Results of probe into Epic collapse expected in weeks

Real estate firm's demise underlines `financialization' of housing: prof

A court-ordered investigation wrapping up this month is the coda to the multimillion-dollar collapse of a formerly burgeoning Saskatoon real estate company.

Ernst and Young investigators have been delving into Epic Alliance Inc.'s business practices after a dramatic video call in January when the company's founders told worried investors “there is nothing left” of the operation.

The investigation's results are expected to be revealed at the end of the month.

The collapse of Epic raises questions not only about the results of the investigation, but also the local real estate market underlying the company's meteoric rise and fall.

University of Saskatchewan law professor Sarah Buhler, who studies renter evictions, said Epic's situation illustrates the growing trend of treating housing like an investment opportunity rather than a place where people live.

“This is one window into a much larger phenomenon, which is the financialization of housing that's happening across the country, in our city and our province,” she said.

Founded in 2013 by Rochelle Laflamme and Alisa Thompson, Epic controlled roughly $126 million worth of real property holdings representing about 500 properties, according to a fiat written by Queen's Bench Justice Allisen Rothery.

Laflamme and Thompson could not be reached for comment.

Saskatoon lawyer Mike Russell represents about 120 clients, most of whom live in Ontario or British Columbia, who've invested between $10 million and $20 million in Epic.

Epic offered investment products with high rates of return, typically between 15 and 20 per cent, Russell said.

The Financial and Consumer Affairs Authority of Saskatchewan issued a cease trade order against the company last October. It lifted the order the following month, but the investigation is ongoing.

It appears new investor money was used to pay out previous investors, Russell said.

“Investors got concerned (by the order), so the repeat customers and investors dried up to a large extent. They weren't able to obtain the funds necessary to keep this going.”

In January, Laflamme and Thompson appeared in an expletive-laden video conference call, blaming the securities regulator for the company's collapse.

Epic also had two programs relating to real property. One was a “fund a flip” program in which Epic bought or flipped properties with loans from security holders. The second was a “hassle-free landlord” program where investors would buy flipped houses; it promised them a passive income while Epic was to handle landlord duties, Russell said.

Saskatchewan Realtors Association CEO Chris Guérette said there hasn't been a massive influx of the company's former units onto the market, despite the company's situation. The SRA'S March report showed fewer new listings than last year and the 10-year average.

However, in some cases the former properties have been sold or are being sold, Guérette said.

“Some are selling. Some have decided to keep their properties and (will) see how it works out and (others), after a couple months, decided to sell,” she said. “Some are probably holding onto it until the lawsuit can be figured out.”

Brenna Sych, a spokeswoman for the Saskatoon Housing Initiatives Partnership, said the reduced unit availability will make it harder for vulnerable people to find suitable housing.

“When things like this happen, it just shows more and more where the gaps are and what we as a community have to do in order to support (those seeking affordable housing),” she said.

Ward 2 Coun. Hilary Gough said the city has an interest in well-managed and maintained properties, which has

Some are probably holding onto it until the lawsuit can be figured out.

been an issue with Epic properties and units where ownership has been in flux.

It's frustrating for people in her ward, where many of Epic's properties were located, to see several units sitting empty, she said.

Easy answers are hard to find, especially when some of the owners are spread out across the country.

“There's a whole spectrum of housing that is needed and there are pinch points and challenges,” she said. “The availability of rental houses is one part of that, but there's also the fact that there are currently over 300 vacant publicly owned housing units in our city.”

Rentalsman decisions have resulted in more than 100 Epic-related evictions since 2019, Buhler said.

That doesn't account for all evictions — only the ones that make it to a hearing — but it's a noticeable number nonetheless, she said, noting the rent on the properties often approached market rates that many tenants could not afford.

Pandemic-related pressures like lost jobs and reduced hours have been common concerns, Buhler said.

A fuller picture of Epic's business practices won't come into focus immediately, but Buhler wants to know how renters have been affected.

“What has happened to the tenants that rented some of those properties? These houses became people's homes.”