TORONTO — Professional fraud examiners who work in the condominium industry say the new Ontario Condominium Act is an excellent step forward, but its high promise must be met with decisive implementation in order to stem the rising tide of fraud and corruption that victimizes thousands of condo owners each year.
“The dirty underside of the condominium industry — which includes financial misconduct by property managers as well as directors who sit on condo boards — is long overdue for a tough-cop remedy,” asserts William Stratas, Managing Director of Eagle Audit Advantage Inc., based in Toronto.
“The new licensing system for condo managers must address the root causes of frauds that victimize condo corporations and their owners,” stated Judy Sue, CFE CPA CGA, a Certified Fraud Examiner and President of Eagle Audit Advantage Inc. She adds, “Strong enforcement measures and ethics oversight must be enabled, otherwise condo fraud will remain a pervasive problem and condo owners will risk being permanently relegated to second-class homeowner status.”
Mr. Stratas believes that Ministry officials deserve praise for a superbly managed 3-year consultation process in which diverse views were welcomed, including input from oppressed condo owners who have been victims of various types of abuse at the hands of rogue boards and management. “I expect the new Ontario Condo Authority will establish a reliable mechanism for affected owners and boards to seek remedy,” Mr. Stratas explains, “The small annual administrative fee charged to unit owners for the Condo Authority will return significant conflict-resolution benefits and education benefits for all condominium owners in Ontario.”
The alarming scope of condominium fraud and financial corruption in Ontario was highlighted in May 2015 by the laying of criminal charges against an operator of a Burlington-based condo management company. In this case police allege that 13 condominium corporations had suffered $4.1 million in fraud losses since 2009 — a circumstance which highlights the vulnerability of the condominium sector to financial misconduct by trusted insiders in property management companies.
Eagle Audit Advantage Inc. was founded in 2013 by two former condominium directors who have a record of recovering losses from alleged condo frauds. The unique consultancy is Canada’s first professional fraud examination office focused on prevention, detection and investigation of frauds in the condominium industry.