Here’s a cautionary tale for you. Sadly, you won’t read about this in the mainstream media (at least not until after this blog post), even though it involves alleged deception, disappointment, bankruptcy, flight and fraud. Over 90% of the victims are Chinese-Canadian families. Draw your own conclusions.
Four years ago it was just another Toronto condo mega-project that buyers were willing to lap up in the heavily Asian district around Yonge Street north of the 401. This one had two towers, a 150-suite hotel and 258 condos in the heart of a district now bristling with spires and clogged with traffic. Centrium was a joint project of a local firm and a Korean builder. The units sold in a cloud of pre-construction frenzy.
Now there’s $12.1 million in deposit money missing, an apparently bankrupted and disgraced lawyer, two hundred devastated buyers and allegations all those dollars are sitting in a Korean bank. The cops are involved. The law society is being bombarded. The jilted buyers are organizing and have been trying for weeks to get the attention of CTV, or CityTV, the Toronto Star – anyone.
Last year rumours swirled the site had been sold at least once and a new developer become involved. By this March it became apparent to many this puppy was in serious trouble. Construction was cancelled, along with communications. Worried buyers started looking to get their deposits back – from the developer, from lawyers and the new home warranty agency, Tarion.
At the centre of this was one Meerai Cho, a lawyer acting for the developer, into whose trust account a mess of depositors’ money flowed. By last month dozens of Centrium buyers had found each other through chat rooms and were barraging Cho’s office. By all accounts, she refused to respond. Frustration was building. As one buyer posted: “At the moment all I care about is that my money is safe. Can anyone at least confirm that our money is safe and that it hasn’t been stolen by these f*cking builders?”
Said another: “Meerai Cho had given away our money to the developer Joseph Lee, who had already fled to Korea. Meerai Cho as a trustee should not have done this, and this is considered illegal. This money, which is more than 15 million (possibly twice of this amount) dollar, should be paid to Joseph Lee after the construction completed. Meerai Cho shouldn’t have done this.”
Last week came the bad news, as online forums and the local Chinese media reported that lawyer Meerai Cho had gone bankrupt. This statement was attributed to her: “I was retained to act as the solicitor for a builder/developer (“Developer”) of a condominium project in Toronto. In that capacity I received, in trust, deposit monies for commercial, hotel and condominium units totaling approximately $12.1 million. In error I released these funds to the Developer who absconded with the funds.”
Worse, Cho’s bankruptcy and the inability of buyers to track down Centrium’s current owner/developer meant getting deposit money back was turning into a nightmare. According to Robert Charles, trustee in bankruptcy, Cho’s total debt on the day of collapse was $13.2 million, with only $863,000 of that secured. My calls to Cho’s office, by the way, have gone unanswered so I cannot independently verify these numbers. But, if true, they’re staggering.
Toronto fraud cops are investigating. In the matter of Cho’s missing trust account millions, there is a court hearing scheduled for September 2nd, but unlikely to be little more than procedural. The Law Society of Upper Canada has been fielding complaints, and the jilted, confused and abandoned buyers are trying this week to get attention. They got mine.
By the way, it’s not at all clear if these folks will get their money back, how much, or when. The Tarion warranty program does not necessarily cover a lawyer going bust. Instead the conditions for refund are (a) the bankruptcy of the builder, (b) a breach of the agreement by the builder or (c) the buyer proving they have the statutory right to treat the deal as terminated – which is a lengthy legal process. In any case, the maximum deposit covered is just $20,000, a fraction of what many in this instance handed over.
I will say it again. If you buy a condo in a pre-construction attack of hormonal delirium, you’re taking a big chance. It’s a futures contract, laden with risk. Centrium was supposed to be built a year ago, and is still a pile of dirt. Realtors flogging the project, collecting their commissions when agreements were signed, apparently felt no obligation to tell clients when material changes occurred. Lawyers obfuscated and dragged. Ultimately, as far as anyone knows, the unknown and unproven principal developer just took off.
Buyers were screwed, without a doubt. These buildings will never rise. A lot families will suffer. And there’s so much blame to go around.
Update Aug 22 9 am: CTV and CITYtv are now pursuing this story. Many jilted owners are planning to meet this Sunday afternoon to organize, and Tarion is telling folks to start processing their claim documents. No word from Korea.