former city employee, landlord face criminal charges in alleged 'kickback scheme'
the case involves allegations that a city of ottawa case worker received kickbacks from landlords in exchange for favourable rental rates.
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ottawa police announced charges against a city employee.
tony caldwell
/
postmedia
a former city of ottawa employee has been charged with accepting a bribe, breach of trust and fraud after an investigation by the auditor general was turned over to ottawa police.
police also charged a landlord with bribing a municipal employee, along with joint charges for breach of trust and fraud over $5,000.
police and city officials did not release the names of the two people charged in the alleged “kickback scheme.”
the case involves allegations that a former city of ottawa case worker — identified only as “employee a” — received kickbacks from landlords in exchange for favourable rental rates under city housing programs.
auditor general nathalie gougeon outlined the initial allegations in a report to the city’s audit committee in december 2024.
the auditor general’s office “has since cooperated with the ottawa police service in their investigation and shared any information required to be produced via production order,” according to a may 6 news release announcing the criminal charges.
according to the report, the allegations were first raised through the city’s fraud and waste hotline (fwhl), and the tip contained “serious allegations of wrongdoing.”
the auditor general “promptly” informed the city solicitor, city managers and ottawa police.
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the auditor general first started a preliminary investigation, and, following discussions with police, “formally launched a full investigation.”
the hotline report alleged the city case worker “had received kickback payments from a group of landlords in exchange for these landlords receiving more favourable rental rates under specific housing benefit programs administered by the city.”
the alleged “kickback payments” began in january 2024, though the landlords received more favourable rental rates starting in approximately october 2023, according to the report.
the unidentified “landlord” in the report refers to four individuals and two corporations that are all overseen by one person, staff told the audit committee in december.
the auditor general, along with forensic specialists from ernst and young llp, found records of $22,000 in payments from the landlord to the former city employee between nov. 14, 2023 and oct. 1, 2024.
the employee was interviewed on oct. 3, 2024 and told investigators they worked with the landlord part-time, but had not disclosed that relationship with anyone at the city.
that constituted a breach of the city’s code of conduct, according to the report.
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investigators obtained banking records and data contained on the former employee’s personal devices.
they found “several messages between employee a and the landlord that would indicate that these
payments were made by the landlord with the intention to utilize employee a’s role at the city to provide a financial benefit to the landlord.”
payments were made by the landlord with the intention to utilize employee a’s role at the city to provide a financial benefit to the landlord.”
one message from the landlord to the then-employee stated: “is there any way you can put a couple in there and get me a higher rent, like $2,300 or what can we do on this thing? it’s a one-bedroom apartment, if you get me the rent, of course the bonus will be much larger.”
investigators observed “multiple factors” that indicated the payments “are consistent with a kickback scheme designed to provide a benefit to both the landlord and employee a.”
the employee was fired between october and december 2024.
a second former city employee — referred to as employee b in the report — is a family member of the accused employee who had knowledge of the alleged kickback scheme and did not disclose that information to the city. that was considered a breach of the city’s code of conduct.
investigators also observed “that employee b was directly involved with collecting payment from the landlord to employee a.”
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the second employee resigned, gougeon told the committee.
city management agreed with a staff recommendation to halt all business relationships with the landlord and said in december “a plan is underway to terminate all existing business relationships with the landlord as it relates to housing allowance programs.”
investigators identified 31 affected tenants who had a rental relationship with the landlord, gougeon told the committee in december.
staff were creating “individualized transition plans” to find alternate accommodations for the affected tenants who were still residing in units owned by the landlord.
the report cites “multiple instances” where the housing case worker assisted clients in entering into leases on units that “significantly exceeded the market value.”
in one example, a client in need of housing signed a lease for a three-bedroom unit in the ledbury/heron gate neighbourhood for $4,050, which is 63 per cent above the average rent of $2,491.
in another example cited in the report, a client signed a lease for the same $4,050 rent in the pineview area, which is 46 per cent above the average of $2,775.
the report states there is a possibility that “such significant increases in rental amounts may have resulted in inflationary rental prices in these areas.”
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the unidentified city employee was formally charged with breach of trust, receiving a bribe and fraud over $5,000. the two accused people were released with conditions and a promise to appear in court at a later date.
the auditor general said she will not comment further while the case is before the courts.
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