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Condo towers are seen at 5 St. Joseph street in Toronto Sunday May 14, 2017.Mark Blinch/The Globe and Mail

Two men alleged to be linked to proxy irregularities at board elections in several Toronto condos have stepped down as directors from one of those towers, leaving behind a deficit and financial records that angry unit owners denounced at their annual meeting.

The resignations of Darryl McGregor and Ray Blanchard as directors at the Five Condos tower came after an article in The Globe and Mail and reports by the CBC raised questions about whether they were involved in a concerted scheme to seize control of Toronto condo boards and their multimillion-dollar budgets

Five Condos tower residents heard at their annual general meeting Wednesday night that, after a year in operation with Mr. Blanchard and Mr. McGregor as directors, the condo corporation had run up a deficit of more than $278,000 in its operating fund.

Read more: Condo board battle: String of disputes raises questions about elected directors

The room broke into applause when the chairman of the meeting announced the resignations of Mr. McGregor, Mr. Blanchard and another director, named as Sam Cheng. Another director with ties to Mr. McGregor and Mr. Blanchard, George Laczko, had quit earlier this spring.

It was the second time within days that the men had ceded control of a condo board.

Last week, Mr. McGregor, Mr. Blanchard, Mr. Laczko and two others associated with them had been removed from the board of the L Tower condos. The five didn't show up at a special meeting where L Tower owners elected a new board, lawyer Denise Lash confirmed.

The new L Tower directors are now reviewing the agreements contracted by their predecessors, Ms. Lash said.

At Five Condos, several owners voiced concerns about the shape of their corporation's finances at the Wednesday night assembly. "We've had a failure of corporate governance at every level," said unit owner Jennifer Campbell, who was elected to the board.

Attendees were told that the corporation was so cash-strapped that the meeting room had to be paid on the credit card of one of the unit owners, Christine Dingemans, a director who had opposed Mr. McGregor and Mr. Blanchard during their term.

The Internet service for the property manager hadn't been paid and was cut off two weeks ago, forcing the front desk concierges to work with their own laptops or phones, Ms. Campbell said in an interview.

The financial statements presented at the meeting mentioned a $7,910 expenditure for "consulting."

The page with the auditor's note giving more detail about that item was initially not in the information package sent to unit owners ahead of the meeting.

The missing page, which Ms. Campbell later requested, states that $5,876 was paid to a relative of a director for "proofing of documents."

Without providing names, that document also says that $3,537 in commissions were paid for utility contracts to a firm controlled by one of the departing directors. Mr. McGregor is the only listed officer at Perfect Clarity, a company that says on its website that it is an energy procurement firm.

Another expenditure was $50,000 to install LCD monitors in the lobby and parking.

The unit owners also heard at the meeting that their corporation's $281,465 reserve fund had not been invested. Instead it was placed in an interest-bearing bank account only one month before the end of the fiscal year.

At the request of the Five Condos assembly, auditor Brian Antman revealed that his recommendations after reviewing the books included that:

  • The corporation should follow a closed-bid procedure when awarding contracts.
  • The board needed a formal investment plan.
  • Minutes of board meetings needed to indicate prices given to award contracts, and to indicate if there were conflicts of interests.

Neither Mr. McGregor nor Mr. Blanchard were present at the assembly.

The chairman of the meeting, lawyer Brian Horlick, has represented the corporation and Mr. McGregor and Mr. Blanchard in condo-related disputes.

When reached by a Globe reporter for comment on Thursday, Mr. McGregor chuckled and declined to comment. Neither Mr. Horlick, Mr. McGregor, Mr. Laczko and Mr. Blanchard, have previously replied to queries from The Globe.

Court records, condo documents and interviews show that Mr. McGregor or Mr. Blanchard or people connected to them have been involved in elections in at least six different Toronto condo complexes in recent years. There have been allegations of proxy irregularities at five of those elections.

At Five Condos, the controversy began last summer at the turnover meeting, the assembly at which control of the new building's corporation is handed to the unit owners.

At the meeting, three board candidates, Mr. McGregor, Mr. Blanchard and Mr. Laczko, sat separately, not acknowledging that they knew one another. They were elected and later said they represented the same unit, No. 1306. The unit had been purchased the previous month by Mr. McGregor. He sold it a week ago.

Two weeks later, however, a lawyer for the condo's developer raised concerns because 34 of the proxies didn't specify the names of candidates.

Another vote was ordered, but the three men got a court injunction postponing it to October. Meanwhile, the interim board, in which they held a majority, voted to terminate the contract of the property management firm, FirstService Residential. The contract was later awarded to Alba Property Management, which has since been dismissed.

FirstService is now suing the directors and the corporation for $600,000 in damages, saying in its court claim that the directors "acted deliberately and maliciously in pursuant of their own personal agendas."

The corporation, which had budgeted $1,693 for legal expenses, has spent more than $88,000 for lawyers' fees.