# Epic Alliance



## londoncalling (Sep 17, 2011)

Real estate company collapses, 500 homes affected, $10M from investors across Canada missing | CBC News


I remember seeing marketing materials for Epic Alliance and hearing about this opportunity from women in the trades advocates.. I would not invest in an MLM strategy as to me this had a similar appearance. This news is a reminder to everyone to do their own DD. 

"The company was not licensed to sell investments or offer financial advice, according to the Financial Consumer Affairs Authority of Saskatchewan (FCAA), which issued a temporary cease trade order on Oct. 21, 2021."

I have sympathy for those that invested in this for social reasons as now they are less likely to support initiatives to advance affordable housing or promote diversity in the trades.


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## MrsPartridge (May 15, 2016)

The investors were promised a guaranteed 15% return. That's a huge red flag that those investors should have heeded. Terrible outcome for those investors but those numbers are unrealistic.


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## scorpion_ca (Nov 3, 2014)

Ponzi scheme.....


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## ian (Jun 18, 2016)

How to immediately identify a ponzi scheme...

- ridiculous 'guaranteed returns', 'capital investment guaranteed'

-background of the exec. team

-often some sort of false 'social return' or 'faith based return' pitch that appeals to the ego and diverts attention from even the most basic amount of financial scrutiny. Such as .... calling the provincial financial authority to see if the firm is even licensed to sell securities etc.

Whatever the losses, they will not be a patch on the losses from Bitcoin scams on the unsuspecting.


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## nathan79 (Feb 21, 2011)

I suspect this is just the first domino to fall. A casualty of a much larger illness that's been plaguing RE in this country. There's a whole generation of people who believe that RE only goes up. A 15% return sounds conservative when house prices are going up by 25% a year. "What's the worst that could happen?" lol...


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## james4beach (Nov 15, 2012)

nathan79 said:


> I suspect this is just the first domino to fall. A casualty of a much larger illness that's been plaguing RE in this country. There's a whole generation of people who believe that RE only goes up. A 15% return sounds conservative when house prices are going up by 25% a year. "What's the worst that could happen?" lol...


I agree and this was my first thought as well. It's natural to see the flakiest ones fail early in the process of a bubble unwinding.

If the Bank of Canada really does raise rates significantly (I still have my doubts) I think that many other RE funds and corps will collapse in the coming years. Investor pools, investment corps, private mortgages, whatever.

And I do hope the BoC kills the RE market because it will be healthy to see all of this washed out. RE has been easy money for a long time, and that attracts tons of bad actors, con men, criminals of all kinds.

The funny thing about bubbles is that rising prices and plentiful money seems to conceal a lot of fraud and crooked behaviour. People get away with a lot, as long as investors aren't yanking their money. But once the investors actually want their money back, that's when you find out that the assets don't really exist, or the accounts are empty, etc.

I think we're all going to be surprised at how much fraud and criminal activity underpins Canadian RE.


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## ian (Jun 18, 2016)

I do not believe that Saskatoon or North Battleford have experience anywhere near 15 percent growth in house prices.


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## Mortgage u/w (Feb 6, 2014)

scorpion_ca said:


> Ponzi scheme.....


I wouldn't consider this a Ponzi scheme but rather a poorly managed company by inexperienced owners. Their concept is not much different than a bank - "borrow" money from a client's chequing account and lending it to another.

What fell apart here is the fact they had no cash flow. Occupancy rate was very low. Poor choice of properties. High salary cap. Complex corp structure. The way they raised capital was very expensive promising 15%-20% return. So from a business prospective, it was designed to fail.

For the investors, a promissory note from an unregulated and inexperienced corp is a huge gamble. The right approach would have been to offer the investors a title to the asset. Should the company go belly-up (as it did), the investor would still be left with a guarantee (the property).


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## OptsyEagle (Nov 29, 2009)

Ponzi schemes are only illegal if fraud is involved. In other words for example, many dividend paying companies are basically ponzi schemes. I would include almost every dividend paying oil and gas stock in that group. The only reason they are not considered illegal is that everything about them, that is material, is disclosed honestly and publicly to their investors.

So the question is not whether this was a ponzi scheme. It was. The question is, did the owners know something about its flaws in its operations, and if so, did they disclose them properly to their investors, or worse, did they disclose a bunch of information they knew to be untrue to defraud those investors. That is what has yet to be confirmed.


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## scorpion_ca (Nov 3, 2014)

_"The company was able to pay investors a high rate of return, even with low occupancy rates and unrealistic rent projections, by continually bringing in new investors and fresh money, he said."_...This seems to me that they ran a Bernie Madoff style Ponzi schemes.


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## ian (Jun 18, 2016)

Most likely the usual story. Investors buying into something they know little about, a leadership team with zero track record and no depth, a 'shiny' story, and an incredible claim of a guaranteed return on investment. Probably no 'due diligence' by many investors other than reading half of the glossy and watching the video.

Spells capital loss to me.


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## sags (May 15, 2010)

A judge has appointed a special investigator.


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## OptsyEagle (Nov 29, 2009)

scorpion_ca said:


> _"The company was able to pay investors a high rate of return, even with low occupancy rates and unrealistic rent projections, by continually bringing in new investors and fresh money, he said."_...This seems to me that they ran a Bernie Madoff style Ponzi schemes.


Again. Bernie Madoff did not go to prison because he promised high returns and used new investor money to pay those returns. He went to prison because he lied to investors on what he was actually doing and he lied about the current value and status of the investment funds he was running.

These are important distinctions. It is why the people that run these investment schemes profess to be the most brilliant people in the world, when attempting to acquire investor money, but then later profess to be the most ignorant employees in the world, when explaining later, their part in what happened to all the money. If all that can be done convincingly to a judge and jury, they walk away free.


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## ian (Jun 18, 2016)

Cannot stop people from doing stupid things.

A few years ago DW's cousin bought a load of Iraqi dinars that she could hardly afford. They would become 'millionaires' at re-valuation time. It would fund their retirement. Life would be grand. They even got a box full of paper currency to prove that it was real. Though how she could tell whether it was real or counterfeit is a mystery to me.

How much research did she do?

Well...did she even bother to check google/web? Heck no. Or call the local foreign exchange store? No need to. Her nephew said that he looked into it thoroughly (and he is a pretty smart guy) and it was a 'solid' investment. He bought some. After all...that is what his friends at church told him...the same people who were selling that worthless wallpaper.

It is Bitcoin now. Next year it might be Florida orange groves or the Golden Gate Bridge.


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## off.by.10 (Mar 16, 2014)

OptsyEagle said:


> So the question is not whether this was a ponzi scheme. It was. The question is, did the owners know something about its flaws in its operations, and if so, did they disclose them properly to their investors, or worse, did they disclose a bunch of information they knew to be untrue to defraud those investors. That is what has yet to be confirmed.


Well it appears they were unlicensed to sell investments so they are in trouble on that basis at least.

It's not entirely clear if the whole thing was built with the intent of fraud or if they were just grossly optimistic and bad at running a business.

Either way, this confirms the saying about fools and their money. 15% gave me a good laugh.


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## sags (May 15, 2010)

OptsyEagle said:


> Again. Bernie Madoff did not go to prison because he promised high returns and used new investor money to pay those returns. He went to prison because he lied to investors on what he was actually doing and he lied about the current value and status of the investment funds he was running.
> 
> These are important distinctions. It is why the people that run these investment schemes profess to be the most brilliant people in the world, when attempting to acquire investor money, but then later profess to be the most ignorant employees in the world, when explaining later, their part in what happened to all the money. If all that can be done convincingly to a judge and jury, they walk away free.


If it gets to a judge and jury, the crown has already determined where the money went, that criminal offenses were committed, and there is a reasonable prospect of conviction. White collar crime is the easiest to prove because there are documents and records as irrefutable evidence, if it is done by amateurs.


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## Johnny199r (May 20, 2014)

It blows my mind how people can give their money to such stupid ponzi schemes.

1. Guaranteeing a 15% return? Run away, fast. End of story.
2. What were the qualifications of the people running the company? Was it those two women wearing under armour hoodies in the video where the admitted they lost everything? They didnt exactly look like they went to Harvard business school.
3. Where's the due diligence? A promissory note? Really? What is that worth? It seems like the business plan here was to buy crappy houses in bad areas, not fix them up and leave most of the houses empty. Yeah, nothing amiss there.

People who invest in schemes like this make me feel like my head is going to explode.


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## james4beach (Nov 15, 2012)

Johnny199r said:


> 1. Guaranteeing a 15% return? Run away, fast. End of story.


This pitch isn't very different than other real estate schemes like "private mortgage" corps which are routinely sold to dentists and wealthy business owners.

A lot of people fall for some version of this kind of thing. A busy dentist doesn't have the time (or knowledge) to carefully read through the prospectus and understand the risks.

Lots of people are caught up in these kinds of terrible investments. They just don't realize it yet. This is one reason I try to stick purely to major public ETFs. It's kind of a way to protect myself from my own ignorance and stupidity. I'm sure that things like XIU, ZSP and XBB aren't the best investments on earth but I'm confident that they are at least sensible and are carefully regulated.



Johnny199r said:


> People who invest in schemes like this make me feel like my head is going to explode.


I know several wealthy people who are invested in some really weird RE things which I think are scams. I struggle to blame the investors. These business people, dentists, etc don't have expertise in these areas.

The same thing happens with hedge funds. They also sell themselves to wealthy people and business owners, and many of the pitches look reasonably good at first glance. Hard to blame the investors.


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## sags (May 15, 2010)

Now showing on Netflix.......


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## m3s (Apr 3, 2010)

sags said:


> Now showing on Netflix.......


What does this Netflix drama have to do with this thread?

Trust no one who claims inflation is good for GICs


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## sags (May 15, 2010)

Trust no one who offers to exchange worthless tokens for your real dollars.

They will come up with all kinds of gimmicks....free tokens, free prizes, discounted merchandise, "air drops", but it is all a con to get your cash.

Remember......if magic internet tokens were really going to be so valuable in the future, the pumpers wouldn't be giving them away.

Look what happened to this poor bugger after he got heavily involved with bitcoins.

Doctors say he suffers from cryptomanic blindness and his future is in doubt........along with crypto's future.


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## sags (May 15, 2010)

Real estate, crypto, fake charity tax writeoffs, fake collectibles,......a scam is a scam is a scam.

If it sounds too good to be true.......it almost always is.


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## m3s (Apr 3, 2010)

sags said:


> If it sounds too good to be true.......it almost always is.


Almost always

According to Wayne Gretzky you miss 100% of the shots you don't take. If you never take any risk that's fine but don't try to convince people that inflation is good for GICs

Wayne Gretzky doesn't shop at goodwill. Snoop Dogg doesn't shop at goodwill either. Snoop Dogg is tweeting about cardano today. Apple is also getting into crypto

Almost always isn't always eh saggyman


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## scorpion_ca (Nov 3, 2014)

Another scam https://www.cbc.ca/news/canada/toro...-lose-millions-unprotected-deposits-1.6435599

So I could open a home building company without a license, take down payment and file for bankruptcies.....easiest way of making millions.


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## londoncalling (Sep 17, 2011)

Investigator couldn't determine what exactly happened to $211M raised by failed Saskatoon real estate group (msn.com)


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## sags (May 15, 2010)

How can they not determine where the money went ? It was cashed by someone in some bank, and distributed from the bank to someone.

The banks would have records, even if the business doesn't.

Clearly this was fraud, as the owners had the evidence erased, so they hid the money somewhere.


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