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Toronto Star May 20, 2000, - by Tony Van Alphen, Business Reporter
ORC alleges fraud, aims to unravel rich land sales
The Ontario government's real estate arm wants to kill several land deals worth millions of dollars involving a Vaughan construction group because of alleged fraud.
Ontario Realty Corp. filed a statement of claim in court yesterday seeking unspecified damages and a declaration that all property deals with the Gabriele group of companies are ``null and void'' if the firms still have an interest in them.
``ORC (Ontario Realty Corp.) claims an interest in those lands,'' the claim says.
Although the Gabriele group no longer has an interest in one of the most valuable pieces in an accompanying list of sales, Ontario Realty also wants to unwind that deal.
A government source said the agency is pursuing the high-profile property in Mississauga because of unspecified legal problems connected with the original sale last year.
In the deal, a Gabriele company bought nine hectares for $1.92 million and then flipped it for $4.39 million without any improvements eight months later, according to real estate records.
Another big deal with the Gabriele group that the government wants to kill relates to the sale of a parcel in Ajax for $2.5 million in December, 1995. `This will be difficult. It's like trying to put toothpaste back in a tube. This is an exercise in public relations.' - Hamilton East MPP Dominic Agostino In its filings in the Superior Court of Justice, Ontario Realty is also seeking a ``certificate of pending litigation'' against all six properties, which government lawyers say effectively would mean a freeze on any further sale pending the resolution of litigation.
The claim alleges fraud and breach of trust against 24 parties, including several Gabriele companies and their principals Pierino, Frank and Antonio Gabriele; former Ontario Realty employees Vince Catalfo, Ross Farewell and Kent Banting; Oshawa consultant Sirman Associates and its three principals Ivan Sirman, Cynthia Stiles and Robert Allan.
None of the defendants has commented publicly on the allegations, which have not been proved in court.
Hamilton East MPP Dominic Agostino said the move to unravel the deals and get the properties back is an admission by the government that taxpayers lost millions of dollars.
``This will be difficult,'' said Agostino, Liberal critic for the government's management board, including Ontario Realty. ``It's like trying to put toothpaste back in a tube. This is an exercise in public relations.''
Bid-rigging alleged on consulting and cleanup contracts.
Ontario Realty filed a notice of motion for a claim last month alleging bid rigging, fraudulent invoicing and kickbacks. But the latest filing contains more allegations from a continuing internal investigation into ``suspicious'' land deals and consulting and cleanup contracts.
Yesterday's claim alleges Gabriele companies received ``substantial reductions'' in prices on some deals after Ontario Realty had reached binding agreements with them.
``Certain purchases were financed by ORC accepting a vendor take-back mortgage on very favourable terms and conditions,'' the claim added. ``In certain cases, the purchasers received extensions which essentially provided an `interest free' period during which the purchaser would pursue improvements to the value of the purchased lands.''
Ontario Realty alleges Sirman Associates and Catalfo, the agency's former manager of institutional and environmental services, participated in bid-rigging on consulting and cleanup contracts for the Markham-Pickering and West Duffins Creek properties last year.
In those cases, Sirman prepared several bids for the two contracts to create an appearance of competition.
``Catalfo was either a direct participant in this bid-rigging scheme or was wilfully blind to it,'' yesterday's court filing alleges.
Catalfo and Sirman said earlier their lawyers have advised them not to comment on the allegations.
The agency revealed new allegations of a similar bid-rigging scheme at a former carpet company in downtown Toronto and added details about fixing a competition for a cleanup contract at the Dryden tree nursery in Northern Ontario.
Last month, the agency made allegations about fraudulent invoicing for a cleanup contract on property in Mississauga. A Gabriele company bought the land, but another related firm also got the cleanup contract.
Furthermore, the companies attempted to deceive the ORC by delivering two invoices for the same work, the agency said in its latest filing.
The agency noted Sirman Associates received a ``secret commission'' or kickback of $20,000 while acting as an ORC consultant for a cleanup contract on King St.
Ontario Realty said their investigation found files did not contain important documents such as appraisal reports and it appears that the agency didn't market properties properly.
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