Man convicted of fraud over hockey project

The first of two men to go on trial in a case with ties to the failed Penticton hockey dormitory project was convicted Thursday in B.C. Supreme Court.

Michael Elphicke, who watched the proceedings via videoconference from a Calgary hospital where he’s recuperating from a partial foot amputation, put his head in his hands as Justice Bruce Greyell delivered guilty verdicts on charges of fraud over $5,000, theft over $5,000 and unauthorized management of a lottery scheme.

The judge rejected defence counsel James Pennington’s assertion that Elphicke was simply taken for a ride by co-accused and former business partner Loren Reagan.

“The Crown has established Mr. Elphicke was more than a beguiled, innocent bystander who was led astray,” said Greyell. “In my view, Mr. Elphicke was actively involved.” The trial in September heard how Elphicke and Reagan in July 2011 formed the Okanagan Elite Hockey Association to offer teenaged players and their parents a European tour in August 2012.

The cost was $5,500 per traveller, minus whatever families pulled in by selling raffle tickets for meat draws, which were operated without the required gaming licence, according to a member of the B.C. Gaming Policy and Enforcement Branch who testified at trial.

The OEHA eventually collected $130,000 in trip deposits and raffle proceeds between July 2011 and January 2012.

A forensic auditor testified, however, that the cash was used to enrich Elphicke and his wife by $17,000, mainly through salaries, and Reagan by $38,000, primarily for personal expenses.

Another $44,000 was put toward the failed $900,000 purchase of nine city-owned lots on Eckhardt Avenue and to start construction of the dormitory there that would have been leased to the unrelated Okanagan Hockey Academy.

The land deal later collapsed and left a trail of lawsuits in its wake, some of which were launched by contractors and named the City of Penticton as a defendant.

All of the parents who testified at trial indicated they were under the impression the trip was a non-profit venture with minimal administration fees.

The judge found there was no reason for them to suspect otherwise.

“The parents were not told they would be paying Mr. Elphicke’s or Mr. Reagan’s expenses . . . . They were not told they would be paying what was essentially a monthly salary to Mr. Reagan or that they would be paying for Mr. Reagan’s housekeeper,” said Greyell.

“Had they been so told, I think it very likely most, if not all, would not have signed up for this ill-conceived project or have worked as hard as they did to obtain funds from friends and family as they did.”

Greyell also rejected Elphicke’s claim that he identified Reagan’s improper spending early on in their partnership and took steps to rein it in.

“Notwithstanding the (bank) accounts were changed to require two signatures, (Elphicke) continued to provide the spendthrift Mr. Reagan with blank, signed cheques — five at a time, sometimes more,” the judge said.

Reagan then used the cheques “to pay himself a salary and to pay various other personal expenses which obviously from the look of the cheques had little, if anything, to do with OEHA affairs.”

A Canada-wide arrest warrant has been issued for Reagan, who was a no-show on the first day of trial.

Elphicke, who is a diabetic with end-stage kidney disease, remains free on bail pending sentencing at a date yet to be determined.