportunity to review and improve your corporation’s financial controls to avoid falling victim to a thief. See here and here and stay tuned for further tips you should institute today. An ounce of prevention goes a long way to avoiding fraud losses.

If your review of the corporation’s banking info reveals a potential fraud, engage lawyers immediately and before you do anything else. The odds of recovering fraud losses drop exponentially if the board fails to get good advice quickly and at the outset.

In addition to preserving the corporation’s rights, getting legal advice quickly will help you avoid being sucked in by the rogue, which is a frighteningly common pitfall for condo directors after a fraud. Many rogues are charismatic and will often convince victims that they will return the money if given more time. Too many victims, shocked at being defrauded and naively hopeful that the damage will be undone, might accept these pathetic assurances and allow precious time to pass, reducing the odds of making a recovery.  The moral: Do not ever trust the word of a person who has stolen money from you.

And while you must notify your bank immediately of a fraud (and give them particulars of the suspected transactions or instruments), do not expect your bank to do anything terribly helpful for you. Despite the warm and fuzzy feelings arising from their friendly advertising, banks are not your friends and will give you no greater protection than as set out in the account operation agreement that no one reads when opening an account. Those one-sided agreements typically provide that account holders are deemed to accept forged instruments or unauthorized transactions unless reported to the bank within 30 days after the monthly statement was issued, even if it was mailed to the rogue. You condo directors are getting a copy of the monthly bank statements mailed to you directly, right? Right?!

Perhaps most disturbing is the fact that defrauded condo boards and unit owners cannot always count on decisive action by police to bring the wrongdoers to justice. This is a troubling proposition because our natural inclination is to report criminal activity to police, not only to potentially recover our stolen property, but also to help protect other potential victims. Unfortunately, neither of these outcomes are guaranteed from police interactions. In our experience, police involvement with condo fraud scenarios rarely leads directly to financial recovery. Laying charges could, however, alert the public about bad apples and warn condo boards to steer clear, but too many condo frauds take place without charges ever being laid.

This may be such a such case.

Because there is reason to believe that Halton Police have been aware of misdeeds by the rogue firm in question for at least a year and were given convincing evidence of criminal activity from multiple sources, the continued failure to lay charges deserves special attention and raises serious questions.  It would, at the very least, frustrate the hell out of the victims who took time to come forward, file reports and give evidence, only to learn that the bad guys were left to defraud even more unknowing condominiums. All those victims should rightly be outraged, especially if they have devoted time and resources to providing police with evidence that has yet to lead to charges being laid and where the resulting delay may have have compromised their own ability to recover their money using other processes.

Let us be clear that we are not anti-police.  Victims should report crimes to police and provide useful information for perpetrators to be charged and prosecuted. There is also great value in the information that might come from police during investigations. And we all applaud when we see charges laid and prosecutions commenced.   Our point is that participating in a police investigation (while part of one’s civic duty) should not divert a defrauded condominium’s board’s time and energy from working with counsel to follow the steps to recovering stolen money, since those steps must be taken quickly.  If your board has time to pursue both avenues simultaneously, then by all means do both. If, however, you must choose whether to use the criminal process versus the civil process first, focus on the civil process first and make your own recovery a top priority.  The police process does not typically lead to financial recovery and, indeed, may not even lead to charges.

Too many boards incorrectly assume that helping police will result in quicker, less costly recovery than using the condominium’s lawyers.   While this seems a reasonable hope, it is misguided.   The best odds of recovery come from condo corporations taking immediate and decisive action to pursue fraud losses using the civil process.   Devoting time and resources to aiding a criminal investigation is both noble and important but it should rank as a second priority as it may be a bad choice as your sole means of seeking financial recovery.  Talk to your lawyers first to assess the situation.

Where police (armed with good information of wrongdoing) fail to protect the public and leave suspected thieves free to victimize dozens of additional condo unit owners, the government is the only other player with the power to fill that role and to stop the bad guys’ crime spree.

Almost 16 months have passed since the Ministry of Consumer Services announced its plan to introduce condo manager qualifications and licensing. No draft legislation has yet been revealed, but the plan would presumably (hopefully?) create a regulator with the power to revoke the license of suspected bad apples, a move that would have spared the condo corporations in Halton from the rogue firm whose misdeeds have been known to police for more than a year.

Creating a regulator with a mandate to license and regulate condominium managers and safeguard Ontario’s condominiums and unit owners is long overdue.  The government’s delay in rolling out this essential framework creates new victims with each passing day. These measures must be introduced immediately. Not “soon, very soon” as Minister Orazietti tells us, but now.

Right now.

Update (May 21, 2015):  The Hamilton Spectator reports that Halton Regional Police have charged Brett Mackenzie Leahey of St. Catharines, 45, owner/operator of Integrated Condominium Management, with defrauding 13 condominium corporations in Halton and Hamilton of $4.1 million between 2009 and 2014.   The charges follow a “lengthy investigation.”

Update (January 9, 2017):  Leahey pleaded guilty on Oct. 13, 2016.  The Spec reported that the Crown and defence agreed on a 4-year prison sentence but disagreed as to how long Leahey would be given to pay back the debt.  On November 17, 2016, Leahey was sentenced to 4 years in prison and given 10 years to pay his victims the $3 million he stole, or face a further 10 years behind bars.