Saskatoon real estate company's missing financial records 'a major problem,' lawyer says

A Saskatoon lawyer says it’s difficult to say a local real estate company was operating in good faith when it raised $211.9 million from investors before collapsing earlier this year.

Mike Russell is representing 121 investors who injected millions of dollars into Epic Alliance Real Estate Inc. and are now searching for answers about their missing money.

He successfully applied for a court-ordered inspector to examine Epic Alliance in February. Last month, Ernst and Young, appointed by a Court of Queen's Bench judge to go over the firm's books, released its report, finding “only nominal cash and other assets remained.”

“The most notable thing that stuck out to me right away was the absence of any meaningful financial records prior to 2019, which leaves a six-year-plus gap in the financial history of a group of companies that had over $200 million flowing through it. A major problem,” Russell said about the report.

The report also said many of the records available to the investigator were "highly disorganized" and computer servers containing the firm's financial data were found missing from the company's office.

The investigation also confirmed what Russell originally thought when he first heard of Epic Alliance co-owners Rochelle Laflamme and Alisa Thompson blaming the company’s demise on a temporary cease-trade order issued in October by Saskatchewan's Financial and Consumer Affairs Authority.

“It's pretty clear what the business model is. And it's not based on operations as a steady flow of income,” he said.

“Unfortunately, at this point, I think it's pretty clear that it's difficult to say that these entities were operating in good faith.”

The Ernst and Young report showed funds from investors represented approximately 82 per cent of revenue between 2019 and 2022 when accurate financial records were kept. Roughly 18 per cent came from operations.

“We see that investors are getting their returns largely from investor input,” Russel said.

Epic Alliance controlled more than 500 properties in Saskatoon and North Battleford, mostly in core neighbourhoods.

Russel also pointed to other concerns in the report about “questionable” disbursements.

In the report, there are lines titled “professional fees” in the amount of $1.4 million, “miscellaneous operating expenses” listed at $1.2 million, “unknown” disbursements at $1.2 million and “credit card payments” listed at $2.9 million.

“So, these line items obviously require further explanation. By themselves, you know, they're quite concerning,” Russell said.

In addition to the ongoing FCAA investigation, the Saskatoon Police Service economic crimes unit is investigating a complaint against Epic Alliance from an Ontario investor.

CTV News has been unable to reach Laflamme and Thompson for comment.