Residents of a luxury downtown Toronto condo have successfully forced the resignation of members accused of commandeering their condo board and taking control of their building's multimillion-dollar budget.

The four members took over the board at the Five condo on St. Joseph Street last summer after a controversial election at the centre of a vote-rigging controversy. The four men controlled how the condo spent its $2.6-million budget and reserve fund.

In the past week, residents organized and presented the board members with an ultimatum: resign or be subjected to a vote by owners to push them out.

Members sat on boards of other buildings

This comes after a CBC Toronto investigation revealed some of the members — Ray Blanchard, Darryl McGregor and George Laczko — were elected to numerous condo boards in Toronto and Mississauga. In many cases, the men were not registered owners of condos in these buildings and didn't live in them.  

Sam Cheng, also set to resign from the Five board, was elected even though he didn't show up for the election. Some residents have since told CBC Toronto they wonder if Cheng even exists.

Ray Blanchard

Blanchard announced in an email Monday that he and the other Five condo board members will step down. (LinkedIn)

"The board of directors realizes that regardless of the merits of the allegations asserted in the media recently, many of the ownership and residents of our building are very concerned and have lost confidence in the board either completely or to some degree," Blanchard wrote in an email to residents on Monday. "We all will be resigning."

Laczko has already resigned. The other men plan to do so by this Friday, according to a subsequent communication with residents.

Accountant to review building's finances

Condo owner Christine Dingmeman told CBC Toronto that the board members are supposed to hand in formal resignation notices by Friday afternoon.

"It's great for the building. It will put an end to any conflict and the residents are very happy their efforts and concerns have been heard," she said. "Hopefully we'll be able to have more of a normal life in the building."

The Five condo owners plan to hire a forensic accountant to review the building's finances.

Residents said they only recently learned that the board and the condo corporation are being sued for $650,000 by a property management company that claims the board fired them without cause in the fall — shortly after the men got control of the board last summer.  

Five Condos toronto

The Five building's condo owners are getting a forensic audit following what they say are questionable financial practises. (Google Maps)

L Tower residents also push to turf board members

Residents at the Five aren't the only condo owners hoping to rid Blanchard, Laczo and McGregor from their condo board.

The three also sit on the board at the L Tower on the Esplanade, alongside McGregor's girlfriend, Anastasia Mustafina, and Toronto real estate broker Kaive Wong.

The building opened in 2015 and has an annual operating budget of about $4 million as well as a reserve fund.

Condo owners served legal notice against the five members and the board's lawyers Wednesday to begin removing them from the board.

The board "failed to act honestly [and] provide full disclosure of the nature of their dealings together," the owners allege in that legal notice.

The board has already fired the L Tower's property management company, security and cleaning staff, and signed new contracts with other service providers. Residents say they don't know why those firms were fired or how the new companies were selected.

But this week, condo owners learned the board had also sold off a third-floor condo that was supposed to be reserved for an on-site superintendent. The L Tower's declaration, or bylaw, forbids the sale of that particular unit.

In fact, the superintendent's suite could only be sold if the move earned the approval of 80 per cent of the building's condo owners. The board, however, never sought permission to go ahead with the sale.

'Why did the board do it?'

Lawyer Denise Lash is working with L Tower condo owners to help oust the board, and said the sale of the superintendent's condo is especially troubling.

"Why did the board do it, under what authority? If they went ahead and did it without professional [legal] advice then there's personal liability for these directors."

That decision means a building with 591 units will no longer be able to have a live-in superintendent, Lash said.

"What are the damages?" she asked of that decision. "That's something we'll have to determine."

Denise Lash

Lawyer Denise Lash is troubled by the sale of the condo superintendent's unit. (CBC)

CBC Toronto contacted Blanchard, Laczo, McGregor, Cheng, Mustafina and Wong several times to respond to the specific allegations against them.

Only Wong would answer CBC's questions.

In an an email from his lawyer, Wong said "the board, with guidance and direction from the property management company, believed the L Tower was permitted to sell [the unit reserved for a superintendent] and that it was in the best interests of the L Tower financially."

Wong said the proceeds of the $338,000 sale were put into the condo's bank account and he denies any wrongdoing.

Board signed gas contract that could cost condo owners double

Until recently, Wong and Blanchard also sat on the board of The Element Condos at 20 Blue Jays Way.

In February, a member of the board signed a fixed-rate natural gas contract that could earn McGregor thousands of dollars in commissions through energy broker Perfect Clarity Inc., of which he is the sole director.

Darryl McGregor condo board

McGregor was the sole director of the energy firm that brokered the natural gas contract deal for The Element Condos.

That contract forces condo owners at the Element to pay almost twice the market rate for natural gas.

Wong has denied any knowledge of the contract, as has the Element's former board president, Sean Ramnarine. Both men resigned from the board in March.

The current board accuses its predecessors of leaving behind a string of unpaid bills. Ramnarine and Wong have denied those allegations, saying they were able to save the residents money and keep maintenance fees low.   

Ontario's Condo Act has major loopholes

CBC Toronto's investigation found that Ontario's Condominium Act allows that almost anyone older than 18, and who is not bankrupt, can sit on any condo board — even if the person doesn't own or rent in the building.  

Serious criminal convictions also don't disqualify someone from sitting on a condo board.

Residents examine damaged ballots

Residents at 20 Blue Jays Way examine what they call 'irregular proxy ballots' submitted in a condo board election. (CBC)

In 2013,  McGregor was convicted of breaking into a condo at 270 Wellington St. W. and stealing a resident's belongings. It's the same condo building where McGregor is suing residents to get back on the board.

He was turfed there, at Icon, following allegations that he submitted  "forged proxies" to get elected.

In his affidavit to the court, McGregor denies any knowledge of election irregularities.

John Lancaster can be reached at john.lancaster@cbc.ca or at 416-205-7538