$210M lawsuit alleges Vaughan mayor, councillors misdirected ratepayer funds to pay deficits

City says claims 'without merit,' plans to defend itself 'vigorously' against allegations

Cbc.ca
May 29, 2019
Lauren Pelley

A previous Vaughan mayoral candidate has filed a $210 million lawsuit against the city on behalf of ratepayers, alleging Mayor Maurizio Bevilacqua and multiple city councillors misapplied surplus water funds paid by residents to cover hidden budget deficits.

Filed on May 8 through Ontario Superior Court, the lawsuit makes a series of allegations against all but one member of Vaughan's current council.

In court documents, plaintiff Frank Miele -- a Vaughan resident and the city's former commissioner of economic development, who unsuccessfully ran for mayor in 2018 -- claims between 2014 and 2017, Vaughan's council was operating with annual budget deficits ranging from $1.5 million to $41 million "contrary to law."

In each of the years, the city and its council "failed to disclose" those deficits to residents, the statement of claim also alleges.

Meanwhile, Vaughan hiked water rates, saying the extra cash was needed to maintain water infrastructure -- but instead, the lawsuit claims, hundreds of millions of dollars raised led to surplus amounts that were instead used to pay down the deficit.

"It's no secret that Vaughan residents have been upset about their water rates for quite a while ... everyone who is paying these taxes and these rates wants to make sure their money is going to the right place," said lawyer Robert Karrass, who is representing Miele and other ratepayers, in an interview with CBC Toronto.

"You're taking from one pocket to pay another pocket, and while that seems kind of reasonable, it's actually contrary to the Municipal Act," he added.

Miele, who is currently a university instructor, did not provide comment by publication time.

The lawsuit also alleges $20 million earmarked for a new hospital instead went to pay untendered, sole source contracts for other hospital infrastructure.

Claims 'without merit,' city says

But city officials say the allegations are "without merit."

"The City of Vaughan uses best practices to ensure fiscal sustainability and credibility," said Michael Genova, a city spokesperson, in a statement.

"It should be noted that the City of Vaughan's financials are certified through a third-party audit and presented at public Council meetings on an annual basis. This helps ensure financial accuracy and integrity."

The city has achieved roughly $30 million in savings since 2015, he added, with council passing budgets keeping property tax hikes below three per cent each year for close to a decade.

The city will defend itself "vigorously," Genova wrote.

City council members named in suit

Alongside the city itself, sitting council members are also named in the lawsuit.

They include Mayor Bevilacqua, Deputy Mayor Mario Ferri, and councillors Gino Rosati, Marilyn Iafrate, Tony Carella, Rosanna DeFrancesca, Sandra Yeung Racco, and Alan Shefman.

Only councillor Linda Jackson was left out, as she wasn't on council during the time period in question.

Before last fall's election campaign, and prior to the lawsuit being filed in court, Ferri told CBC Toronto from the campaign trail that the allegations were "fake news."

On Tuesday, Toronto-based municipal lawyer John Mascarin, who is representing the city of Vaughan, declined to comment.

Lawsuit not making criminal allegations

According to Karrass, municipalities are simply not allowed to operate in surplus or in deficit, and must legally maintain balanced budgets because the funds are raised through property taxes.

The problem with Vaughan's situation isn't theft or embezzlement, he said, but a lack of consultation with the public.

"We're not trying to accuse anyone of having done anything criminal, or in particularly bad faith," Karrass added.

A key goal of the lawsuit is to have the $210 million in allegedly misapplied funds returned to Vaughan ratepayers.

According to the statement of claim, Miele also hopes to have the mayor and councillors banned from holding office for a two-year period.