Realtor Andrea Beitel says she used iPro's tax remittance program for the past two years and the company owes her $70,000.Galit Rodan/The Globe and Mail
The trail of wreckage continues to expand following the collapse of Ontario mega-brokerage iPro Realty Ltd. as more of those affected come forward to describe the growing tally of money lost and trust broken.
On Sept. 22, the Real Estate Council of Ontario obtained a tracing and freezing order to assist its efforts to track down all of the missing $10.5-million that was removed from iPro’s trust accounts. But even if that effort succeeds, it may do little for a growing list of creditors owed money by iPro, including many of its former realtors.
“I’m not some million-dollar agent,” said Marian Stevens, who had been working with iPro on and off for 16 years before the Aug. 14 announcement that the brokerage would be closing. “The better part of my career, I was a first-time buyer’s agent and I worked with people like nurses referred to me by another nurse, to help her buy her first condo. As a single mom of a daughter with special needs, I do struggle. I’ve struggled many times.”
Ms. Stevens said she was horrified to discover she now owes the Canada Revenue Agency almost $30,000 because she was part of a tax remittance program run by iPro for its realtors. She said she can’t get answers from RECO or iPro’s current management.
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“I’ve never cheated on taxes. … I’ve always done things by the book,” Ms. Stevens said. “That’s why I signed up for this [remittance program], so that at tax time [the money] would be there.”
Most realtors are not paid like a typical worker whose employer holds back taxes owed to the government. Because most realtors are independent contractors, they receive their income in the form of commission cheques and must keep track of how much is owed in income tax, and in Ontario, how much is owed in harmonized sales tax. At some brokerages, as at iPro, realtors can ask for a portion of each commission cheque to be diverted to a separate account and be remitted to the CRA every quarter.
In a statement in response to questions about tax remittances, a RECO spokesperson said: “The insurer continues to assess commission protection claim forms submitted by registrants [or realtors], and the insurer has committed to providing a further update on this matter at the end of the month.”
It’s not clear how many people participated in the iPro tax remittance program, but Ms. Stevens is one of about a dozen people who have found themselves in online chat groups realizing they now have the same problem.
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“They’ve got $70,000 of mine,” said Andrea Beitel, who has used the tax program for the past two years. “I elected to have 20 per cent of every commission I made withheld and remitted. On the HST, they’d hold the entire amount of the HST for me.”
Now, she says neither the CRA nor RECO have answers about what happened to the money intended for taxes. RECO froze iPro’s bank accounts on Aug. 25.
“I was almost in tears,” Ms. Beitel said. “Nobody cares. I talked to CRA and the person was so disinterested: ‘You’re still going to be on the hook for this no matter what they did,’” she said she was told.
Robin Michael Azarcon only joined iPro in February, but he now says he’s in the same boat, wondering who to ask about his tax remittances. “I tried to send them an e-mail, ‘Hey can I get that money?’ No response; it’s frozen and they can’t do anything about it,” he said. Now that he heard more about how money was allegedly moved around inside iPro, he’s concerned that his tax fund could be, not just frozen, but lost. “I’m hoping they didn’t spend it, but I really don’t know,” he said.
In response to inquiries from The Globe and Mail, the CRA issued this response: “Taxpayers are generally considered responsible for errors made or delays caused by third parties acting on their behalf. However, there may be exceptional situations, where it may be appropriate to provide relief of penalties and/or interest to taxpayers related to third-party errors or delays.” CRA said it provides tax filers with a self-assessment tool that can help them understand if they are eligible for any help.
Rui Alves, co-founder of iPro Realty.Facebook
The victims of the tax program are far from the only people seeking money from what’s left of iPro. There are now three separate civil claims filed with Ontario’s Superior Court of Justice seeking the return of millions of dollars in money lent or invested with iPro and its founders, Rui Alves and Fedele Collucci.
The first to file were former managers of iPro branches Philip Kocev and Perry Staikopoulos, who along with members of their families and some other plaintiffs, are seeking the return of almost $4-million. On Sept. 10, a claim for $500,000 was filed in court from lender Susanne Liorti and on Sept. 18 another claim was filed on behalf of an unpaid investor using a corporate identity – 1460371 Ontario Ltd. – seeking $1.5-million in damages and $1-million in punitive damages.
These plaintiffs could represent just the tip of the iceberg. According to an affidavit filed by RECO, there are more than 170 different agreements for loans or investments with iPro and one of its related companies. It said iPro owes more than $30-million.
Mr. Alves still hasn’t explained what happened to the lost money or offered insight into how investors are going to be repaid, but he did release a statement last week that took some responsibility for the mess.
“We made serious mistakes in financial management and oversight,” Mr. Alves wrote. “We deeply regret the chaos our serious error in judgment and misguided attempts to save the company, has caused to the industry, iPro agents, co-op brokerages and consumers. We failed everyone.”
Editor’s note: A previous version of this article incorrectly stated that the the Real Estate Council of Ontario obtained a tracing and freezing order on Tuesday. The order was obtained Sept. 22.