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.
The headline suggests that Pat Hare was just caught up in the Drinkwater scheme and that Drinkwater is the sole perpetrator of this chain of crimes. Reading the very serious allegations it is very possible Pat Hare not only knew about the Ponzi scheme but was an active part of it. Only after the hearing process is complete will we know the full story. The allegations towards David Lem are astonishing since he was a former RECA investigator.
If you’re going to speculate Marie D. you might want to do that privately and not publicly. I find your post without merit.
Steve Sklenka, I’m sure you know that RECA would not launch a three day hearing without strong evidence. This is a public matter and the hearing is public. Speculation is suspicion, therefore investigations are required. Without speculation, you’ll never begin a process to find the facts. There have been many victims and it is in the public interest to know that they can trust their realtors, and that when unethical things are done, there will be consequences.
Marie D., when you speculate, and your speculation is found to be erroneous, you’re wrongfully harming an individual. Therefore, your speculative post has no merit, Marie D.
Mr. Skelenka, I do agree with you that erroneous speculation isn’t right.
But that’s not my point.
Please refer to the RECA disciplinary procedure:
” Hearings are only conducted once the investigation is complete, and if it is found that there is sufficient evidence of conduct deserving of sanction, the Registrar has three options:
1. refer the matter to a Hearing Panel
2. issue a letter reprimanding the licensee
3. impose an administrative penalty on the licensee
The matter has been referred to a Hearing Panel.
So there is nothing to speculate about. RECA has evidence that misconduct did occur. And… all of this is (and more) will be public!