Paul Chavady and Jerry Hallgrimson/photos: Royal LePage Varsity. 

 

Nearly five years after the collapse of Epic Alliance, two Saskatoon real estate agents tied to the $211-million investment scandal have each been fined $100,000 and suspended for six months.

In Sept. 29 disciplinary decisions, the Saskatchewan Real Estate Commission (SREC) sanctioned Paul Chavady and Jerry Hallgrimson following an investigation into their handling of 147 transactions connected to the operation, one of the largest real estate investment schemes in the province’s history.

While sanctions have already been issued to Epic Alliance’s founders addressing securities trading, the SREC decisions are the first to address real estate trading and the conduct of the real estate agents involved. 

The decisions have triggered scrutiny of Saskatchewan’s real estate regulatory system. Following calls from the Saskatchewan Realtors Association (SRA) for an independent review, the Financial and Consumer Affairs Authority (FCAA) confirmed in a news release Friday that the province’s Superintendent of Real Estate will engage a third party to examine the regulatory framework.

Chavady and Hallgrimson had worked with Epic Alliance since 2019, handling transactions involving residential properties purchased and resold through the company’s investment operation. That relationship ended in October 2021, when FCAA issued a temporary cease trade order against Epic Alliance, several related companies and its principals.

SREC’s investigation began in 2024 after the regulator anonymously received information concerning approximately 500 transactions.

Among the findings, Chavady and Hallgrimson failed to adequately represent buyers in 67 limited dual-agency transactions, failed to include required information in 106 offers to purchase and, in one transaction, failed to disclose known asbestos to a buyer.

Each received the maximum $100,000 fine permitted under The Real Estate Act, along with a six-month suspension, reprimand and additional monitoring and education requirements.

SREC subsequently confirmed to Real Estate Magazine that both Chavady and Hallgrimson have had their registrations terminated by their broker. The pair had been working at Royal LePage Varsity. 

 

Buyers purchased properties sight unseen

 

Epic Alliance operated several investment programs, including promissory-note loans, a “Fund-A-Flip” program and a “Hassle Free Landlord Program.” Through the latter, the company acted as landlord and property manager for more than 400 Saskatoon rental properties on behalf of investors, many based in Ontario and B.C.

According to the recent SREC decisions, in 67 transactions, Chavady and Hallgrimson acted in limited dual agency, representing both Epic Alliance and purchasers. The buyers purchased properties sight unseen and all declined property inspections.

The hearing committee found the agents generally prepared the documents and sent them electronically for signatures, but failed to adequately explain limited dual agency, inspection forms or the risks associated with declining an inspection.

The commission also found the agents failed to include required information in offers on 106 occasions and, on 36 occasions, failed to remove conditions or amend contracts before applicable deadlines expired.

Both were also found to have provided an untrue statement of material fact to the commission and omitted material information during its investigation.

 

A $211-million operation

 

A court-appointed inspector examining Epic Alliance and its affiliated companies reported that approximately $211 million had been raised from retail investors and that the companies had few remaining assets.

Incomplete financial records and missing servers prevented a complete accounting of the group’s affairs. At the time of its collapse, Epic Alliance’s operations included more than 500 residential properties in Saskatoon and North Battleford.

Separate FCAA proceedings later resulted in Epic Alliance Real Estate Inc. and principals Rochelle Laflamme and Alisa Thompson admitting to multiple violations of Saskatchewan securities law. They were assessed a combined $300,000 in administrative penalties and subjected to 20-year restrictions on a range of securities-related activities.

 

Why did the real estate investigation begin in 2024?

 

The time that passed before the real estate transactions resulted in disciplinary action is now a central point of the scrutiny the regulator is facing.

SREC executive director Aaron Tetu told Real Estate Magazine that the regulator did not receive the anonymous complaint that led to the cases until 2024.

“Once the anonymous complaint was received, the Commission initiated a thorough investigation process in compliance with its obligation to respect the rules of procedural fairness, verified the transaction data with the Saskatchewan Realtors Association, and moved forward with the appropriate disciplinary actions,” Tetu said.

Chris Guérette, CEO of the 1,800-member Realtors association, argues the absence of an earlier formal complaint does not adequately explain why the conduct was not examined sooner.

“There was a very large period before they considered the complaint in 2024,” she told Real Estate Magazine. “They claim that they had not received any complaints from any investors. Well, that’s a very sad response.”

Guérette said people within the industry had been raising concerns about Epic Alliance for years.

“I had a number of members, myself being part of that group, saying, ‘You need to take a look at this.’”

She contrasted the timeline with action elsewhere in the Epic Alliance case.

“There was investigation of the trading and securities side, and lawyers representing investors in court,” she said. “But nobody until yesterday had come with a decision on the trading in real estate side.”

Guérette said SRA members are now coming to the association looking for answers. 

 

SREC points to information-sharing

 

Tetu said the case highlights the importance of information-sharing between different parts of Saskatchewan’s real estate system.

“Generally speaking, and relevant to this matter, only those with real time access to multiple listing services can monitor which registrants are conducting trades, for what amount, and in what volume,” he said.

He said greater co-operation between regulators, boards, associations and brokers in sharing transaction data could help assess and mitigate risks.

“Simply put, reporting of data and/or complaints will help protect the public,” Tetu said.

Tetu also emphasized that the suspensions are part of broader sanctions that include the maximum statutory fines, mandatory coursework, ongoing audits and 2½ years of strict registration conditions.

 

SRA questions staggered suspensions

 

Hallgrimson’s six-month suspension began Oct. 1 and was scheduled to run until April 1, 2027. Chavady’s was scheduled to begin that day and continue until Oct. 1, 2027.

The consent orders do not explain why the suspensions were staggered.

Guérette criticized the arrangement, arguing it could allow the partnership to continue operating while one member served a suspension.

Following the decisions, SRA changed its Membership Suspension Policy so a member subject to an order suspending their real estate registration loses unrestricted membership privileges when the decision is rendered, even if the regulatory suspension is scheduled to begin later.

The suspension remains until the individual has fully served the regulatory suspension.

SRA also made anyone subject to a licence suspension ineligible for non-member administrative assistant and business partner accounts, preventing them from using those accounts to access association services.

 

Review will examine regulatory gaps

 

SRA called for an independent examination of Saskatchewan’s regulatory model, arguing the Epic Alliance case raised broader questions about the system’s ability to identify risks, protect consumers and maintain public confidence.

“We are asking to work collaboratively so we can get to a place where we have a regulatory system that is modern, professional and that the public can depend on,” Guérette told Real Estate Magazine.

Guérette pointed to independent reviews of real estate regulators in other provinces as precedents.

“We know it’s worked in Alberta, we know it’s worked in Ontario,” she said.

FCAA’s newly announced review will assess the effectiveness of Saskatchewan’s existing regulatory framework, identify potential gaps and opportunities for improvement and consider regulatory frameworks and experiences in other Canadian jurisdictions.

A final report will identify options for addressing any issues uncovered.

Chavady, Hallgrimson and Royal LePage Varsity did not respond to requests for comment.