Condo buildings are seen in downtown Toronto in this file photo. Condominium boards should review their insurance coverage annually with a broker who understands condominium risks, Bob Aaron writes.

A Toronto condominium corporation’s experience with fraudulent guaranteed investment certificates is a costly warning to every condo board entrusted with owners’ money.

Toronto Standard Condominium Corporation 2150 consists of 304 residential units at 126 Simcoe St.

According to a notice to owners issued by the corporation last month, it was the victim of a “sophisticated investment fraud” in February 2025.

The board had approved the investment of approximately $324,000 of the corporation’s operating surplus in guaranteed investment certificates with what the directors believed, based on professional-looking documentation, was a well-established Canadian financial institution.

It later discovered that the funds had been diverted to an account operated by people impersonating the institution.

The matter was reported to law enforcement. As a result of recovery efforts pursued by the corporation and with the assistance of its advisers, a “substantial portion” of the loss was recovered.

A claim to the corporation’s insurers for the remaining funds was denied and the board is pursuing “other avenues” to recover remaining funds. The notice to owners said that the corporation is bound by confidentiality obligations and cannot disclose further details of its recovery efforts.

The corporation’s auditor referred to the loss at the annual general meeting in May 2026, more than a year after the event. The board undertook to provide owners with further information and did so last month. The July letter to the owners issued by the board does not identify the financial institution, the fraudsters, the recipients of the money, the building’s insurer, how partial recovery was made, why the loss was not covered by insurance, or the amount still missing.

The stolen funds came from an operating surplus and did not affect the reserve funds or money required for daily operations. The corporation says it remains financially stable and it has not issued a special assessment because of the loss.

Ontario condominium corporations are required by law to carry property insurance for full replacement cost, commercial general liability insurance, and directors’ and officers’ liability insurance.

I advise condominium corporations that they should also carry crime and fidelity insurance, environmental liability coverage, equipment breakdown insurance (for items like elevators), umbrella or excess liability insurance, and legal expense coverage.

In the wake of increasing frauds like the one that hit the Simcoe St. building, fidelity coverage has become important for risks such as theft by employees or property managers, forged cheques, electronic funds fraud, computer fraud, and social engineering fraud, which is the coverage needed for protection against the fake GIC scenario.

Last week I contacted Dayle Semple, an insurance account executive at Hub International Ontario, to ask what he recommends to his condominium corporation clients. Semple has been the president of his own condo board for 14 years.

In an email, he wrote that “cyber liability insurance is no different from other insurance products. In general — broader, more robust protection equates to a higher premium. Social engineering (fraud) can be included as part of your cyber liability protection. Discussing your organization’s exposures with a broker that specializes in cyber liability coverage can assist you with selecting the right coverage and policy limits to protect the organization.”

In other words, when it comes to insurance, you get what you pay for. It’s important for condominium boards to conduct an annual review of the exposure and coverage the building has, and the coverage it does not have.

Semple also recommends that condo boards use a professional investment company to manage and invest the building’s funds. Along with their fee comes a strong degree of protection and the assumption of the risk that would arise if the board manages its own investments.

Last week I emailed Maple Ridge Community Management, the property manager of the Simcoe St. condo, asking a dozen questions about the incident.

I received a prompt reply from Leza Blair, the company’s vice-president of operations. “I have forwarded same to the appropriate party should a response be forthcoming,” Blair wrote.

As of publication time, I had not received a further response.

Condominium boards should review their insurance coverage annually with a broker who understands condominium risks. They should also establish who may — and who may not — invest funds, which institutions may be used, how investments may be purchased, and whether only a fund manager should be entrusted to manage condominium money.

The Simcoe St. investment fraud is an important lesson for condominium corporations everywhere in Ontario.