$20million condo fraud in Toronto shows need for more regulation.

Reports have surfaced about a Property Manager that allegedly obtained fraudulent mortgage funds on behalf of 1,000 unsuspecting condo owners.   The Toronto Star reports that Manzoor Moorshed Khan, president of Channel Property Management, borrowed millions against at least five condo buildings, without the owners knowing about it.

Equitable Trust, a Canadian financial institution, says they were taken for $14million worth of fraudulent mortgages.  The Star reports that Khan falsified a series of legal papers to obtain the loans fraudulently.

In another situation related to the same property management company, it is alleged that Khan siphoned off some money through construction fraud.   Apparently, he tendered a bid for some construction work on one of the buildings he was managing through Canali Engineering, a company he created.  He submitted the lowest bid at $1.2million.  Then he inflated the bill to $1.3million… but his company never did the work.. he hired a sub-contractor to do the work at half the cost.

It should be noted that a statement of defense has been filed by Khan denying the allegations.

CBC.ca reports that condo fees in one of the buildings managed by Khan’s company has gone up from $340/mth to $780/mth….and the values have gone from $152k to $70k.

They say fraudsters cannot be stopped, only discouraged through regulations and laws.   Clearly, some more regulations need to be put in place.  CBC.ca quotes Dean McCabe, president of the Association of Condominium Managers of Ontario (ACMO), saying “there is no licensing or regulation of condo property managers.   Khan could manage condos next week, next month or next year”.   ( Yikes!  That’s a scary thought.)  Mr. McCabe is calling on the government to enforce licensing or regulation.

Channel Property Management manages upwards of 40 buildings….. We’ll report more on this story as it happens…