Hockey dorm put on ice

Deal to purchase city land falls through as developer embroiled in legal disputes

The on-again, off-again dormitory project for the Okanagan Hockey Academy is off again, though proponent Loren Reagan still claims he is going ahead with it.

Reagan might have some problems following through, however, as he is currently facing two claims in civil court. One, filed on Feb. 14, claims that Reagan and his partner Michael Elphicke, operating as the Okanagan Elite Hockey Association, have misused more than $100,000 a group of minor hockey parents paid them to organize a European hockey tour.

The other lawsuit comes from Citation Ventures, who were to arrange the financing needed to build the dormitory next to the SOEC, a project that has been stalled since December. Alex Fraser, one of the principals of Citation Ventures, said they had full intentions to back the deal, but became concerned as they examined the deal Reagan was promoting.

“The more layers we peeled back from the onion, and the time and effort we put into this, we realized there is no deal with Loren. We are not interested in doing business with him and we have started an action against him,” said Fraser. “Our intention is to prove that he provided false and fraudulent information to us.”

The two civil suits, however, appear to share financial connections as well. Money paid by the parents for the Europe trip has been used to pay both the City of Penticton and Citation Ventures.

According to Nathan Wahoski, a lawyer with Brooke Jackson Downs in Salmon Arm, the parents became concerned about two weeks ago.

“After these parents had paid over $100,000, after they had done a lot of fundraising, they were essentially contacted by Loren Reagan to say that he was pulling out and that somehow there was a personal falling out between him and the other partner,” said Wahoski.

“The bottom line is that someone took the money and used it for other things, maybe used it for personal reasons.”

The parents have now started a civil lawsuit to recover the money that they paid to Reagan and Elphicke.

“From what we know, it looks like there is about $13,000 left of the money out of over $100,000. It looks like $15,000 was paid to a travel company as a deposit, so a portion of it was used for the trip and there is some money left over, but there is another $100,000 that is not accounted for,” said Wahoski. “We do have cheques that show that the City of Penticton received some money, unknowingly of course. There was some money paid to Mr. Reagan personally for substantial amounts from this account.”

According to Fraser, there was another $20,000 paid to Citation Ventures to cover travel expenses while trying to set up the deal. A copy of the wire transfer Fraser provided to the Western News shows that $20,000 was transferred on Nov. 21 to Citation Ventures from one of the accounts named in the application requesting the court freeze the assets of the OEHA.

“We wanted our travel and expenses covered while we were doing our due diligence for the project,” said Fraser, who said he became increasingly concerned about Reagan’s involvement starting in early December.

“I had a problem with him in the first week of December, we actually walked away from the project,” said Fraser. However, with much of the legwork done and investors lined up, Fraser thought the deal was still worth pursuing. His first concerns were over the length of time it took for Reagan to produce a budget proposal.

“We had issues about the deal from day one: the budget, the concept. We thought we could work through them and that’s what we honestly tried to do,” said Fraser. “We first met Nov. 7 and it was sometime mid to late December, we got what I am going to call my first decent look at a budget.”

Part of Fraser’s concern came from the investment security being offered to investors, including Reagan’s own investment in the project.

“He told us he had a million dollars in this. When we looked at it in December, we realized he had no money invested in this,” said Fraser. “The more we looked and dug, we didn’t see any money in the deal from him.”

Reagan, however, paints a very different picture of the situation. He said the money for the Europe trip was not misappropriated, and that the money he used from it only amounts to his company’s profit from the deal. It is none of the parents’ business, he said, how the company spends its profits.

That lies in harsh contrast to the parents’ claim in their suit that the trip was being organized on a non-profit basis, and that neither Reagan or the OEHA would benefit. The parents’ group also contends that their expectation was that the monies paid would be used exclusively for costs and expenses related to the European tour.

“They entrusted these individuals with the money. The partners, however, are saying that it is a business and the parents paid the money over to a business. If it was wasted, that is poor business practices, but it is not fraud,” said Wahoski.

“It’s absolutely nobody’s business. The parents can’t tell me, the courts can’t tell me, the RCMP can’t tell me how to spend the profits of my partnership,” said Reagan, who also claims he didn’t know there was to be any profit until January, two months after he transferred the $20,000 to Citation Ventures.

Like the hockey dormitory, Reagan said the European trip is still on, but the parents need to pay more money, and that as of November, they were behind in payments.

“They are short $49,000 on their financial commitments up to Nov. 1,” said Reagan. “Did we use more money than there was profit in the trip? I don’t know, I know what I used.”

The picture Reagan paints of his relationship with Citation Ventures is even less flattering. He contends that far from Fraser and Citation pulling out of the deal, they haven’t lived up to their commitments.

“I fulfilled my obligations to Citation Ventures,” said Reagan, adding that included signing personal guarantees and giving the company shares for security. “I forfeited a $50,000 deposit to the city when they didn’t close on Feb. 1. They never fulfilled their commitments on their term sheets.”

“Mr Fraser is not pulling out of the project. He has been relieved of any contractual obligations by me for failing to complete his commitment,” said Reagan. “He’s fired, he didn’t do his job.”

Reagan said he is working with new investors to find backing for the project, adding that Penticton Mayor Dan Ashton has told him the city, which owns the land the dormitory is to be built on, will entertain a new proposal from him.

“There is no offer on the table whatsoever,” said Ashton. “I told Mr. Reagan that yesterday. If he wants to come forward, he can, but due to the circumstances we are hearing about, there will have to be lots of clarification. I will have to see this stuff resolved before he comes forward.”

Reagan’s original proposal was fast-tracked through the city’s application process in the fall, and though this deal has been fraught with problems, he stands by the city supporting desirable development projects in that manner.

“There is always hindsight. Unfortunately this has turned into what it has turned into,” said Ashton. “We worked very diligently to see that this project could get into the gourd before the winter, because of the zoning required. We also worked very diligently to see that the citizens were protected, and that’s what we did.”

 

Just Posted

Rollover closes road

No serious injuries reported in a rollover off South Main in Penticton

Raven story shines light at Children’s Showcase

Season opener of the Children’s Showcase in Penticton

Student leadership conference hits home

Nearly 500 Grade 5 students taking part in leadership conference in Penticton

Penticton dancers headed to Germany for world championship

Penticton dancers representing Canada at World Dance Championships

Okanagan Taste: Snacks and what to pair with them

Your guide to for the go-to snacks and beverage pairings for sports season

VIDEO: Sears liquidation sales continue across B.C.

Sales are expected to continue into the New Year

New B.C. acute care centre opens for young patients, expectant mothers

Facility aims to make B.C. Children’s Hospital visits more comfortable

Search ramps up for B.C. woman after dog, car found near Ashcroft

Jenny Lynn Larocque’s vehicle and dog were found in Venables Valley, but there is no sign of her

Police officer hit by car, stabbed in Edmonton attack back on job

Const. Mike Chernyk, 48, returned to work Thursday

UBC medical students learn to care for Indigenous people

Students in health-related studies to take course, workshop to help better serve Aboriginal people

Dorsett has 2 goals, assist in Canucks’ 4-2 win over Sabres

‘It was a real good hockey game by our group,’ Canucks coach Travis Green said.

Berry disappointed: Bear tries to eat fake fruit on woman’s door wreath

A Winnipeg woman has taken her berry-embellished wreath down, after a hungry bear visited her porch

B.C. search groups mobilize for missing mushroom picker

Searchers from across the province look for Frances Brown who has been missing since Oct. 14.

Have you heard about Black Press scholarships?

Up to 37 scholarships are awarded each year to students throughout British Columbia

Most Read