True Patriot Love - October 25, 2025


Inside Ontario’s $10 Million Real Estate Scandal


Episode Stats

Length

39 minutes

Words per Minute

172.1097

Word Count

6,772

Sentence Count

527

Misogynist Sentences

1

Hate Speech Sentences

3


Summary


Transcript

00:00:00.000 They called it one of the biggest real estate scandals Ontario has ever seen.
00:00:04.640 iPro Realty, a giant brokerage with over 2,400 agents and 17 offices,
00:00:10.660 suddenly collapsed when regulators discovered up to $10 million missing from its trust account.
00:00:16.720 Buyers lost deposits, agents lost commissions,
00:00:19.120 and the industry was left reeling as police opened up a criminal investigation.
00:00:24.860 It should have been the end of the story.
00:00:26.240 But now it looks like the same guys are back in business.
00:00:36.960 Mark Morris is a real estate lawyer here in Ontario.
00:00:40.240 He owns LegalClosing.ca, and he joins us for a second time today,
00:00:44.200 the first time with Paul Micucci earlier on the same topic on the iPro scandal,
00:00:50.440 which we're talking about today.
00:00:51.560 Thanks for joining us, Mark. I appreciate it.
00:00:53.540 Oh, it's a pleasure. Thank you again for having me back.
00:00:55.680 I really enjoyed the first interview.
00:00:58.020 Well, as I kind of outlined in the intro, you know, iPro was probably Ontario's largest brokerage scam in history.
00:01:07.100 Maybe I'm wrong about that, but certainly it drew the attention of the authorities.
00:01:13.420 And so sort of as a follow-up, first of all, why don't you take us through what the scandal was
00:01:18.340 and what it meant to consumers at the time that it occurred?
00:01:20.640 Yeah, well, I think you're right, by the way, in the way you classified that, because you called it a scam.
00:01:25.800 It's certainly not the biggest scandal.
00:01:28.680 It's certainly not the biggest bankruptcy.
00:01:31.480 It's certainly not the biggest blow-up.
00:01:33.280 But I do think it's the biggest scam, meaning that it was born of intention and, as a result, has criminal elements,
00:01:44.300 regulatory elements, and has really shaken the industry to its core.
00:01:49.380 So just to remind your audience as to what has transpired here, there was a large brokerage of about 2,500 agents,
00:01:56.660 which is about as big as they come in Ontario, all of whom belong to this group called iPro Realty.
00:02:04.060 And it turned out that iPro Realty was effectively not guarding its trust fund appropriately.
00:02:15.000 So to back up and to give context, all lawyers in Ontario and all brokerages in Ontario are entrusted with something called a trust account,
00:02:24.640 which is an account for other people's monies.
00:02:27.020 And as you can imagine, being an account for other people's monies, it has to be given and treated with the heightened diligence
00:02:33.160 that comes along with dealing with other people's monies.
00:02:36.640 These are not monies that you've earned.
00:02:38.180 These are monies you're holding for other people.
00:02:40.300 So in the context of real estate, there's two different types of monies that a brokerage regularly holds.
00:02:45.780 The first is the monies that it is holding by way of a deposit for transactions that have not yet occurred.
00:02:51.860 And as you can imagine, with 2,400 agents, there's a whole lot of people, because you sign an agreement to purchase a sale,
00:02:58.400 and then it usually takes about three months to close.
00:03:00.700 There's a whole bunch of people who have a whole bunch of deposit monies sitting in that trust account.
00:03:06.520 The second monies that are usually held in trust are those monies to pay out the agent commissions.
00:03:12.960 Because as you can imagine, agents themselves have to wait until the day of closing for those monies to be earned.
00:03:19.520 And then once they're earned, there's a period of time where ultimately they have to be paid as well.
00:03:26.640 And what happened here is that there were trust irregularities that took place such that there was not sufficient money
00:03:35.800 within the trust account to account for all of the people's money who ultimately entrusted IPRO
00:03:43.080 to monitor and protect those sums.
00:03:46.360 Now, that in itself is a scandal.
00:03:52.060 It's born of more than inadvertence.
00:03:56.220 If you know the way trust accounts work, particularly for large organizations,
00:03:59.700 I've run large law firms in the past, and my law firm is now a mid-sized law firm again.
00:04:05.440 You know, we do daily reconciliations.
00:04:07.600 We're meticulous about our accounts.
00:04:09.600 And the reason we do daily reconciliations is actually not so that I can come on a show
00:04:15.040 like this and brag, but rather because if you have a single issue and you discover it
00:04:19.300 30 days later, it's a headache par excellence.
00:04:22.540 You want to know about these things.
00:04:24.340 You want to be keeping active tabs.
00:04:26.180 And in fact, we have to pay a lot of money for people whose sole job it is to monitor
00:04:30.000 the trust account and make sure that every dollar that's flowing is being treated seriously.
00:04:34.220 And that would be the expectation of an IPRO or a right at home or one of these larger
00:04:39.080 brokerages that they were doing more than the mandatory minimum requirement of reconciling
00:04:43.100 once every month, but they were on it every single day.
00:04:45.640 So the fact that money was missing was itself a regulatory failure in that firm.
00:04:52.140 It turned out to be more than that.
00:04:53.860 And we'll talk about it.
00:04:54.760 But that is not the essence of why it is we are still speaking about IPRO because people
00:05:02.640 will be, not everyone is honorable.
00:05:05.040 And if you take a hundred people in a room, you're going to have people who are 100% honorable
00:05:08.860 and you're going to have a given percentage of people who are not.
00:05:11.760 And the regulatory body's purpose, in this case, the regulatory body in real estate is
00:05:16.660 called RICO, the Real Estate Council of Ontario, is to ensure that all actors, whether
00:05:21.700 good, evil, malevolent, negligent, or otherwise, are properly accounting for their trust obligations.
00:05:30.980 In this instance, RICO, through an audit, discovered that there were discrepancies in the trust account.
00:05:38.800 And the problem that took place here is that RICO did not act with dispatch.
00:05:44.780 In fact, many people believe that RICO acted with anything but.
00:05:48.740 But RICO took three months in order to properly identify the issue and shut down the brokerage.
00:05:58.620 Those three months, people had no idea that this was taking place, even though the regulator
00:06:03.600 did, continued to put new monies into the trust account, continued to operate with the
00:06:09.940 trust that they were being properly overseen.
00:06:12.800 Even though everyone realized that was not the case, at RICO, that is to say.
00:06:19.060 And when they shut down the brokerage, they did so in the most inappropriate of ways.
00:06:27.540 Specifically, they gave what was, by any stretch, a slap on the wrist to people who embezzled trust funds.
00:06:36.100 It turns out that, you know, this was known.
00:06:40.120 It turns out that this was not negligence.
00:06:43.160 This was been taking place for a long period of time.
00:06:46.560 It feels almost Ponzi, Ponzi scheme.
00:06:50.240 It's totally, you know, the dollar.
00:06:52.380 It's absolutely a Ponzi.
00:06:54.060 And it's worse than a Ponzi because it's an involuntary Ponzi.
00:06:57.280 It's a Ponzi where you cannot tell you're part of a Ponzi scheme as opposed to someone
00:07:02.760 who says, hey, you should invest in this.
00:07:04.660 And then you're duped and you didn't realize it was a Ponzi scheme.
00:07:07.720 In this instance, you were told.
00:07:08.520 It's actually the easiest Ponzi scheme to execute because you don't have to explain anything
00:07:13.220 to anybody.
00:07:14.040 Correct.
00:07:14.620 You just take the money.
00:07:16.180 And so what happened here is that RICO was negligent because it took three months for
00:07:20.680 it to actually take action.
00:07:23.100 When it took action, its action was wholly deficient.
00:07:26.700 The regulator at the time, who has since been removed from his duties as a result of this,
00:07:31.400 basically said, you will be allowed to voluntarily withdraw yourselves, the two owners of IPRO,
00:07:38.160 from the profession.
00:07:39.200 You'll be allowed to claim semi-retirement, which is what they did.
00:07:43.900 And then struck a deal where they were allowed to transfer the brokerage's underlying assets
00:07:53.840 to an entity that was, for all intents and purposes, clean and thus obfuscate the fraud
00:08:03.480 that took place.
00:08:04.200 Originally, they reported there was like, I think, under $8 million that was in discrepancy
00:08:08.920 here.
00:08:09.280 And then it was $10.5 million.
00:08:11.320 And then shortly thereafter, we're finding out that it's closer to $24 or $25 million.
00:08:18.100 So now, has the money been restored to any trust fund or are these consumers out their
00:08:26.020 money?
00:08:26.740 So let's be very clear, firstly, as to the numbers.
00:08:30.020 The $24 million is a sensational number, not because it's not accurate, but because $24 million
00:08:35.220 is in play, but that's not the number that is missing.
00:08:39.720 Okay.
00:08:40.160 For the purposes, and so when we hear $24, $30 million, that was the total amount of money
00:08:46.240 that was fungibly used within this system, but some of it was paid back.
00:08:51.000 So it's not that there's $24 million in losses.
00:08:53.400 We don't know what the total amount of losses are.
00:08:55.420 We'll find that out when the audit comes out, and we'll talk about that was mandated by the
00:09:00.520 frauds, but what is important about the number question happens to be the number eight, because
00:09:09.160 $8 million is the mandatory insurance that RICO demands that brokerages maintain for the
00:09:17.640 purposes of frauds.
00:09:19.780 What that means in English is that $4 million covers commissions and $4 million covers the
00:09:26.400 public.
00:09:26.840 So whether it be $10 million, $24 million, or $100 million, anything above $4 million that
00:09:36.220 deals with consumer deposits is a loss that is not covered by insurance.
00:09:42.400 We don't care up to $4 million.
00:09:44.960 I mean, at that point, the trust account will be made whole.
00:09:48.280 If it's just $4 million that are missing, no problem.
00:09:51.180 Insurance pays the $4 million.
00:09:52.600 There's enough money to pay everyone back.
00:09:54.140 But if there's $10 million in losses on the consumer level, not the commissions, then you're
00:10:01.380 looking at a $6 million discrepancy that needs to be made up from somewhere.
00:10:06.140 Now, as it turns out, the realtors of Ontario, to their credit, are sickened by what happened.
00:10:11.360 They're sickened by what happened due to self-interest.
00:10:13.460 I'm not trying to say that they're altruistic beings that ultimately love this.
00:10:16.260 I'm saying to you, they realize that their own credibility is on the line here.
00:10:20.660 Because if a single consumer loses a single dollar putting money into a brokerage in Ontario,
00:10:27.720 whether or not the insurance covers it or not, then we all collectively as a profession have
00:10:33.580 a credibility issue that we will not overcome.
00:10:36.180 And everyone...
00:10:36.500 That makes sense.
00:10:37.700 No, no.
00:10:38.080 I mean, you don't want to create suspect in any industry, especially one with high-priced,
00:10:42.940 important purchases like homes.
00:10:45.000 Precisely.
00:10:45.620 And that's the reason that RICO took an approach, which I think is actually quite smart.
00:10:49.900 First smart thing they did in this entire thing, where they said, for commissions, everyone
00:10:55.020 has to wait.
00:10:55.740 We're going to do it pro rata.
00:10:56.940 Everyone's going to make their submissions.
00:10:58.320 People are going to take their haircuts.
00:10:59.520 People will probably come out 40% on the dollar, whatever.
00:11:01.920 But that's the agents.
00:11:03.800 For Ontarians that have their deposits, these things continue in the normal course.
00:11:08.640 We will pay them out.
00:11:09.780 We will just get it paid.
00:11:11.340 How will they do it?
00:11:12.140 I don't know.
00:11:12.600 There may be a special levy that takes place on realtors at the end of this.
00:11:15.740 There may be just...
00:11:16.560 They have a $50 million, I think, retained earnings in their statement.
00:11:21.640 Maybe they'll use that.
00:11:22.560 Who knows?
00:11:23.320 But one way or the other, RICO, on behalf of the industry, is seemingly not allowing consumers
00:11:28.320 to lose a penny beyond the insurance mandates, specifically because if they start doing that,
00:11:34.260 then deals start falling aside.
00:11:35.820 And if they fall aside, then, as you can imagine, it's much more than the deposit.
00:11:39.480 Your whole agreement of purchase and sale.
00:11:41.500 Yeah, if people's money vaporizes, the home deals go away.
00:11:44.960 The home deals go away.
00:11:46.220 That just dominoes and dominoes.
00:11:48.680 Okay, so now it begs the question, what were they doing with the money?
00:11:52.660 What was I pro doing with the money?
00:11:55.140 Yeah.
00:11:55.460 Well, all right.
00:11:58.280 So this is all conjecture.
00:12:00.040 Let me state that this is all conjecture.
00:12:01.980 No one knows.
00:12:03.620 Let's say, allegedly, this could happen.
00:12:05.640 Let's be hypothetical.
00:12:06.680 No problem.
00:12:07.700 It's actually, you know, that's probably the most interesting...
00:12:10.300 I've been interviewed on this a couple times, and that's probably the most interesting question
00:12:13.480 that hasn't been asked.
00:12:14.660 What did they do with the money?
00:12:16.140 Because, truthfully, I mean, they had a nice house or two, and I think there was some evidence
00:12:22.460 that they may have had a yacht of some sort and everything else, but they weren't living
00:12:26.000 extravagantly the way that you would if you were just embezzling.
00:12:31.520 In fact, there's reason to suspect...
00:12:34.460 I'm not saying to you this is the case, but there's reason to suspect that their basic
00:12:40.680 business operation was not sustainable.
00:12:44.160 So to be clear, there was a new...
00:12:47.280 Right at home pioneered a new model for the industry.
00:12:51.060 And the new model, it used to be the case that everyone used to divide out their commissions
00:12:54.800 60-40.
00:12:55.880 So if you were a REMAX agent, you would give 40% to the brokerage and you'd keep 60.
00:13:00.020 Then over time, particularly as technology kind of came in, those splits changed to, I don't
00:13:06.760 know, 80-20, 90-10.
00:13:09.440 And then this new model came into the industry that had never been there before.
00:13:13.460 Right at home pioneered it, where they said, we're going to take $295 a deal, regardless
00:13:19.180 of what it is you do.
00:13:20.860 And we're going to take $99 or $169 per month.
00:13:27.080 And what we're going to do is we're going to be such nimble and good operators.
00:13:31.660 We're going to give you no training.
00:13:32.580 We're going to give you nothing else.
00:13:33.640 They get training now.
00:13:34.640 But initially, we're bare bones.
00:13:37.620 We're going to basically be the brokerage.
00:13:39.980 We will facilitate this.
00:13:41.500 We'll have all...
00:13:42.200 And we'll do in volume, we'll give us net profit.
00:13:46.560 And that's acceptable, by the way.
00:13:48.440 You have to be a really, really, really good operator.
00:13:51.100 And by the way, the operators right at home were really, really good.
00:13:53.420 Howard, Drew Karsh, and others, magicians at what they did.
00:13:57.160 And they operated properly at these rates, which people said they could not operate at.
00:14:02.440 They couldn't understand how they were doing this business.
00:14:04.820 And I feel very much for them.
00:14:06.040 I started up a law firm called Access Law, which was based in Walmarts.
00:14:10.100 We opened up 13...
00:14:11.460 By the time I sold it, we opened up 13 law firms in Walmarts.
00:14:14.540 And we were doing volume-based law.
00:14:16.840 And I was doing wills for $149 a pop.
00:14:20.100 And people were like, how do you make profit on this?
00:14:22.680 I just had a family member finish their will at that very Walmart location.
00:14:29.540 Okay.
00:14:29.820 So that was my...
00:14:31.000 That was...
00:14:31.560 I co-founded that with my partner who's still running it, Lena Koch.
00:14:35.240 And, you know, we did this in volume.
00:14:38.800 And it was very hard to make a profit.
00:14:40.460 But eventually a profit was made once we actually figured out the imaginations of quality and
00:14:45.300 assurance and process and order.
00:14:47.180 And that's much, much harder than you can imagine.
00:14:49.060 But right at home did it.
00:14:50.580 Access Law did it.
00:14:51.980 People can do it.
00:14:52.740 So iPro decided to compete in that space.
00:14:55.860 This is to your question.
00:14:56.980 iPro decided to compete in that space.
00:14:59.580 But I don't think people quite understand how hard it is to streamline operations.
00:15:04.280 Operations are the hardest thing in the world.
00:15:06.120 And if you have ever been in business, you will know doing something in volume and making...
00:15:11.520 And particularly in commoditized services where marginal costs don't fall at scale.
00:15:16.100 I know that's Yiddish.
00:15:17.560 But basically what it means is if you are manufacturing a physical device, if I'm manufacturing
00:15:23.300 this, if I produce 10,000 of them, the cost is $100.
00:15:27.840 But if I produce a million of them, the cost is $5.
00:15:30.780 Because marginal costs, the cost of every item falls at scale.
00:15:35.020 But with professional services, marginal costs don't fall at scale.
00:15:38.100 You still make the same profit, but there's no marginal cost differentiation because you
00:15:42.460 have to tack on additional people and quality assurance.
00:15:45.620 I was going to say everything requires that.
00:15:47.560 That process of somebody actually physically doing that work.
00:15:51.340 Exactly.
00:15:51.860 So 2,400 agents could make for a very profitable business if you have a Howard Drukarsh who's
00:15:57.820 ultimately operating and driving operations.
00:16:00.340 And there you go.
00:16:01.060 But for every Walmart, there's a Sears.
00:16:05.120 And Sears did not have their operations down where Walmart did.
00:16:09.320 And we see what the difference is.
00:16:11.020 And actually, if you are iPro, you can see based on how many people had to lend money,
00:16:17.560 to the operating company over time, that they weren't running efficiently.
00:16:21.540 Certainly, they weren't running profitably.
00:16:23.960 So if you're asking where the money went, yes, to some degree, I'm sure while they were sitting
00:16:29.140 there and delving into the trust, they were paying themselves handsomely.
00:16:32.000 And I'm sure that it went to homes.
00:16:33.180 And I'm sure that it went to renovations.
00:16:34.340 And I'm sure it will be discovered that they had yachts and everything else.
00:16:36.820 But in terms of siphoning $30 million, that's not, it seems, what was going on.
00:16:43.700 It didn't seem to be living that they weren't living with stolen money.
00:16:47.740 They were just funding.
00:16:48.720 They were operating their business because they could not operate it without it, which
00:16:53.500 itself is a sign of failure.
00:16:55.380 You know, business people, you know, if you're if you don't have something that's working,
00:17:00.100 shut it down.
00:17:00.820 Shut it down or alternatively, borrow your money and put your do what we all do.
00:17:05.560 Right.
00:17:05.980 You can't embezzle money, take it from someone else.
00:17:09.280 But to your question, what happened to the money?
00:17:11.940 I think we're going to find it's a mixture of both.
00:17:13.920 I think they were living on it, though, not living too large, although they were living
00:17:18.180 large, combined with the fact that they were using it for the operations of the business.
00:17:23.080 Now, Rico does these inspections.
00:17:25.620 This was a routine one.
00:17:27.080 I think that my question is, if they do these inspections every four years, is that enough?
00:17:35.360 Is there more oversight needed?
00:17:37.240 Now, Rico is saying that they're going to, I guess, insulate and be better enforcers,
00:17:43.680 better inspectors, and that they're going to play a heavier role based on this specific
00:17:49.640 incident.
00:17:50.960 But are they?
00:17:52.520 And how will they?
00:17:54.420 Think about this for a second.
00:17:56.160 So you remember how I was just talking about operations of a business?
00:17:59.820 Operations of a business require detailed analysis of things that actually make things
00:18:05.520 better.
00:18:06.320 One thing that would make Rico better is not their attestation that they're going to be
00:18:12.100 more diligent in their audits.
00:18:14.740 Rather, an acknowledgment that brokerage A is not brokerage B.
00:18:19.760 An acknowledgment that LegalClosing.ca, which is my firm and does 10 deals a day.
00:18:25.500 Well, we don't.
00:18:26.220 That's humble bragging here for the purposes of this pod.
00:18:28.800 But truthfully, we do between six and 10.
00:18:31.200 So we do between six and 10 deals a day.
00:18:33.580 It's perhaps deserving of additional audit track that a person who does two deals a month
00:18:41.140 is not because LegalClosing.ca presents a systemic risk, whereas that person does not.
00:18:48.960 And well, certainly not inspected over that period of time.
00:18:52.440 Yes, I would agree.
00:18:53.560 You should be inspected more often, Mark.
00:18:55.680 But if you think about it, there's a very easy way to do it for the purposes of Rico.
00:18:58.960 Just do it by brokerage size.
00:19:00.840 If you have 2,400 agents, there should be no excuse.
00:19:03.980 There aren't that many.
00:19:05.320 There should be no excuse.
00:19:07.260 Brokerages that hit 1,000 and more agents should be audited on an annualized basis,
00:19:14.000 whereas brokerages that have five agents perhaps can go through a four-year audit track.
00:19:19.280 And yet Rico hasn't even discussed turning its attention to a bifurcated audit track,
00:19:24.100 which would accord with the realities of the market today.
00:19:27.660 By the way, it's not just Rico.
00:19:30.240 Law Society is equally deficient on this.
00:19:32.540 But I don't want to pretend that I'm high and mighty.
00:19:36.640 My colleague, Cartel and Bouie, just had an article written about them in the Toronto Life
00:19:41.900 where they basically embezzled $90 million and have been living their best life on client trust funds.
00:19:49.220 Similarly, there's someone out in Brampton, a real estate lawyer,
00:19:51.960 who's gone ahead and purchased out $3 million from their trust accounts.
00:19:57.000 And my suggestion to the Law Society on that is do not allow people to ultimately conduct
00:20:03.160 real estate transactions if they don't have sufficient coverage per transaction.
00:20:09.460 That is to say, if you're doing a $10 million transaction and Law Pro's mandated minimum
00:20:13.180 is $1 million, make sure that you have excess for $10 million before you can take it on.
00:20:17.100 Simple rule.
00:20:17.900 It seems pretty obvious to me.
00:20:19.240 There are ways of being smart about this that do not require us to say,
00:20:24.820 Rico, do a better job and start heavy hand of regulation.
00:20:28.500 Just bring it out there.
00:20:29.780 There are better ways.
00:20:31.000 There are smarter ways of approaching this.
00:20:33.340 Rico has to date shown no evidence that they are thinking about these things.
00:20:37.020 But then again, Rico has gone properly, silent.
00:20:40.680 They're pending the Denton's review.
00:20:42.380 They're under the thumb of the minister.
00:20:43.680 We haven't talked about any of these aspects, but this is a fallout of the scandal.
00:20:47.560 And the high likelihood is that regulatory reform, internalized regulatory reform is in
00:20:55.360 the cards and that these matters will start being discussed as a viable mechanism as opposed
00:21:00.980 to just saying, we're going to audit everyone more.
00:21:03.460 So, Mark, these guys, I'm sorry, I had their names in front of me.
00:21:07.720 And it, but the group, so sorry, it was Rui something or another and someone, I forget
00:21:14.000 their names too.
00:21:14.860 Yeah.
00:21:15.260 I, Rui does sound right.
00:21:17.400 And before the end of the show, I will find it.
00:21:20.320 But essentially they were told, okay, guys, we'll give you early retirement and we'll do
00:21:27.620 a further audit.
00:21:28.620 And I guess they'll figure out what's going on there.
00:21:30.940 Meantime, they're able to open up iCloud, which seems to be doing the exact same thing.
00:21:42.120 Well, it's not iCloud.
00:21:43.580 Let's be clear.
00:21:44.620 iCloud is not.
00:21:45.280 I'm so sorry.
00:21:45.900 What is the name of the new version?
00:21:47.520 No, it is.
00:21:47.940 It is called iCloud, which is hysterical because they'll be sued to oblivion by Apple at some
00:21:51.720 point, which, which, which it shows you the haste in which they opened it up that they
00:21:56.740 called it iCloud.
00:21:57.240 I feel badly even saying the name out loud because I just feel like anybody from Apple
00:22:01.540 right now in the legal department is going, okay, there were two, there were two different
00:22:06.400 brokerages.
00:22:07.020 I think it was skybound and iCloud that were opened up and the fact that they were opened
00:22:10.860 up and the fact that people who were involved in iPro are involved in iCloud and skybound
00:22:17.840 is not really the biggest deal.
00:22:21.420 That's not the biggest deal.
00:22:22.780 Look, we're innocent until proven guilty.
00:22:24.380 And there's a whole lot of people who work for iPro who probably knew nothing of the scandal
00:22:28.200 and we can't paint them all with the same brush.
00:22:30.140 That's not the way justice works.
00:22:31.620 If someone who was affiliated with iPro is forever tainted as a result of a scandal that
00:22:36.960 they had no part of or no knowledge of, that is itself a manifest injustice.
00:22:42.800 And there are a bunch of people who have opened up iCloud and who have opened up skybound.
00:22:47.500 And we don't know if they have been involved or not, although we suspect they were because
00:22:53.120 of the sweetheart deal that was provided.
00:22:56.260 But we don't know that yet.
00:22:57.600 Fine.
00:22:58.760 That's not the scandal.
00:23:01.020 The scandal is not that the people who are not affected by the scandal are trying to reconstitute
00:23:06.160 and do what they need to do and make a living and everything else.
00:23:09.140 Begrudgingly, you've got to give people their due.
00:23:12.640 Let them have that.
00:23:13.480 The scandal, the essence of the scandal here, above all of us, and we haven't touched on
00:23:20.320 this, is that RICO, in its brilliance, facilitated the underlying transfer of the value asset
00:23:28.520 that is the brokerage members.
00:23:31.740 So let me explain.
00:23:32.700 Every business, doesn't matter what business you're in, is valued on the basis of its future
00:23:38.840 cash flow.
00:23:40.300 So if your future cash flow is expected to end in three years, then you will only get
00:23:45.020 paid for the present value of three years worth of new cash flow.
00:23:48.640 If you have 2,400 agents and your future is looking bright, then it's called a perpetuity.
00:23:55.960 You're assuming that it's going to continue forever and 2,400s are going to generate the
00:24:00.360 following, and therefore, the present value of that is X, and that's how you value the
00:24:03.960 brokerage.
00:24:04.980 And it's usually at an X factor of 10 or whatever it is over a period of time.
00:24:09.320 Hardly, it's a professional service firm.
00:24:09.840 It's usually an X factor of about one, to be very frank, for professional service firms.
00:24:12.840 Oh, is that right?
00:24:13.660 Yeah, yeah, yeah.
00:24:14.080 In that industry?
00:24:14.460 Okay.
00:24:14.640 It's different.
00:24:15.620 Tech is about eight.
00:24:16.880 In the normal thing, tech is about eight outside of the unicorns.
00:24:21.060 Manufacturing is usually about four.
00:24:23.820 Things like insurance are about two or three.
00:24:26.400 Actually, insurance could be a bit higher.
00:24:27.960 But professional services are about one, because there's no longevity of purpose.
00:24:34.300 If Mark Morris goes away, legal closing is not valued the same way, because they are saying
00:24:38.800 it's not correct.
00:24:39.840 So that's the reason that it has low value.
00:24:43.680 Regardless, that's all interesting.
00:24:45.420 We could talk about that another time.
00:24:47.400 What happened here is that the underlying value is the agents.
00:24:51.820 And what RICO did is, before they even explained that there was a fraud, they basically said,
00:24:56.960 hey, every one of you that are agents of iPro, we are automatically transferring you to iCloud,
00:25:04.660 unless you opt out of the system in three days.
00:25:08.000 Now, opting out of the system is not an easy thing for an active agent to do.
00:25:11.620 They have to find a new brokerage.
00:25:12.900 They have to fill out the forms.
00:25:14.300 They have to be comfortable with their new contracts.
00:25:16.640 It takes a month or two months to ultimately do this.
00:25:19.900 And so what RICO did in giving people three days, many of whom are on vacation, many of
00:25:24.880 whom aren't following this, whatever, they facilitated the underlying value transfer from
00:25:32.220 a infected firm called iPro to a clean firm called iCloud, clean until Apple sues them.
00:25:39.840 And that underlying value transfer means that iCloud is now sitting on the results of what
00:25:50.600 was effectively a fraudulent enterprise.
00:25:53.040 And RICO did this.
00:25:54.480 RICO did this.
00:25:55.700 RICO was the one who said, we're auto-transferring.
00:25:58.100 They didn't say, hey, guys, you guys only have three days and you have to find a new brokerage.
00:26:02.440 No, they said, we're transferring this.
00:26:04.120 And there's reason to suspect that the principles of iCloud are related or maybe even guided by
00:26:11.160 iCloud, by iPro principles.
00:26:13.740 Now, I said, we have to give them their due.
00:26:16.240 That's fair.
00:26:17.020 We can allow people to do and start their business.
00:26:20.120 But what you're saying is an industry regulator can't be helping a failed company that has done
00:26:27.600 something untoward with their trust funds and just allow them, because even if they're
00:26:33.980 various brokers or signed on members, took three days or five days when they made the
00:26:41.580 transfer of that company to take on whatever investor was going to get behind them, they
00:26:46.600 showed that investor the value of all of these brokers that were associated with them or all
00:26:51.860 of these agents that were associated with them.
00:26:54.580 And that then gave them the basis for the value of their new business.
00:26:58.800 Precisely so.
00:26:59.440 That's exactly right.
00:27:01.180 And so it stinks to high heaven.
00:27:02.840 I mean, it just stinks to a point where there was consequence.
00:27:07.260 RICO had to let go of its director.
00:27:09.440 The minister, who is ultimately responsible, came in and said, to hell with this.
00:27:16.520 And they gave strict instructions about the audit that's to take place.
00:27:20.620 They mandated that that audit be public, which it will be when it is released.
00:27:25.340 It's let things quiet down a bit, which is good for everyone right now.
00:27:29.060 But it will be released.
00:27:30.200 And then this will kind of spark back up again.
00:27:33.520 And RICO will have to answer for its sins.
00:27:36.460 It's just we're waiting to find out the full extent and report.
00:27:39.760 Quite frankly, the answering that they'll probably end up doing is a slap on the wrist as well,
00:27:44.860 which is to say they may have an overseer themselves, an ombudsman who you can complain to.
00:27:51.500 That won't really do anything.
00:27:52.800 It's just another layer of management.
00:27:55.840 Truly, what needs to happen is RICO just needs to be better at its job.
00:28:00.080 Because whether it's the ministry or RICO, this is a failure of people.
00:28:05.100 And wherever those people are, whether they're at RICO, whether they're at the ministry at a board level or anything else,
00:28:10.220 anyone could have failed in their regulatory tasks.
00:28:13.580 What we need to do in this country, Canada generally, is we need to take justice matters more seriously.
00:28:21.040 When you rob trust accounts, you need to go to jail.
00:28:25.100 When you go ahead and you do something that is untoward, you should face consequences.
00:28:33.940 Now, don't get me wrong.
00:28:34.840 I have endless criticism of the way the United States chooses to met out justice.
00:28:39.320 I don't think it is justice in half the instances.
00:28:42.140 But quite frankly, it goes the other way in Canada.
00:28:45.740 You can't let people who are doing this go free because if you do, you're setting an example.
00:28:50.740 I am currently sitting here.
00:28:52.420 This is not an exaggeration.
00:28:53.600 I'm just going to pull it up.
00:28:54.620 I have no idea.
00:28:55.920 I haven't looked in anticipation of this interview.
00:28:58.200 But right now, in my trust account, I'm taking a look.
00:29:01.600 I have $12,300,000 sitting in my trust account today for today's transactions.
00:29:09.620 There it is.
00:29:10.140 It's right on my screen.
00:29:12.320 If they don't take this seriously, what stops me?
00:29:17.100 I know what stops me.
00:29:18.840 Us.
00:29:19.580 Us.
00:29:19.940 What stops us?
00:29:22.600 What stops the nefarious actors who are lawyers?
00:29:26.520 And there are the same two, three percent that infected eye probe can infect anything.
00:29:31.500 What stops them from looking at the $12 million that's in their trust account and going off
00:29:35.280 to Tahiti?
00:29:36.400 Where is the hammer?
00:29:38.780 And that's the question we need to ask.
00:29:40.660 We see that in corruption.
00:29:42.960 We see that in widespread, large corruption in this country all the time.
00:29:48.920 Yes.
00:29:49.200 We see it consistently.
00:29:51.000 People that could, should, or even be tried under a criminal charge for the things that
00:29:57.180 they do in a fraudulent manner.
00:29:59.280 I mean, we saw it happen in this province recently with a training program.
00:30:03.420 We've seen it repeatedly over and over again.
00:30:06.760 And nobody goes to jail.
00:30:08.160 Nobody goes to jail.
00:30:09.740 By the way, nobody goes to jail.
00:30:12.120 This is, this is a problem of, of ossification of our systems.
00:30:16.940 Do you know that only one person went to jail during the great financial crisis in the United
00:30:20.280 States in 2008?
00:30:21.300 One person, one person was jailed.
00:30:23.600 Right.
00:30:24.080 The United States has their own problems.
00:30:25.640 It's not like we, it's not like we're not facing, it's not like we're facing a system
00:30:29.480 that's unique to Canada.
00:30:30.640 There are other challenges too.
00:30:32.440 The King's court exists in almost every democracy, right?
00:30:36.620 But we live in this country and it's on us to do better.
00:30:40.420 And we, piss poor, do not care about justice.
00:30:43.460 Now, to their credit, I'm a liberal.
00:30:45.540 I am.
00:30:46.540 I usually support liberal causes.
00:30:48.840 But to their credit, the conservatives bring a lot of value to the table, particularly with
00:30:52.140 regards to economic policies and particularly with regards to justice issues.
00:30:57.040 And the truth is that it's all well and good to actually give deference to rights and
00:31:04.220 respects and everything else.
00:31:05.560 But once you've exhausted that, you need a hammer.
00:31:09.560 You need a hammer.
00:31:11.220 And the conservatives understand that to their credit.
00:31:16.740 And I wish that there was more attention paid to this.
00:31:20.400 I think that there is an outcry.
00:31:22.400 I think we're seeing that on a regular basis right now.
00:31:24.840 I think that what has happened in Canada is certain polarity is going to fade away.
00:31:31.460 For example, you just said that you're a liberal.
00:31:33.540 I consider myself a conservative.
00:31:35.440 We've had a nice discussion.
00:31:37.240 We agree about the problem.
00:31:38.720 We agree that there needs to be a solution.
00:31:41.380 No polarity of politics involved.
00:31:43.140 And I think more issues, by the way, my vote could be swayed.
00:31:47.920 Go ahead and call me and make the right offer.
00:31:50.160 But if we have more conversations that aren't polarized by political party or, you know, big
00:31:59.560 party thinking, if we sit down over these issues, things like people committing crimes against a
00:32:05.700 large group of people, people committing crimes against an industry, you know, people that we
00:32:11.500 trust like lawyers and brokers of our money.
00:32:14.440 Unless we start to really watch over that, there's going to be problems.
00:32:20.680 And that has no political realm.
00:32:23.480 That's all of us.
00:32:24.720 That's correct.
00:32:25.640 And you know what?
00:32:26.300 There's so much overlap at a macro level between what the interests of everyone are.
00:32:31.960 I'll give you a great example that I was involved in for the past two years.
00:32:35.160 So the immigration scandal that took place.
00:32:37.480 So what happened was the federal liberals were incredibly lax with their immigration policy,
00:32:42.700 negligently so.
00:32:43.440 And they allowed in endless reams of students.
00:32:49.100 And what the bad actors in Ontario recognized, Conestega College being the worst and there's
00:32:54.940 others, that they basically had these fields of people in India, all of whom wanted permanent
00:33:00.500 residency and all of whom could obtain it through a loophole in the system that allowed them
00:33:04.420 to claim they were going to college.
00:33:06.060 P.S. involved, you know, getting a haircut.
00:33:09.880 Literally a haircut.
00:33:10.960 As long as they paid $75,000.
00:33:15.040 So these guys were making off like bandits.
00:33:16.940 They were abusing our immigration system.
00:33:18.920 They knew they were abusing the immigration system.
00:33:20.860 They made millions of dollars over the course of years, leading to disastrous effects in our real
00:33:26.840 estate bubbles in Brampton's real estate bubble, particularly, and have led to see change in the way Canadians actually as a whole even see immigration, where it's now no longer a net positive for the first time in Canadian history.
00:33:41.060 I think both liberals and conservatives can easily come together on an issue like this and say, listen, immigration may be a greater good, but like hell, we're putting up guardrails to ever allow something like that, where we're taking advantage from a liberal perspective, where we're taking advantage of poor innocent people and taking $75,000 away from the working people in the home.
00:34:01.320 And conservatives are saying, and like we're just letting anyone into this country fundamentally that have no income or qualification.
00:34:07.260 Well, we're aligned on the basic macro idea that immigration controls are important, right?
00:34:13.800 And if you're able to see through...
00:34:15.720 But on both sides of that fence now, we all are having the same conversation.
00:34:22.420 Correct.
00:34:22.800 A mistake was made.
00:34:24.440 We need to make sure that this doesn't happen, not just for the sake of Canadians here now, for the sake of people coming to this country.
00:34:31.520 You know, I saw a recent report saying, and by the way, I don't love all reports, and this one seemed a little fictitious, but the intent was there.
00:34:41.100 There was a time where Canada was the top of the list of great places on earth to live, in the top five.
00:34:48.600 We're now under, I think we're at 35 on that list now.
00:34:52.580 And that is because of decisions that we make like this, that allow industries to steal from people or be disreputable because it's being covered up.
00:35:06.820 Well, it's that plus economic malaise.
00:35:10.440 I mean, we're going a bit off topic here.
00:35:11.860 Exactly.
00:35:12.160 But truthfully, and this is a decadence that is ascribed not just to Canada, but also to the Western world as a whole, we are no longer economically productive as countries as compared to top economies.
00:35:24.740 When someone goes to China and sees the fact that they're about to introduce drone vehicles into their car dealerships, and that within five years, they're expecting those drones to be flying within major metropolitan centers, and compares it as against the fact that we can't build a freaking LRT over 19 years, and not even have a similar investigation.
00:35:45.200 We are talking about an ossification of our economies, which naturally leads into this.
00:35:52.660 So what we have is a productivity crisis at its heart that is ultimately affecting the quality of life that we exist.
00:36:00.640 There's an interesting article that came out, and again, this is way off topic, but it's interesting.
00:36:04.640 It's an interesting article that just came out in the Atlantic that says, China is a nation of engineers, and America is a nation of lawyers, and the job of lawyers are to preserve wealth and to make sure that IP rights are there in place, and the job of engineers are to create the future.
00:36:17.240 I think that's actually very accurate.
00:36:18.780 So I think that speaks to that, and Canada is promptly within that realm of lawyers, not engineers.
00:36:24.480 We're part of this Western society that is no longer productive in the same way.
00:36:29.260 And so that is also, strangely, directly affecting immigration even more than our internal choices.
00:36:35.020 Well, you know, we might be able to handle it a little better.
00:36:37.320 However, as I see, Australia has done a deal with the U.S.
00:36:41.160 We could have easily done on some of our mining and resources here in Canada.
00:36:47.660 You know what, Mark?
00:36:48.160 It sounds to me like you and I have other stuff to talk about.
00:36:50.440 Maybe we can pick this up again.
00:36:51.780 What do you say?
00:36:52.360 Anytime.
00:36:52.900 It would be a pleasure.
00:36:53.660 I'm always welcome.
00:36:55.120 Listen, on that topic, Mark, thank you very much for being here.
00:36:57.940 I think I just said I'm always welcome on your show.
00:36:59.060 What I meant is it would be a pleasure.
00:37:00.880 That's what I meant to say.
00:37:02.300 Thank you.
00:37:02.960 I knew the intent.
00:37:06.140 But look, well, before we leave, please tell you you're a lawyer, real estate agent.
00:37:11.440 You are a billiard superstar.
00:37:13.980 I made up that.
00:37:15.000 But you do have a podcast that is unrelated.
00:37:18.240 What's the name of your podcast?
00:37:19.260 I'm sure people would love to check it out.
00:37:20.820 Yeah, the podcast is called Brave New Something.
00:37:22.940 It's just about global politics and economics and things that I'm interested in.
00:37:27.020 So I just interview various and various people.
00:37:29.120 We just had Bob Ray, the Canadian ambassador to the United Nations, on two days ago.
00:37:33.440 So that's our most recent interview.
00:37:36.340 And it's just born of love.
00:37:37.860 It's just questions I want to ask.
00:37:40.020 Well, you've got great guests and you're a great chat.
00:37:43.080 I really appreciate your expertise on this.
00:37:45.280 If people wanted to reach out and use your services, since you're not out there spending
00:37:49.740 their money willy-nilly on them, where can people do that?
00:37:52.880 You mean if people want to give me money for the trust accounts so that I can respond to
00:37:55.740 Florida and they'll never hear from me again, you can use LegalClosing.ca Professional Corporation.
00:38:03.560 He's not going to do that.
00:38:05.060 No, no, no.
00:38:05.700 Don't you worry.
00:38:06.300 I've been doing this for 25 years.
00:38:07.840 The temptation is over.
00:38:09.540 LegalClosing.ca Professional Corporation.
00:38:11.420 It would be a pleasure to touch base with anyone.
00:38:13.620 Mark Morris, you're a great guy.
00:38:15.260 Thank you so much.
00:38:16.300 And as more breaks on this or more breaks down in that industry overall, we're going to reach
00:38:21.860 out to you.
00:38:22.280 It will be more interesting to speak about this after the Denton's report is released
00:38:25.660 and then substances can be put to rumor.
00:38:29.200 Well, we'll talk to you then.
00:38:31.100 Wonderful.
00:38:32.360 Thank you so much.
00:38:33.100 And thank you for joining us.
00:38:34.120 Don't forget to subscribe to everything on TPL.
00:38:37.400 This is The Daily Cancelled.
00:38:38.880 People love to hate it.
00:38:40.220 Please go ahead and do that yourself.
00:38:42.200 And subscribe to everything at tplmedia.ca.
00:38:46.780 For now, I'm Mike.
00:38:48.160 That's Mark Morris.
00:38:49.460 We'll see you next time.
00:38:50.240 Bye-bye.
00:38:50.520 Thanks, guys.
00:38:50.920 Bye-bye.
00:38:53.060 Bye-bye.
00:39:02.980 Bye-bye.
00:39:04.120 Bye-bye.
00:39:04.980 Bye-bye.
00:39:06.940 Bye-bye.
00:39:08.820 Bye.
00:39:09.140 Bye-bye.
00:39:09.200 Bye-bye.
00:39:11.340 Bye-bye.
00:39:14.260 Bye-bye.
00:39:15.400 Bye-bye.
00:39:17.020 Bye-bye.
00:39:18.300 Bye-bye.