Epic Alliance collapsed in January 2022
Investors who lost their life savings when Saskatoon real estate investment company Epic Alliance collapsed in 2022 are still seeking accountability and answers about what happened to their money.
Epic Alliance abruptly shut down operations in January 2022. Investors and property partners learned of the collapse during a 16-minute Zoom call from the company's founders, Rochelle Laflamme and Alisa Thompson.
"Everything is gone. Everything is bankrupt, guys. It's all gone," Laflamme said in the January 19, 2022 video.
Epic Alliance blames regulator
The founders blamed the collapse on the Financial and Consumer Affairs Authority (FCAA).
"Unfortunately, we don't have any good news, we don't have any good updates," Laflamme said in the Zoom call. "The FCAA f***ed us, so that's it."
The prospects of investors recouping any of their losses appear slim.
A court-appointed investigator from Ernst & Young concluded that investors are unlikely to recover the $211.9 million raised from them between 2013 and 2022 due to incomplete records prior to 2019.
Crucial financial records, including the company's "network infrastructure," disappeared after the shutdown.
"The inspector identified an empty server rack where several servers containing the network data for EA Group should have been stored," the report stated. “A drill was located on top of the server rack which appeared to have been used to remove the servers."
Fraud suspicions
The company promised investors high returns on rental properties in Saskatoon's core neighbourhoods. Epic Alliance quickly grew into a complex web of named and numbered companies, employing 118 people and managing over 400 properties.
Veteran realtor Gary Busch said he became suspicious of potential mortgage fraud or manipulation of facts as early as 2020 when he noticed a pattern of homes being severely overvalued.
"There's a company and they're buying 20 to 30 houses a month, and these prices are being inflated," Busch told CBC News. "I don't know what's going on for sure, but I think there could be some mortgage fraud, or there's some manipulation of facts here."
Busch pointed out that Epic Alliance properties were being valued higher than market rates in Saskatoon.
"Saskatchewan's market is very tortoise versus the hare. We are nice up and down, nice and slow, modest dips and rises," he explained. "We're not Toronto. We're not going up 50% in a year. That does not happen here, so it was very out of character that these houses were suddenly worth $50,000 more… it just didn't feel right, didn't look right."
Investors unlikely to recover losses
Now, over a year later, investors like Lena Jerabek are still seeking answers.
"I would like to know where the money went," Jerabek said. "There are people that lost their life savings, their retirement."
While the FCAA reached a settlement with Laflamme and Thompson for fines totalling $300,000 and a 20-year ban from selling investments, it did not address any potential fraud.
Read next: Fraud prevention back on broker agenda
The settlement notably "is silent on the issue of misrepresentation and/or fraud," according to the FCAA panel chairperson Karen Prisciak.
Saskatoon police also launched an investigation last year but have not indicated if any criminal charges will result.
Busch, who raised early alarms, hopes the full story ultimately comes to light. "For our industry, a lot of people are looking at us saying, 'well, how didn't you catch this, right?'"
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