British Columbia’s real estate regulator has frozen the accounts of two more brokerages associated with suspended licensee Balpreet Singh Bal. The B.C. Financial Services Authority suspended Bal’s licence and froze accounts associated with his companies Bal Realty Services Inc. and Amex-Fraseridge Realty in an “order in urgent circumstances” published on Nov. 3. Three days later, the BCFSA issued additional freeze orders against accounts belonging to Jovi Realty and Lighthouse Realty Ltd. The orders are in place as part of an ongoing BCFSA investigation into alleged mishandling of trust funds, deceptive dealing, failing to maintain brokerage records, and offering mortgage and investment services without registration, according to the regulator’s consumer alert. The allegations have not been proven. BCFSA hearing officer Gareth Reeves found them serious enough and supported by enough “prima facie” (“on its face”) evidence to justify the freeze orders and licence suspensions pending further investigation. Money moved before first freeze A redacted version of Reeves’ reasons for ordering the freezes of Jovi and Lighthouse accounts published on the BCFSA website reiterates some of the findings from the first freeze order and offers some new details about Bal’s alleged misconduct. The BCFSA’s investigation into Bal began with a complaint from a member of the public who alleged that Amex-Fraseridge was improperly withholding $2.75 million in its trust account. Reeves’ most recent reasons indicate that those funds, plus another $95,000 related to other matters, were held in Amex-Fraseridge’s trading trust account as of Sept. 12. The brokerage’s commission trust account held more than $375,000 as of that date. In response to notice from the BCFSA about the first freeze order, the bank that held the accounts informed the regulator that all of the targeted accounts had been “taken to a zero balance” between Sept. 29 and Oct. 27, according to the document. The only exception was the commission trust account, which had had its balance reduced to $1.70. On Nov. 4, Bal’s lawyer told the BCFSA that her client was in the process of shutting down Amex-Fraseridge and had “transferred the funds to Jovi with the intention of paying them into his counsel’s trust account pending a resolution” of a court case involving the $2.75 million. “Mr. Bal’s counsel indicated that Mr. Bal did not intend to abscond with the funds,” Reeves’ reasons read. That same day, investigators spoke to the managing brokers for both Jovi and Lighthouse, who each said they did not have signing authority over their respective companies’ trust accounts and professed a lack of familiarity with their companies’ finances. The names of the companies’ managing brokers are redacted in the document. B.C.’s Real Estate Services Act requires that a managing broker have signing authority over a brokerage’s trust accounts, a rule Reeves’ describes in his reasons as “a key control” that facilitates regulatory oversight of trust accounts. “The evidence establishes reasonable grounds to believe that Jovi and Lighthouse do not have a managing broker as a signing authority on their trust accounts,” the document reads. “In my view, this state of affairs is contrary to the public interest.” “Looking at the whole of the circumstances, I have significant concerns that the funds in both Jovi’s and Lighthouse’s accounts are not being properly managed,” Reeves adds, later in his reasons. Bal claims not to be a director When interviewed by regulators on Nov. 4, Bal told them he was “no longer involved” with either Lighthouse or Jovi, according to the document. This claim is supported elsewhere in Reeves’ reasons, which indicate that Bal was removed as a director of both companies on Nov. 3 and replaced by an unnamed individual referred to in the document as “Director 1.” Reeves’ reasons note that Director 1 is not a real estate licensee and indicate that the transfer “appears to have been precipitated by the previous orders” against Bal. “It makes it appear as if Mr. Bal may be trying to distance himself from Jovi and Lighthouse somewhat precipitously,” the document reads. “He also appears to intend to maintain some control over Jovi and Lighthouse, as evidenced by the fact that he has entrusted Jovi with $2,750,000 in funds that should be held in trust and that Mr. Bal, despite not being a director of Jovi, plans to direct their payment to his counsel. This suggests that Mr. Bal’s divestment might not be entire and that he may retain some beneficial interest or other form of influence over Jovi and Lighthouse.” The document notes that Jovi appears to have accepted the $2.75 million from Amex-Fraseridge and held it for more than a month in a non-trust account, which would be a violation of the RESA. It also notes that Lighthouse’s trust accounts appear not to be designated as such on available account statements, another violation of the Act. Throughout his reasons, Reeves repeatedly expresses concern about the financial arrangements of both companies and Bal’s connections to them. “The risks presented by the current situation are significant because the brokerages’ accounts are not managed by managing brokers, they appear to be improperly managed, and they appear to be accessible by or their operations appear to be influenced by Mr. Bal, for whom there exists reasonable grounds to believe he has seriously misconducted himself,” the hearing officer’s reasons read. Advice for consumers In its consumer alert, the BCFSA provides advice for people currently working with real estate agents affiliated with the companies affected by the freeze orders. “Contact the real estate licensee you’ve been working with, who can provide you with information regarding any funds you may have in trust at the brokerage as well as information on how the orders may impact the real estate services you are receiving,” the alert reads. It also notes that consumers may be eligible for support from the regulator’s "Special Compensation Fund," which provides financial protection for victims of real estate licensee misconduct. In a news release announcing the orders against Bal and the companies associated with him, the regulator said real estate licensees working under Jovi or Lighthouse can continue providing real estate services and advise their clients regarding any funds they may have in trust. “BCFSA is communicating directly with licensees at the impacted brokerages to ensure they can effectively support their clients during this time,” the release reads.
