Condo manager has licence revoked over cryptocurrency buy

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A property manager who transferred $500,000 in condominium reserve funds to an alleged cryptocurrency investment company known as Pink Piggy Investment Group Inc. has had his license to manage condominiums in Ontario revoked.

While the ruling provides a strong signal about the financial and legal accountability required to manage a condominium community, some are urging the Condominium Management Regulatory Authority of Ontario (CMRAO) to use the example to keep its focus on serious issues.

“We got rid of a bad apple, fantastic, that’s what we should be doing, let’s only look at things of that type of issue,” said Robert Weinberg, CEO of condo management company Percel Inc. “There are others out there … and they will eventually get caught.”

The initial notice to revoke Norbert (Bert) Berger’s license came with a suspension by the CMRAO on Oct 12, 2023, following its investigation after a Sept. 20 Globe and Mail story described the allegations against the long-time condo manager and his company L & H Property Management Inc.

The April 5 ruling by Colin Osterberg, Vice-Chair of Ontario’s Licence Appeal Tribunal (LAT), was unequivocal in weighing the evidence against Mr. Berger: “The Tribunal can have no confidence that he is prepared to act in accordance with the law or with honesty and integrity in the future.”

The grounds cited by the LAT for revoking the license include violations of The Condominium Act relating to conflicts of interest and notice and approval. Mr. Osterberg found Mr. Berger contravened section 52 of the Act, which requires a manager to provide written notice to a client if they have an interest in a contract or transaction. Also breached was section 32 of the Act’s regulations that bar a licensed manager from completing a transaction they have an interest in without written approval.

Mr. Berger is the chairman of the board of Pink Piggy and a shareholder, but told the LAT that he had no “financial interest” in the transfer of $500,000, and that he gets no compensation or benefit from the company.

Mr. Osterberg rejected that contention.

“It is not believable that the appellant would take on the responsibilities of being a member of Pink Piggy’s board of directors and be issued shares in the company without some expectation of a benefit, financial and otherwise,” he said.

The question of whether Mr. Berger notified the board of his client building, York Condominium Corporation No. 25, and received approval for the transaction was also contentious.

Two board members testified that they were never informed of Mr. Berger’s connection to Pink Piggy, and Mr. Osterberg concluded that only some members of the board (one of whom subsequently died ahead of the LAT hearings) knew in advance that Pink Piggy would be getting $500,000 of the condo’s money.

Mr. Berger argued the lack of approval from the board was commonplace: “The appellant says that YCC No. 25 ‘operates on silence’ and that if he waited for approval from the board, nothing would ever get done. He testified that, for him, ‘silence is approval,’” said Mr. Osterberg. “To be clear, I find that silence is not approval. … I do not accept the appellant’s evidence that this is the way things are always done.”

Mr. Berger didn’t respond to requests for comment regarding the LAT ruling. When he spoke to The Globe for the Sept. 20 story he suggested the allegations against him were a matter of opinion.

“So there’s a violation of the Act? Let’s just assume that. You say it’s a violation of the Act. I’ve had other people look at it and they don’t necessarily agree,” Mr. Berger said. “Just because it says something in the Act doesn’t mean that the Act can’t be changed or interpreted in a different way.”

Mr. Osterberg also found that the cryptocurrency plan failed to meet the definitions in the law of an eligible condo reserve fund investment.

According to the ruling, while Mr. Berger agrees now that the Pink Piggy investment was not allowable, he claimed at the time “he was under the honest, but mistaken, understanding that the [investment] was compliant.” Also the package submitted to YCC No. 25′s board made several “demonstrably false and certainly deceptive” claims about the compliance of Pink Piggy, ruled Mr. Osterberg, concluding: “I also find that the appellant likely knew the information was false.”

Mr. Berger has said the money has since been paid back in full, but Mr. Osterberg ruled that the condo “lost the opportunity to earn investment income during the better part of a year that the money was allegedly in the possession of Pink Piggy.”

“The results of this case send a clear message that the CMRAO will not tolerate advising or soliciting condominiums to make illegal investments of this nature, which put owners at serious risk,” said Tsehaie Makonnen, director of communications and outreach for the CMRAO. “This case serves as a strong deterrent and going forward the CMRAO will be issuing additional guidelines and conducting more inspections in this area.”

Yet there are some in the condo management industry who warn that condo managers are under growing strain.

“Managers are very scared of dealing with people, they are worried about violence, they are getting burned out, and worried about losing their license,” said Bradley Chaplick, a partner with Levitt Di Lella Duggan and Chaplick LLP who handles legal matters for several condominium corporation clients. He worries that the CMRAO requires condo managers to respond to too many complaints, many of them frivolous, at the risk of professional sanction.

“A condo owner with a grudge has the ability to make the efficient management of the condominium totally impossible for condo boards and property managers,” he said. “You used to be able to just ignore the trouble makers, but now you can’t because they can file a complaint at the CMRAO.”

Mr. Chaplick and others say they’ve even seen CMRAO complaints where managers are required to respond to claims that they were rude to a condo resident.

“For every good complaint that needs to be handled, there’s probably 100 they should leave people alone,” said Mr. Weinberg, who said he’s frustrated by complaints that appear to be personal beefs.

“I don’t have any confidence in the CMRAO; they spend most of its time trying to persecute managers for not talking nicely to people.”