January 29, 2021
Dear Mayor Hurley & Council,
As we know, just before Christmas, The City of Burnaby announced plans to buy Fortius Sport & Health Centre for $26.6 million. The sale is scheduled to close very soon, on Monday, February 1, 2021.
As I said in my initial letter, two weeks ago, I hope that the sports centre can re-open as soon as possible but I believe that the payment of $26.6 million to Fortius Foundation should be put on hold.
Based on what I'll explain ahead, it seems to me that in purchasing the sports centre, The City of Burnaby faces three issues: 1) The price, 2) Who gets the money, 3) The RCMP file.
Regarding the price, Mayor Hurley has told me that he thinks The City is getting a bargain. The centre is 140,000 square feet and would cost $1,000 per square foot to build, he says. ($1,000 - seems awfully high to me, but that's what the mayor said). At $1,000, that would put the replacement cost at about $140 million. Its easy to see why Council would keen to buy the sports centre for less than a quarter of that but there's more to this purchase than the price.
The current owner of the sports centre is Fortius Foundation, a registered charity.
Promising to help Canadian athletes raise their game, Fortius Foundation opened the sports centre in 2013. Since then, Fortius has hosted an impressive number of teams and events - even pre-season training for the Toronto Raptors.
At the end of December, Fortius Foundation shut down the sports centre, blaming COVID19. But the truth is that Fortius has been in trouble for years.
The $23 Million “Donation” from Scott Cousens
Fortius has long said that it began with a $23 million donation from Scott Cousens, a local mining executive. However, as The Globe and Mail reported with an in-depth investigation by Kathy Tomlinson, this narrative is contradicted by tax returns and financial statements obtained from the Canada Revenue Agency.
Tax returns show that gifts to Fortius from Scott Cousens’ private foundation total $130,000, not $23 million.
Despite a total of $106 million in tax-receipted donations and charitable gifts and $130 million in loans, Fortius Foundation was still $24 million in debt (as of 2019), and yet the assessed value of the buildings is only $15.7 million.
The $106 million includes a "gift" of $74.7 million from Charitable Impact Foundation (“CHIMP”), just two years ago.
As I mentioned in my initial letter, during December I asked Scott Cousens repeatedly about the funding of the sports centre via e-mail, phone and Twitter. I sent a detailed letter sent to him and to John Bromley, CEO of CHIMP. I received no reply so I reported this matter to The Economic Crime Unit of The Burnaby RCMP. They have opened a file (#2021-892).
Fortius Foundation
The second, more difficult issue is who should get the $26.6 million. The salient point here is that Fortius Foundation is not a commercial seller. It is a registered charity.
As I explained in my initial letter, on the basis of my extensive research it is clear to me that Fortius Foundation is part of a massive tax fraud scam involving hundreds of millions of dollars in tax-receipted donations and charitable gifts that are a SHAM. For examples of tax-receipted donations and gifts that I believe are a sham, click here.
The reason that I would characterize these gifts as a sham is because I believe that no real money changed hands. For a gift to be a true gift, there must be an intention on behalf of a donor to benefit the recipient, with a corresponding impoverishment to the donor. Furthermore, I believe that there was no true transfer of property since these gifts are between related parties and were not made without expectation of something in return. For these reasons, I believe that these gifts are sham transactions, paper shuffles conducted in a circuit of charities that operates like multiple pockets in the same pair of pants.
By law, registered charities are required to operate for purposes that are exclusively charitable. This means entirely, solely and purely charitable. This is the responsibility that charities bear because they can issue tax receipts for substantial tax relief.
The sole purpose of Fortius Foundation was the sports centre. Now that the centre is closed, the foundation should also close because its purpose no longer exists. This is why I believe that The City of Burnaby should not pay as much as $26.6 million to Fortius Foundation.
To see how Fortius got into trouble, we need to look back at how it began.
Tax records show that Fortius was created by a trio of registered charities. The first of the trio, New Dimensions Foundation, reported nearly $18 million in tax-receipted donations (2008 & 2009). That should have been enough to build the sports centre. But instead of using the $18 million for the centre's construction, New Dimensions gave a loan - not a gift - of $17.4 million to the second charity, Fortius Foundation. That loan was secured by a mortgage against the sports centre and was passed on to the third charity, Imladris Foundation.
An important point here is that these three charities are not autonomous. All three were created by Scott Cousens and Blake Bromley, a Vancouver lawyer. This trio must therefore be assessed as a whole. New Dimensions did nothing but receipt the $18 million, hand-off the Fortius loan to Imladris, and promptly shut down. Imladris Foundation is now run solely by Scott Cousens, his spouse and family. CHIMP, which gave Fortius Foundation the "gift" of $74.7 million, is run by Bromley's sons, John and Clif.
Another important point is the date of the loan from New Dimensions to Fortius Foundation. That date is June 1, 2008, before the 2009 financial crisis.
As I reviewed the financial statements for the Fortius charities, one of the surprising things I noticed is that between 2010 and 2018, Scott Cousens’ foundation charged roughly $1 million per year in interest on the loan to Fortius Foundation, a total of $9.6 million. The initial interest rate was 20 percent. That was reduced to 5 per cent pursuant to a CRA audit, tax returns say. The net result of the interest charges, in my view, is that the “donation of debt” was jacked up by $9.6 million.
In 2018, Scott Cousens’ foundation gave CHIMP Foundation a gift of $29 million which appears to be the transfer of the mortgage against the sports centre, and unpaid interest.
Financial statements show that the construction of the sports centre appears to have been paid for via a long series of loans starting in 2011 with $20 million from Romspen Investment Corporation, based in Ontario. That loan was increased to $26.4 million and followed by $35 million in additional loans from five charities run by Blake Bromley:
- Global Charity Fund: $4 million
- Foundation for Public Good: $12.2 million
- Homestead on the Hill Foundation: $4 million
- Almoner Foundation: $15 million
- Association for the Advancement of Scholarship: $600,000.
In 2018, Fortius Foundation appears to have used the $74.7 million that it received from CHIMP in order to consolidate its debt under a loan from Bank of Montreal. As far as I can tell, the $74.7 million wasn't a true gift of real money, it was a paper shuffle, a re-arrangement of loans.
Important Questions
The most recent publicly available financial statements, for the year 2019, say that Fortius Foundation has a mortgage for $16 million from an unidentified lender (the name is redacted in financial statements provided by the CRA) and a debt of $4 million to a director of the foundation.
Who is the unidentified lender and who is the director owed $4 million? Would they be repaid with public funds?
A list of further questions was included with my initial letter.
Conclusion
In light of the above, I respectfully suggest that The City of Burnaby finds out how much real money was put into building the sports centre - and by who - and I suggest that The City repay the outstanding loans for the cost of the centre's original construction – and not a cent more.
As for the land, the centre is located on 5.2 acres in Burnaby. It was valued at $3 million when the project began. Now, the assessed value is $12.4 million. There’s nothing to stop Fortius Foundation from giving the land to The City of Burnaby at the original cost. After all, giving is what charities are supposed to do.
I wish you the very best in your service of the people and the taxpayers of Burnaby.
I am available to answer any questions you may have.
Sincerely,
Vivian