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Toronto condo fraud: Silent embezzlement

The story of Manzoor Khan — the president of Channel Property Management who allegedly borrowed an estimated $20 million against his buildings and fled the country in 2011—was told in a shocking Toronto Star investigation.

Khan was also accused of rigging bids — creating fake companies that would win work in his condos and then subcontract the work at a fraction of the price.

However, stories of condo embezzlement usually go unreported.

In late July, Tim Toole, former president of Deaconwood Property Management, pleaded guilty to fraud over $5,000 and possessing property obtained by crime, and has started serving a two-year penitentiary sentence, said Toronto Police Det. Const. Christopher Briggs.

Toole embezzled nearly $1 million from two North York condos: 20 Olive Ave. and 22 Olive Ave., said Briggs.

The fraud came to light when the board at 20 Olive elected a new president, who demanded to see financial records, which Toole refused to divulge, said Briggs.

That prompted the board to fire Deaconwood and ask the new property management company to conduct the audit, which identified the stolen money. Police found the funds had gone directly from the condo’s bank account to Toole’s.

The unsophisticated fraud may never have been discovered without the new president asking questions, said Briggs.

“They were very trusting of Tim (Toole),” he said. “Everyone said the same thing: he talked a good game and gained everybody’s trust. Until they made that change they had no idea.”

Deaconwood also managed 9 Boardwalk Drive. Former resident Bruce Campbell alleges the building was taken for about $90,000, because his board wasn’t paying close enough attention.

Campbell, who became the board treasurer after Deaconwood Property Management shut down, went through his building’s financial statements with an auditor and saw $13,000 had been transferred from the current account through the reserve fund to an outside bank account, until about $90,000 was missing.

When they went to the police, they learned about the charges in relation to the buildings in North York. The board at 9 Boardwalk decided, that since there were “bigger fish” in line, they would write off the loss, said Campbell.

In the end, the loss amounted to about $1,000 per unit.

In a 2010 case, residents at 38 Elm Street recovered the money their building was allegedly defrauded of in an out-of-court settlement with their property management company.

Judy Sue and William Stratas were residents of the building in March 2008 when they got a “cryptic disclosure” from their board, said Stratus.

“Under the condominium act they had to make a disclosure that there was a litigation underway involving the common elements of the building,” said Stratas.

Stratas and Sue decided to investigate and went to court and retrieved the legal documents involving their condo. They learned that the contractor, Gregory Chatzisavvas, who the board had hired to provide low-flow toilets to the building—and was paid over $142,000 upfront—had disappeared with the money.

At the next annual general meeting, they both ran for the board. Stratas was elected president and Sue, a certified general account who worked at the Royal Bank as a senior financial analyst, was elected treasurer.

Sue investigated the building’s finances. What she found prompted the board to take the condo’s property manager, Christine Maitland, the management company and Maitland’s direct supervisor to court.

Sue outlined what she discovered and believes to be true in an affidavit filed with the court, along with supporting documents:

  • Maitland had a “non-arms-length” relationship with the contractor, suggested by condo cellphone records and evidence that Maitland’s daughter was married to a subcontractor that worked with Chatzisavvas.
  • Maitland helped the contractor write correspondence to the board that purported to be from Chatzisavvas on the computer in the condo’s office.
  • Maitland had stolen more than $30,000 from the building and falsified records to cover it.
  • That theft included keeping cash payments intended to be paid to other condo employees as Christmas bonuses.
  • Two people had attempted to deposit a forged cheque drawn on the condo bank account for $221,670, but the bank refused it because it lacked a date.

That affidavit convinced a judge to issue an order to open bank accounts belonging to the contractor and Maitland.

The settlement details are confidential, but the documents were given to a real estate blog, which reported the management company settled for $460,033.90.

Christine Maitland, now known as Christine LePage, is currently a property manager with Newton-Trelawney Property Management Services. Reached by phone at her building, the Liberty At Discovery Place in Pickering, she had no comment.

“I cannot discuss anything,” she said, “that was part of the final settlement.”

In a statement of defence filed with the court, Maitland "vigorously (denied) all allegations of theft, fraud and misrepresentation during her employment" at 38 Elm.

Sue and Stratas would like to see property managers licensed and the licensing overseen by an independent body that would revoke it for wrongdoing.

“Our view is the licensing process needs real teeth, real consequences and real review and vetting of individuals,” said Stratas.

Stratas said his experience has convinced him fraud is pervasive in the condo industry because there many opportunities for people to rip off condo corporations. “To what extent they actually commit those financial crimes is only a question of the individual morals and self-restraint individuals may have.”

Inspired by their investigation of the fraud at 38 Elm, Sue and Stratas have gone into business together as Eagle Audit, offering fraud auditing and investigation services for condos.

Part one

Part two

"He talked a good game and gained everybody’s trust"

Part three

Part four

Full feature page: click here.

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