The founders of a Saskatoon real estate investment company that left investors with millions of dollars in losses have reached a settlement with Saskatchewan’s financial and consumer watchdog.
In a settlement with the Financial and Consumer Affairs Authority (FCAA) approved earlier this month, Rochelle Laflamme and Alisa Thompson, the founders of the now-defunct company Epic Alliance, have agreed to pay fines totalling $300,000, and are restricted from selling and promoting investment products for 20 years.
In 2022, a court-ordered investigation found that $211.9 million dollars invested in the company by multiple investors were mostly gone.
The meltdown of Epic Alliance resulted in significant financial losses for more than 120 investors, mainly from British Columbia and Ontario.
The company offered a “hassle-free” landlord program — offering to manage homes for out-of-province investors.
Under the landlord program, the investor would take out the mortgage on the home and Epic Alliance would assume responsibility for finding tenants and maintaining the property.
Many of the homes actually sat vacant as the company promised the investor a 15 per cent guaranteed rate of return on their investment.
A Saskatoon attorney representing some of the investors told CTV News in 2022 the pair were “using new money to pay old money.”
“Investment products should generate returns on (their) own, not by acquiring new money,” Mike Russell said.
The company also offered a “fund-a-flip” program, where investors could buy homes through Epic Alliance — which would oversee improvements and upgrades — and then sell for a profit, often advertised as a 10 per cent return on a one-year investment.
In their settlement with the FCAA, Laflamme and Thompson admit to selling investments when they were not licenced to do so, and continuing to raise investment money after the FCAA had ordered them to stop.
What the settlement doesn’t address are any allegations of fraud.
“The settlement agreement is silent on the issue of misrepresentations and / or fraud,” the FCAA panel wrote in its April 5 decision.
“There are no facts before the panel to evaluate whether the respondents engaged in misrepresentations or fraud vis-à-vis their investors. Furthermore, the statement of allegations did not allege the respondents’ conduct was fraudulent … the respondents’ culpability is limited to these specific violations of the Securities Act.”
Because there was no finding of fraud, the FCAA ruled it was not necessary to permanently ban Laflamme and Thompson from the investment industry.
“A permanent ban is not appropriate in these circumstances given that there is no agreement or finding that the respondents were fraudulent,” the decision says.
“A 20-year prohibition from involvement in the capital markets of Saskatchewan is significant.”
While the FCAA acknowledges the effect Laflamme and Thompson’s conduct had on their investors, the settlement does not include any compensation for them.
According to the FCAA, 96 investors paid an estimated $4.3 million to Epic Alliance over six years.
In January 2022, Laflamme and Thompson hosted a Zoom meeting to inform investors of the company’s imminent demise.
According to a transcript of the call included in a court filing, the company’s financial situation was described as a “s–t sandwich.”
“Unfortunately, anybody who had any unsecured debts … it’s all gone. Everything is gone. There is no business left and that’s what it is,” the transcription said.
Laflamme and Thompson started Epic Alliance in 2013.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
