The fallout of the multi-million-dollar Ponzi scheme by former Calgary Realtor Eric Drinkwater continues to unfold, with new developments relating to the fraudster’s one-time bosses and the brokerage he worked for.
Drinkwater’s scheme centred around falsified bridge loans for non-existent real estate transactions. Drinkwater was charged by Calgary police on May 8. Police reported 16 victims came forward with a combined loss of more than $1.9 million.
In a recent disciplinary hearing of the Real Estate Council of Alberta, Drinkwater admitted that the total amount invested in the scheme was $3.5 million, and an investigation found there were at least 71 victims, and possibly dozens more.
The outcome of Drinkwater’s RECA hearing is pending.
Hare and Lem RECA hearings scheduled
Industry watchdog RECA has scheduled three days of disciplinary hearings for Pat Hare and David Lem from Aug. 18-20.
Hare is the well-known founder of the longtime Calgary brokerage formerly known as Re/Max Central, historically a top-performing office, where Drinkwater was employed during the time he carried out his scheme.
The hearing panel will determine whether Hare is deserving of sanction for allegations connected to his involvement in the fraud.
According to RECA’s notice of hearing, Hare is alleged to have been made aware of Drinkwater’s scheme in 2021, and received payments from Drinkwater that he “knew or ought to have known came from the fraudulent scheme.”
Other allegations include:
- Hare was aware of numerous complaints concerning Drinkwater’s conduct and he participated in concealing the activity, allowing it to continue.
- Hare counseled Drinkwater to keep his fraudulent activities secret to conceal his activity and prevent a disciplinary investigation by RECA.
- Hare used his control over Drinkwater’s legitimate real estate commissions to put his funds out of reach of creditors.
Allegations against Lem
Lem, who was the broker/manager at the time, is facing allegations of being “willfully blind to Drinkwater’s conduct related to the fraud” as early as 2021.
Allegations against Lem include:
- Failing to take reasonable steps to correct the misconduct or reduce any harm that may have resulted from the misconduct upon becoming aware of it.
- Failing to notify the registrar upon becoming aware of misconduct.
Blue Sky ineligible for Commission Protection for now
Just weeks after Re/Max dropped Re/Max Central from its franchise network due to allegations surrounding Drinkwater’s scheme, Hare’s son Mackenzie Hare charted a move to Royal LePage under a new name, Royal LePage Blue Sky.
The Alberta Real Estate Association has deemed 4th Street Holdings and Blue Sky ineligible for its Commission Protection Program, which protects agents’ commissions when a broker goes out of business.
It does not have any effect on the brokers’ day-to-day business, AREA CEO Brad Mitchell told Real Estate Magazine.
“It simply means that if the brokerage goes out of business and if the commissions to agents are not paid, the agents would be ineligible to apply to the fund to pay their commissions,” said Mitchell.
He said Blue Sky has been deemed ineligible because AREA’s board has determined “it is outside its risk tolerance at this time.”
“This is not a permanent state,” he said. “We have only suspended coverage until we can conduct a comprehensive review of the risks and we have reached out to Blue Sky through our legal counsel.”
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.