Fraud Lawsuit – Five Condos

April 2018

Condo owners at Five Condos in Toronto are suing former board members for $800,000 claiming they conspired to divert funds from the corporation’s operating budget for their personal benefit.  Condo owners of the corporation are in debt and have received a $750,000 special assessment.

The lawsuit claims these individuals claimed to be owners in the building and forged ballots in 2016.  They resigned from office in 2017 after a CBC Toronto investigation reporting some members of the group were on the board of 12 other condominiums.

Toronto Condo News reported on this, Investigation into Condo Board Elections, in August 2017.  The article was reporting on condo boards electing directors accused of hijacking condo boards, obtaining control of multi-million dollar budgets, diverting funds and failing to pay bills of condo corporations.  At the time we were aware of at least three affected condo corporations.

According to the lawsuit, “the group would use their position of trust and power, authority and discretion to access the operating budgets of the condo corporations to bind the condo corporations to contracts with businesses that they, or their associates, controlled in order to insidiously divert funds for their own benefit.”  The lawsuit alleges that some board members received “kickbacks” or commissions from contracts.  One contract forced condo lowers to pay three times the market rate for hydro.  Other allegations in the lawsuit are that residents were billed double the cost for management and security services with half the money being kept by these directors; and that the corporation was billed for services never provided.

An audit of the Five Condos budget showed $600,000 in unpaid bills and a negative bank balance.  They were at risk for losing hydro, water and insurance because of unpaid bills.  The special assessment allowed these bills to be paid.

Ultimately, condo owners elected these individuals to represent them.  Proper election practices would have likely prevented deceptive practices which allowed these individuals from obtaining control of their board.

For more information on condo elections, see the Condo Archives – Condo Boards, Communications & Community, subcategory Meetings & Elections. You can also access articles directly: