“These appraisals typically assigned a value to the property which was well in excess of its original purchase price,” the report says. “From the inspector’s review of appraisal documents, it appears that, despite their appraised values significantly exceeding their purchase price, many of the homes had not received significant renovations.”
Properties from the “find a flip” inventory were then sold as part of the “hassle-free landlord” program and Epic Alliance leased back the properties, which were either rented or used for short-term accommodation, such as Airbnb.
However, the vacancy rate for these properties ranged from 50 to 60 per cent and did not generate enough money to fund monthly payments to investors, the report says. A “high volume” of the “find a flip” properties had not been renovated when the company collapsed in January.
Epic sold at least 280 “find a flip” properties for $72.6 million, the report says.
Laflamme and Thompson told investors in an expletive-laden video call in January that the company had collapsed; they blamed the the Financial and Consumer Affairs Authority of Saskatchewan.
On May 4, 2021, Epic Alliance told investors it had been contacted by the FCAA and acknowledged it needed to comply with the authority. Investors were also told their money was “not in jeopardy.”
The FCAA issued a temporary cease trade order for Epic Alliance and related companies in November.
Laflamme and Thompson cooperated with the investigation, but were unable to provide details on the company’s operations in the United States, the report says.
Thompson received $202,167 in compensation from 2019 until 2022; her monthly rent for a home on Grasswood Road just south of Saskatoon was also paid by Epic Alliance.
Laflamme received compensation of $170,300 over the same period and lived in properties owned by the company. Epic Alliance also provided her with a personal vehicle.
Bank statements showed “significant cash transactions” were not recorded in Epic’s books and records. Statements from the Bank of Nova Scotia show 37 disbursements of more than $5,000 that were not recorded from December to February, the report says.
“Upon review of the bank statements, it was noted that there was consistently a high volume of large cash receipts and disbursements between 2019 and 2022,” the report adds.
Ernst and Young also urged further investigation of the company’s operations in the United States, noting bank statements from just one of Epic’s at least three American bank accounts have been provided. No documentation about sales and purchase of homes by Epic Alliance in the U.S. has been obtained.
Beyond the EA Group, Laflamme and Thompson started 10 other corporations in Canada and one in Wyoming.
In addition to the court case, Epic Alliance is also still being investigated by the FCAA.
