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.”

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A property crime map for the month of March shows the hot spot for crimes is centered around the area where the Victory Church homeless shelter is located. (City Submitted)
B.C. Premier asked to intervene in Penticton homeless shelter dispute

Mayor sends letter urging premier to reconsider Eby’s use of paramountcy powers

A woman is hoping that her dog Ginger ran away from the fire that erupted in her Osoyoos home Saturday night. The home caught fire twice in two days and is totally destroyed. (Contributed)
Dog missing after saving woman from huge house fire in Osoyoos

The woman escaped the burning home, but she hopes her dog Ginger ran away to safety

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
65 new cases of COVID-19 in Interior Health

Overall, B.C. is seeing a decrease in COVID-19 cases

Two vehicles were involved in a collision around 3:30 p.m. on Tuesday at the Main Street and Industrial intersection. (Jesse Day - Western News)
Traffic slow after collision at Main and Industrial in Penticton

Two vehicles were involved and first responders are on scene

RCMP. (Black Press File)
Major Crimes called in after two bodies discovered in Naramata

A manhunt involving a police helicopter took place on May 10

Sisters Audrey Cunningham and Donna Erdman, join the Vernon Kalamalka Chorus singing in their cars, tuned into the radio, under the direction of Debbie Parmenter. (Jennifer Smith - Morning Star)
VIDEO: Okanagan choir steers around COVID with ‘carbershop’ twist

Singers find a unique way to practice during pandemic restrictions

The RCMP logo is seen outside Royal Canadian Mounted Police “E” Division Headquarters, in Surrey, B.C., on Friday April 13, 2018. Indigenous leaders are calling for an investigation into the conduct of Mounties on Vancouver Island after two police shootings of members of a small First Nations community in three months. THE CANADIAN PRESS/Darryl Dyck
Indigenous leaders call for clarity, investigation into RCMP after B.C. shooting

The RCMP declined to comment on the requests by Indigenous leaders

Colleen Price, Vancouver Island University’s bachelor of science in nursing program chairperson, says she is impressed with how students have persevered through the COVID-19 pandemic. (Chris Bush/News Bulletin)
Next generation of B.C. nurses already showing resilience

University program head says learning had to be adjusted amidst pandemic

The Vernon Community Arts Centre is seeking member artist submissions for a summer exhibit called Enchanted: A World of Fantasy. Submissions are open until June 30, 2021. (VCAC photo)
Vernon artists’ fantasy worlds wanted for summer exhibit

Vernon Community Arts Centre is seeking submissions for Enchanted: A World of Fantasy

Logging is proposed for a portion of Mount Ida, with the industrial park to the right. The purple portions are the proposed cut blocks, the yellowy-green are city-owned properties and the red and black dotted lines are the proposed logging roads. (City of Salmon Arm image)
Salmon Arm council’s concerns eased over Mount Ida logging

Fire chief explains proposed cut complements wildfire risk reduction efforts

The temporary skatepark will be placed between the Capital News Centre (in the parking area) and H20, pictured here (Kelowna Skateboard Association/Contributed).
Kelowna skateboarders hope to get Lower Mission park

The Kelowna Skateboard Association is helping a group of kids get a skatepark for the summer

Two-year-old Kashius Weme rides at the Steve Smith Memorial Bike Park in Nanaimo on Tuesday, May 11. The youngster’s precocious bike-riding ability is already attracting cycle sponsors. (Chris Bush/News Bulletin)
2-year-old B.C. bike rider already attracting cycle sponsors

Nanaimo’s Kashius Weme has a knack for extreme cycle sports

RCMP. (Phil McLachlan/Capital News)
Mounties battled various sex crimes in the North Okanagan

The local RCMP sex crimes unit has been involved in a number of investigations so far in 2021

RCMP are searching for Philip Toner, who is a 'person of interest' in the investigation of a suspicious death in Kootenay National Park last week. Photo courtesy BC RCMP.
Man sought in suspicious Kootenay death found in Lake Country

Philip Toner is a person of interest in the death of Brenda Ware

Most Read