Real estate agent Kelly Da Costa's licence revoked following 'sophisticated schemes' Bill Jackson, Cambridge Times September

5, 2013 Prominent Cambridge real estate agent Kelly Da Costas licence to sell homes has been revoked by the Real Estate Council of Ontario (RECO). In its decision handed down Aug. 15, the Licence Appeal Tribunal determined Da Costa orchestrated sophisticated schemes to defraud clients and lenders in three instances. He not only failed to honour his professional and fiduciary duties towards his clients in two instances, he also misled the financial institutions, the tribunal decision asserts. Mortgage fraud is a very serious act that can threaten the integrity of this regulated profession. The banks, apart from other documents, rely on the MLS and Agreement of Purchase and Sale for approving mortgage financing. Any manipulation of the price affects not only the banking system but also provides an inaccurate impression of market value of the properties to the consumers; thereby destabilizes the real estate market. An appeal of Da Costas licence revocation is in the works. The mandate of the registrar, and therefore the tribunal, is not to impose punishment but to determine if past events show that the registrant is not likely to practice in the future with integrity, defence lawyer Jim Marentette said in a statement to the Times. He contends hundreds of transactions have taken place in the past five years, which Mr. Dacosta has conducted with integrity, resulting in satisfied clients, and there need be no concern about his future conduct. RECO received an anonymous complaint in March 2010, alleging Da Costa was involved in two questionable property transactions a third later came to light. In February of 2008, without a sellers authorization, Da Costa shortened the time frame for an MLS listing on Beverly Street that was part of a $143,000 guaranteed sale program, then entered into an agreement as a seller of the property on behalf of his own corporation (151 Inc.) for a significantly higher price of $179,000. Da Costa didnt pay a deposit or hand over an agreement of purchase and sale, and then relisted the property on the MLS system two days after entering into an agreement to sell the property a method commonly created to defraud lenders that require a valid listing as part of due diligence. When the purchaser defaulted on the mortgage in October 2009, the Bank of Montreal transferred the property to the Canadian Mortgage and Housing Corporation, which sold it under power of sale, determining that Da Costa made a profit of $38,992.

Also in 2008, after entering into a listing agreement for a Lowell Street property, Da Costa sold the property for $175,000, seven hours before he bought it from the original seller for $97,000. In disclosure to the original seller, Da Costa indicated he planned to renovate the property and sell it at an increased price, but given that he sold the property before purchasing it, the tribunal determined such renovations were not possible and the disclosure was false. Acting under power of sale, lender Paradigm Quest listed the property in November of 2009 and sold it for $102,500, determining that Da Costa, through his corporation, had made a profit of $76,788. In another transaction involving a property on Hewat Street, the tribunal found Da Costa assisted a purchaser to get financing based on false property value. Soon after the completion of the transaction, the purchaser failed to make mortgage payments and First National Financial sold the property under power of sale. The facts in each case were undisputed in front of the tribunal by Da Costa and his lawyer, who pleaded for a suspension of Da Costas real estate licence and the imposition of conditions for reinstatement, pointing to a relatively clean record. RECOs discipline committee fined Da Costa $5,000 in 2001, after finding that he was negligent in the manner in which he retained and stored confidential client information, failing to protect the public from fraud in connection with real estate transactions. Da Costa has been a registered real estate salesperson since 1989. He was registered with Re/Max Twin City Inc. from 1996 to 2009 and more recently registered with Re/Max Real Estate Centre Inc. Representatives of local brokerages that Da Costas been affiliated with spoke to his record of integrity. A psychological assessment report described the now-former real estate agents depression and intense anxiety. The report alleged his values and attitudes were significantly affected by his childhood experiences in an immigrant family, many of which are healthy and serve him well. However, the same values and attitudes have also caused him to have a somewhat narrow focus on the concept of work ethic, affecting the way he does business and causing him to neglect red flags which he should have prudently observed. Da Costas counsel further submitted that he has shown remorse and put $114,000 in a trust account to pay back victims. However, the tribunal determined Da Costa would have established better footing if he had made restitution prior to the hearing. Because Da Costa has been under the watchful eye of RECO during the last several years, the tribunal also determined he hasnt had sufficient, unmonitored professional activity, and that therefore his unblemished record cannot be given considerable weight. Marentette said his client intends to appeal the decision to the divisional court later this month.

RECO cant comment on the specifics of the case because it is still within the appeals period of 30 days. If the revocation of licence is upheld, Da Costa may re-apply for registration in accordance with the Real Estate and Business Brokers Act.