FCAA sanctions real estate scheme operators

The operators of a real estate investment scheme have been sanctioned in a settlement with the Financial and Consumer Affairs Authority of Saskatchewan (FCAA).

A regulatory hearing panel approved a settlement with Rochelle Laflamme, Alisa Thompson and their company, Epic Alliance Real Estate Inc. The respondents admitted to various regulatory violations in connection with a scheme that raised $4.3 million from investors over six years through promissory notes. The investor funds were used to finance real estate investments (flipping houses, and buying and leasing residential properties).

In settling the case, the respondents all agreed to 20-year bans and penalties of $100,000 each.

According to the panel, as part of the settlement, the respondents admitted to failing to register with the FCAA, failing to file a prospectus and failing to assess the suitability of investors, along with other violations.

The panel also noted that the respondents routinely advertised their scheme on social media, failed to comply with a temporary cease order issued by the regulator, and failed to comply with an undertaking they provided to the regulator’s executive director.

However, the panel also indicated that the respondents didn’t admit to misleading investors, and that there were no allegations of fraud in the case.

Additionally, they cooperated with the regulator, admitted to regulatory violations and terminated their operations.

In approving the settlement, the hearing panel said the proposed sanctions are proportionate to the misconduct.

“The panel agrees that a two-decade ban coupled with the restrictions on the respondents’ involvement in the investment marketplace recognizes the number of investors involved in these transactions and the significant cumulative investment,” it said. The panel added that the monetary sanctions are appropriate too.

While the regulator’s original allegations sought compensation for investors, that’s not a feature of the settlement.

“[I]t is not within the purview of the panel to lift the veil of settlement discussions to examine why investor compensation was not part of the settlement agreement,” the panel said. “The panel’s jurisdiction is limited to accepting or dismissing the settlement agreement rather than speculating as to reasons for the parties’ agreement.”