The FIC Group was thriving in the early 2000’s in a major Bull Market with hundreds of members participating in various investment opportunities including real estate. Real estate in the Province of Alberta was booming and FIC Real Estate Fund was established to invest in development land. FIC was growing at a staggering rate by 2006 with the executive ‘on the road’ two weeks a month & so – engaged the consulting services of John Tansowny, a person who professed to be an experienced real estate investor and entrepreneur in the Edmonton, Alberta area.
Due diligence on John Tansony provided, what appeared to be, a solid reputation and so eventually all real estate transactions on behalf of FIC were handled by him.
All real estate transactions on behalf of FIC were subsequently handled by Tansowny.
A series of transactions was entered into by FIC beginning April 30,2006 when it purchased land from 1229068 Alberta doing business as Phoenix Land Ventures (“Phoenix”) , a company owned by Denis and Valerie O’Dowd (“O’Dowd”). The purchase price was $1,250,000 and we haven’t yet been able to determine when O’Dowd purchased the property nor for how much.
A month later, on May 31, 2006 FIC purchased lots in 3 stages of a development known as Willow Park. Without agreement or even disclosure, a “finders fee” of $52,500 was paid to Phoenix.
Genesis on the Lakes
On Nov 15, 2006, FIC purchased 4 parcels of development property in Stony Plain, Alberta for a single home development named Genesis on the Lakes. While its likely there were intervening transactions (a belief based on a pattern of this happening in many other projects), no documentation could be found on previous owners and whether there were intervening transactions.
It’s clear that Tansowny badly misrepresented the value of the property since the property was sold in May of 2006 for $2,200,000 then again in September of 2006 for $6,900,000 and then flipped to FIC on November 15, 2006 for $9,867,331, a 348% increase in just six months.
This was a major project. It involved tens of millions of dollars of investment, a large multi- million-dollar bank loan and required experienced project management. Tansowny was in charge of the project on behalf of FIC and he hired David McDonald, a land development consultant living in British Columbia.
The development involved a Joint Venture in which Phoenix received a 5% share and David McDonald received a 15% share. Neither of these parties contributed cash. Mr. McDonald (through an Alberta numbered company, received $450,000 as a 3-year prepayment of developer fees, working on behalf of the Joint Venture.
The Joint Venture development was subsequently put into receivership when the TD Bank called their loan due to negative publicity surrounding the BC Securities Commission and FIC due to a complaint lodged by Tansowny in order to escape from his fraudulent behaviour in many of the FIC land transactions. Tansowny’s plan was to destroy FIC so that his actions would never be investigated to exposed. Tansowny went so far as to tell the BCSC that the FIC Management was stealing assets personally which in large part led to the seizure of FIC assets and of course none of this was true and the BCSC admitted in court filings that management had no personal gain as a result of the collapse of FIC and in fact were financially damaged more than any other investor due to their large holdings.
The land was eventually sold for a significant loss and the bank loan was fully repaid. As joint venture partners O’Dowd and McDonald are responsible for their share of any losses, a lawsuit was filed but due to financial and resource constraints, the matter wasn’t concluded.
Tansowny Contract
On February 6, 2007, Tansowny entered into a formal contract with FIC and was appointed Vice President, Real Estate. Compensation in cash, bonuses, commissions and stock options were extremely generous. Among the various compensation terms was a 2% fee for sourcing and purchasing property. His task, among others was to source, acquire and develop real estate and manage all development activities on behalf of FIC.
Tansowny became involved in a series of transactions that included Phoenix for a multi-million-dollar windfall gain for Phoenix at FIC’s expense:
Calmar 1
On February 27, 2007 FIC purchased land in Calmar, AB from Phoenix for $5,000,000. The land had been recently acquired by Phoenix for $4,200,000 in anticipation of FIC purchasing it, thereby providing an immediate gain to Phoenix of $800,000. Tansowny initiated and managed this deal for FIC.
Devon Robin
On March 1, 2007, FIC purchased a property in Devon Alberta for $1,950,000 however before closing the price was amended without any clear reason to $2,550,000. Prior to the final purchase by FIC, Phoenix purchased the property for $2,200,000 and the flipped it to FIC for the $2,550,000 giving rise to a $350,000 gain for Phoenix. Tansowny initiated and managed this deal for FIC.
Pigeon Lake
On January 31, 2007 Freedom Investment Club entered into a Joint Venture to develop a large tract of land near Pigeon Lake – the three party JV document was signed by Tansowny on behalf of FIC, David McDonald and Denis O’Dowd for Phoenix.
Tansowny committed FIC to purchase the land for $3.8 Million.
On May 15, 2007, the owners of the land sold it to Dave McDonald, a development consultant that had strong ties to O’Dowd and Tansowny and was the development consultant for Genesis on the Lakes for $2,497,800.
On the same day, McDonald sold the property to Phoenix for $3,059,800 (a difference of $562,000 and Phoenix in turn sold the property to FIC for $3,859,800, a difference of $800,000.
Had Mr. Tansowny arranged to purchase the property directly from the original owners, it would have saved $1,362,000.
What became clear is that with the commitment by FIC to purchase the land at $3.8 Million, the other JV Partners conspired to defraud FIC by purchasing the land at a reduced price and then through a couple of intervening transactions, pocketed $1,362,000 with the knowledge and complicity of Tansowny.
As if the $1,362,000 wasn’t enough, on February 15, 2007 Mr. O’Dowd and Mr. McDonald were provided a 5% and 15% share in the proposed development of the Pigeon Lake property for no financial consideration. The deal was signed off by Tansowny on behalf of FIC.
Note: The details of these transaction were only uncovered in 2009 during an audit of transactions (real estate flips) and on site visits and conversations with the previous owners who were shocked to hear what the inflated price was that FIC paid.
Devon Church
On May 23, 2007, Phoenix purchased property from the River of Hope Church in Devon, AB for $750,000 and flipped it to FIC for $990,000, giving Phoenix an immediate gain of $240,000. The details of the transaction weren’t uncovered until 2011 during a conversation with the Pastor of the Church who disclosed the purchase price their church received and was surprised to hear what FIC had paid. This was a deal managed by Tansowny.
Calmar II
On October 15, 2007, FIC purchased another property in Calmar, AB in the amount of $6,300,000 and without approval of FIC Directors, Phoenix was paid a 5% commission amounting to 315,000. O’Dowd was not a licensed realtor.
Golfdome Property
On August 2, 2007 FIC invested $1,000,000 into a Trust controlled by O’Dowd with trust conditions. The investment was being held in trust until a hotel development could be approved. The Trust conditions were not met and without the knowledge or consent of FIC, the funds were used elsewhere. FIC requested the return of its entrusted funds but was unsuccessful in getting the investment returned. As a result, FIC launched a legal claim which took place in 2018 through 2020? At every turn, the court ruled in FIC’s favour and against Phoenix and admonished O’Dowd for his behaviour and lack of veracity.
FIC was awarded amounts requested. O’Dowd launched an appeal which was ultimately denied.
FIC has collected approximately 80% of the amount invested but incurred significant legal fees.
In total, the intervention of Tansowny’s friends and associates in the real estate transactions cost FIC $4,119,500 – which was pocketed mostly by O’Dowd. Under the terms of his contract, Tansowny would have been eligible to receive 2% of the increased amounts paid to O’Dowd and McDonald, a total of $62,390. No proof could be found that O’Dowd and McDonald shared their gains with Tansowny.
In the various court actions that included O’Dowd and Tansowny the judge criticized both saying their testimony lacked credibility and went so far as to say “I found (Tansowny’s) version of events was unburdened b y any need to reconcile or distinguish between his vested interest in the outcome and the vents as they actually occurred. I found his testimony to be glib, facile, and dismissive…I find that his assertions at trial openly in favour of Phoenix simply do not withstand scrutiny.”
In other words, he lied.
Judge Hillier also commented on O’Dowd’s testimony saying “I found O’Dowd an unreliable witness on key points.” Further he found “O’Dowd’s evidence was almost equally unreliable” as that of Tansowny. Another liar.
Its noteworthy that FIC wasn’t the only entity defrauded and who sued O’Dowd. In an action that resulted in a judgment against Phoenix pronounced on Nov 25, 2021, Alberta Fund 1, Prima Projects Canada LLC and Prima Equity Partners, Inc. who were also defrauded by Phoenix/O’Dowd and were ordered to pay $1,163,211.92.
The full extent of the frauds against FIC was laid out in a formal court action in September of 2011 wherein Tansowny and Crown Capital sued FIC for commissions that Tansowny felt he was owed. FIC counterclaimed in a fulsome retelling of the frauds perpetrated on FIC seeking an award of $24 Million. This also included notes on how Tansowny was duping the BC Securities Commission into helping him to destroy FIC.
In fact in an adjudication vs the management of FIC a key email was used to rule against them. In the note the CEO, Lathigee is explaining the inability to pay Tansowny and citing financial difficulties. Lathigee did this as information was needed from Tansowny who was under internal investigation but was trying to extort his fees before he would turn over documents.
In our opinion this shows a pattern of corruption, fraud and greed. Clearly this small group saw FIC as a cash cow to be milked with the participation and complicity of the person who had been entrusted to protect FIC’s interests and who had been provided with resources belonging to the members/investors of FIC.
Numerous lawsuits were filed against all the parties but due to financial constraints, only a few of them were able to be completed. The few that did run to final Orders were overwhelmingly successful.
A fully documented package was delivered to the RCMP in Edmonton, but they declined to take on the case due to severe manpower shortages in their white-collar criminal division.
In addition, these victories in court were completely ignored by the BCSC who saw the FIC Management Team as poster children they could use for pursuing large fines that were not collected by the BCSC and consistently publish updated to the public. The BCSC seemed uninterested to pursue the real fraudsters who have gotten away completely with their ill gotten gains. It is interested to note that John Tansowny was previously sanctioned by the Alberta Securities Commission.
John Tansowny was terminated by FIC on May 12, 2008 and records show that he immediately went to work for Denis O’Dowd, collecting fees from the Golfdome operations.
Unfortunately, the fraudsters weren’t limited to just O’Dowd and Tansowny.
Crossroads Property
In the early 2000’s FIC entered into a deal to purchase land in Edmonton area known as Crossroads from Kenneth Horne. FIC paid millions of dollars for the purchase, which was handled by its lawyer, Malcolm Lennie. The land was transferred into a company owned by Lennie and Horne.
The land was subsequently sold again by Horne and Lennie resulting in FIC being defrauded of the money it paid. Horne and Lennie were sued, and Lennie paid back funds he owed and resigned from being an attorney.
Horne entered into a legal agreement to pay back a portion of the funds owing. It has taken over 10 years to collect from Horne and at this time there is still a significant amount owing. FIC has a mortgage on 50% of his personal residence but has hasn’t been able to get the property sold. Horne recently declared bankruptcy and the matter in now in the hands of a Trustee.
Since this time the CEO, Michael Lathigee, had a story written by Gordon Hoekstra a reporter for the Vancouver Sun. In the story a picture of Lathigee’s house in Las Vegas where he relocated was shown and Hoekstra’s article clearly implied that Lathigee had purchased the house with funds from the FIC Group. Lathigee in fact had borrowed monies and maintained full documented records of all those who loaned him money being repaid with a return. However, when Hoekstra was notified of such, he had no interest to write a retraction.
This factually incorrect story did not go unnoticed by the BCSC who placed a lien on the property and of course could never prove that any funds came from Canadian investors to buy the house however, the BCSC received 350k from the eventual sale of the house and it would be interesting to know how much if any of that money was ever returned to FIC Investors. As of this date FIC Management contacted many FIC shareholders and none have ever stated they received any monies back from the BCSC on recovered monies.
At one-point Lathigee was being examined to provide financial disclosure to the BCSC. In the process of providing the information his mother passed away and he notified the BCSC asking for addition time to provide the information requested and stated that his mother had passed and her upcoming funeral date.
The BCSC ordered 3 constables and 11 moves and 3 large trucks to the house of Lathigee to clear out his house completely on the day of his mother’s funeral when Mr. Lathigee was scheduled to deliver the eulogy. The BCSC was aware of this date but certainly shows the ruthlessness of a government organization with an unlimited budget.
During the seizure 68 one-ounce gold coins were taken out of one of the safes at the house however, these gold coins never showed up on the inventory list of items taken from the house and the BCSC was notified several times and this was expressed in court filings. The coins were never found, and Mr. Lathigee incurred the full loss without any compensation.
It is interesting at this point to ask a few questions about apparent improprieties which respect to financial transactions. There was never any accounting for any proceeds received from three FIC companies, forcing them into bankruptcy. Did the BCSC receive any funds that are supposed to go to shareholders? (the proceeds from the sale of the house for 350k US but in our discussions with previous FIC shareholders no one has ever received any of these monies (No report was provided to creditors or shareholders of the three FIC Companies by either BCSC or the Trustee in Bankruptcy, John McEown. Normally there would be periodic reports by a Trustee as a bankruptcy unfolds along with a final report to the court.
