Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2013-06-06

FILE:

7490 /REBBA

CASE NAME:

7490 v. Registrar, Real Estate and Business Brokers Act 2002

Appeal from a Proposal of the Registrar under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C to Revoke Registration

Domenic Manicapelli

Applicant

-and-

Registrar, Real Estate and Business Brokers Act 2002

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Laurie Sanford, Vice-Chair

APPEARANCES:

For the Applicant:

self-represented

For the Respondent:

George Drametu, Counsel

Heard in Toronto:

May 30, 2013

REASONS FOR DECISION AND ORDER

This is a hearing before the Licence Appeal Tribunal (the “Tribunal”) arising out of a Notice of Proposal issued by the Registrar (the “Registrar”), Real Estate and Business Brokers Act 2002 (the “Act”) on June 8, 2012. The Registrar proposes to revoke the registration of Mr. Manicapelli as a real estate salesperson.

FACTS

Mr. Manicapelli has been registered as a real estate salesperson under the Act since 1994. From the outset, Mr. Manicapelli concedes, he has been lying to the Registrar in completing his bi-annual applications for registration. On nine applications Mr. Manicapelli failed to disclose his 1994 personal bankruptcy despite a question on the application that asks very specifically for the disclosure of any bankruptcy. In 1998, Mr. Manicapelli became a director of a business. On seven applications Mr. Manicapelli failed to disclose this business to the Registrar despite a question on the application that asks very specifically about whether the applicant is engaged in businesses other than acting as a realtor. In 2000 Mr. Manicapelli became a director in a second business. On six applications Mr. Manicapelli failed to disclose this business to the Registrar. In 2001, Mr. Manicapelli was arrested and charged in the State of Florida with grand theft, 3^rd degree for an alleged attempt to defraud Home Depot of $1,200 in merchandise. He was released on a bond of $4,500 but failed to return to court. He was charged with contempt of court and a warrant was issued for his arrest, which remains outstanding. On five applications Mr. Manicapelli failed to disclose these charges to the Registrar despite a question that asks very specifically for disclosure of any outstanding criminal charges. In 2010 two writs of execution were issued against Mr. Manicapelli for a total of just under $190,000 plus costs. Mr. Manicapelli failed to disclose these judgments on his 2011 application for renewal of registration despite a question asking very specifically about outstanding judgments. In 2011 Mr. Manicapelli declared bankruptcy for his two businesses and personally. Under s. 34(1) of O. Reg. 567/05 to the Act, a registrant is required to report any change to the information supplied on an application. Mr. Manicapelli failed to advise the Registrar of his 2011 bankruptcy. These applications were signed by Mr. Manicapelli’s various brokers; he did not disclose the truth to them.

Mr. Manicapelli explained the false statements by saying that he was shamed by his bankruptcies and by the charges against him and did not want to admit to them. He testified that he failed to appear in the Florida court because he did not get adequate notice but that he is now moving to have the matter re–opened so that he may clear his name. He did not comment on the substance of the grand theft charges.

Concerning the bankruptcies, Mr. Manicapelli testified that the first bankruptcy occurred during a downturn in the real estate market. He entered into an agreement to purchase a home that was yet to be built. Before it was complete, the real estate market collapsed and his home dropped 33% in value. He was unable to obtain financing for the house and so was unable to close the transaction. The builder pursued him for the shortfall and he was forced into bankruptcy. The 1994 bankruptcy has been discharged.

Mr. Manicapelli testified that his second bankruptcy was as a result of the market downturn in 2008. He was building and renovating homes but financing dried up and he again declared bankruptcy, losing his home in the process. He had debts in excess of $1.2 million. The 2011 bankruptcy has not been discharged.

The investigator for the Real Estate Council of Ontario (“RICO”), the organisation which administers and enforces the Act, testified that the Registrar only learned the truth of Mr. Manicapelli’s past record in 2011 when a judgment creditor of Mr. Manicapelli requested a meeting with RICO. Mr. Manicapelli was charged in 2011 under the Provincial Offenses Act with 15 counts of providing false information to the Registrar: he was fined in connection with seven of these charges, received a suspended sentence for three and the remaining eight charges were dropped.

The Manager of Registration for RICO testified that the Registrar relies on self-reporting on applications and does not have the staff to verify every application. Persons wishing to become real estate salespeople receive training not only in how to transact real estate trades but in the ethical and legal obligations they have under the Act. As part of the training, prospective applicants review the section of the Act that states that failure to honestly complete an application form is grounds for revocation of their registration.

DECISION

Mr. Manicapelli stressed in both his submissions and his testimony that no clients of his had been harmed by his non-disclosure of information, his criminal charges, his bankruptcies or his other businesses. That may be true but that is not the test set out in the Act. Section 10 of the Act provides:

10. (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,

(a) the applicant is not a corporation and,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,

(ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty, or

(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration;

The principal concern in this case is that Mr. Manicapelli has “consistently and persistently provided false information on his applications for registration or renewal”, in the words of Mr. Drametu, counsel for the Registrar. This pattern of deceiving his regulator goes back 19 years to his first application and involves one or more falsehoods on each of nine applications.

Mr. Manicapelli testified that he was shamed by his bankruptcies and so did not disclose them and was likewise shamed by his criminal charges. It reflects badly on Mr. Manicapelli’s character that he felt less shame in lying to his regulator than in confessing to financial difficulties and criminal charges. Mr. Manicapelli did not explain why he failed to disclose the two other businesses he was conducting. Both the businesses concerned the renovation and building of residential real estate. Mr. Manicapelli’s involvement with them was relevant information for the Registrar to have to assess whether there was a possibility of a conflict of interest between Mr. Manicapelli’s real estate trading and his role as a builder who, in the ordinary course of business, would be selling the homes he had constructed. He also did not explain why he permitted two criminal charges in Florida and the warrant for his arrest to remain outstanding. In his opening statement, Mr. Manicapelli said, “so, I just let it go for the next 10 years.” A person of integrity does not forfeit a bail bond or permit a warrant for their arrest to remain outstanding for a decade, absent extraordinary circumstances which plainly do not exist here.

The persistent pattern of lying to his regulator is not only a violation of subparagraph 10(1)(a)(iii) but it also raises concerns about whether Mr. Manicapelli is governable, that is whether he will comply with the Act. Concerning Mr. Manicapelli’s criminal charges, we have only his word that he is seeking to resolve them. Mr. Manicapelli provided no evidence of any efforts to deal with the matter and, given his dishonesty to his regulator, his uncorroborated word can have little weight. Obviously, the existence of criminal charges that have been uncontested for a decade raises legitimate concerns about Mr. Manicapelli’s willingness to abide by the law. The fact that one of these charges is for grand theft raises concerns about his honesty, as does his persistent deception of his regulator. The Tribunal concludes that subparagraph 10(1)(a)(ii) of the Act also applies to Mr. Manicapelli’s course of conduct.

The Registrar is also concerned that Mr. Manicapelli’s two bankruptcies render him a person who “cannot reasonably be expected to be financially responsible in the conduct of business.” The simple fact of a bankruptcy is not conclusive evidence of financial irresponsibility. The conduct of the registrant leading up to the bankruptcy needs to be considered. Multiple bankruptcies do raise concerns about whether there is a pattern of financial conduct, such as personal overspending, that might amount to financial irresponsibility. In this case, the Registrar has provided no evidence of the circumstances of the bankruptcies. We have only Mr. Manicapelli’s testimony that the two insolvencies are unrelated. The Tribunal concludes that the Registrar has not demonstrated that subparagraph 10(1)(a)(i) applies.

Mr. Manicapelli submitted that he should be permitted to remain registered under the Act. He stated that he no longer has the money to start a new business so trading in real estate is his only source of income. He has a wife and children and to deprive him of his livelihood would render him unable to support them as real estate is the only business he knows. If this submission is true, it is to be regretted. However, what Mr. Manicapelli is saying by this argument is that because he supports his family by trading in real estate, the ordinary rules of conduct should not apply to him. He should be given not a second or third chance to stop lying to his regulator; he should be allowed a tenth chance to begin telling the truth on his applications. The fact is that the converse of Mr. Manicapelli’s logic applies. If he is the sole support of his family and if real estate is the only means he has to support them, then it was particularly important for him to have been scrupulous in complying with the Act.

Mr. Manicapelli’s broker testified on his behalf and the Tribunal considered whether permitting Mr. Manicapelli to work under strict terms and conditions, including regular oversight might be an option. The conditions at the brokerage where Mr. Manicapelli works are ideally suited to a level of oversight that would not ordinarily be available to a real estate salesperson. There are a low volume of transactions, the clients are sophisticated, frequently institutional, real estate traders and the broker of record is involved to some degree in every transaction. However, there are two concerns. First, the broker of record, while testifying that Mr. Manicapelli had told him “everything” about his past difficulties, was not aware that Mr. Manicapelli had declared bankruptcy twice. This suggests that Mr. Manicapelli has not been totally candid with his employer. Second, the persistent nature of Mr. Manicapelli’s deceptions raise real concerns that no oversight would be effective in protecting the public, even given the sophisticated nature of his current clients. Ultimately, it is not possible to derive terms and conditions to substitute for honesty.

The Tribunal concludes that Mr. Manicappelli’s persistent deception of his regulator together with the outstanding criminal charges against him and his conduct in dealing with these charges raise serious concerns about his ability to conduct his business in accordance with the law and with the honesty and integrity required by the Act. He has also failed the test set out in subparagraph 10(1)(a)(iii) of the Act. His conduct is sufficiently serious that the only effective sanction is to revoke his registration as a salesperson under the Act.

ORDER

Acting under subsection 14(5) of the Act, The Tribunal directs the Registrar carry out his Proposal of June 8, 2012.

LICENCE APPEAL TRIBUNAL

_________________________

Laurie Sanford, Vice-Chair

Released: June 06, 2013