Epic Alliance Real Estate Inc – If you have not heard about this story, get comfy, this is a wild ride that happened in our backyard (here in Saskatoon). We are very sorry to anyone who was affected by this.
It is a situation that is bound to happen again unless society knows what to watch for.
What Was Epic Alliance:
Epic was an investment product with promises of high rates of return, typically between 15% and 20%;
It was Founded in 2013 by Rochelle Laflamme and Alisa Thompson. According to their statements, Epic controlled around $126 million worth of real property holdings representing about 500 properties. This is according to a fiat written by Queen’s Bench Justice Allisen Rothery.
New investor money was used to pay out previous investors. And if you are new to this idea it is called a ponzi scheme. In fact, the very definition of a Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors.
Epic Alliance, according to Laflamme and Thompson, had 504 properties in Saskatoon and North Battleford worth a total of $126 million before it fell apart.
How Did They Do This?
Laflamme and Thompson established and ran three primary businesses.
A loan program which people gave anywhere from $50,000 to $500,000 to Epic in exchange for a one-page promissory note. The notes indicated interest rates varying from 15% to 20%.
Was called Fund-A-Flip. In this business buyers would buy homes through Epic, do improvements and upgrades, and sell those homes for a profit.
There was a hassle Free Landlord Program. This business invited investors – mostly from outside the province – to buy homes acquired by Epic through the Fund-a-Flip program.
Investors took out the mortgage on the home they bought (many without seeing the homes), while Epic took responsibility for finding tenants, maintaining the property, and other aspects of management. All of this came with the promise of a 15% guaranteed rate of return.
What Went Wrong?
The promissory note program attracted the attention of the Financial Consumer Affairs Authority of Saskatchewan (FCAA). It noted that Epic Alliance and its owners were purveying advice and information on how to invest in securities, including real estate investments and promissory notes, without ever having registered as dealers or advisors.
From there, investors became concerned. Repeat customers and investors dried up to a large extent. Laflamme and Thompson weren’t able to obtain the funds necessary to keep this going.
How Did It End?
In January 2022, Laflamme and Thompson appeared in an expletive-laden video conference call, blaming the securities regulator for the company’s collapse. They took no blame for any wrongdoing.
Justice Allisen Rothery of the Court of Queen’s Bench has tasked accounting firm Ernst and Young to investigate what happened to an estimated $10 million to $20 million dollars that 120 investors put into Epic Alliance.
Laflamme and Thompson gave back the keys to some of the properties and the remainder of the story will unfold after the findings.
As always – if you need help buying or selling a property do not hesitate to reach out to Gregg Bamford or Ryan Bamford.
And please remember – if it sounds too good to be true in real estate, it probably is. Saskatchewan housing returns are not usually around 20% in such short periods of time.