Former broker jailed for a year

A former Toronto real estate broker who misappropriated funds deposited to him in trust was sentenced to a year in jail, and his brokerage was fined $200,000.

David Seto pled guilty last November to eight counts of failing to ensure that while acting as a broker of record of Re/Max Executive Realty Inc. (1996), the brokerage complied with the Real Estate and Business Brokers Act, 2002. The brokerage was also convicted of eight counts of failing to deposit trust money into a real estate trust account and depositing the money directly into a general account. For each of the eight counts, it received a fine of $20,000. A $40,000 victim surcharge fine, standard in such cases, was also levied, says The Real Estate Council of Ontario (RECO).

It began an investigation into Seto and the brokerage in January 2009 after receiving a tip from an anonymous source about irregularities regarding a trust account, says the regulator. 

After an initial investigation, RECO issued a freeze order, freezing the bank accounts of Re/Max Executive Realty. The investigation by RECO found that on several occasions, beginning in the summer of 2007, Seto had received funds from clients with respect to agreements of purchase and sale. The funds, to be deposited into a trust account, were instead deposited into the general account of the brokerage. Evidence presented to the court showed that Seto had signed deposit slips indicating funds had been deposited into trust accounts when they had not. At the same time, there was a 10-month period where Seto had authorized payments to himself from the general account totaling more than $120,000, says RECO.

Though figures show consumer losses exceeded $133,000, they are not out of pocket due to RECO’s consumer protection insurance, says the regulator.

During his sentencing, the court was told that Seto had lost $1.2 million of his own money and was driving a taxi for $750 a week to pay off his debts. His lawyer, Marvin Flancman, said Seto did not profit from his actions, but was simply trying to keep the business afloat.