Scott Cousens
The single largest charitable donation in the history of British Columbia is $74.4 million. In 2018, this huge gift was made between two charities, both based in Vancouver. The donor was Charitable Impact Foundation ("CHIMP") and the recipient was Fortius Foundation which built Fortius Sport & Health Centre ("the Sports Centre") in Burnaby, B.C. and owned it until it was sold to the City of Burnaby.
Having received $74.7 million, you'd think that any charity would be in good shape, right? After all, who would give that much money to a charity in trouble?
But despite the $74.7 million gift, Fortius was in trouble. Just two years after receiving that huge, historic gift, Fortius announced that it was selling the sports centre to the City of Burnaby for $26 million.
The founder of Fortius Foundation is Scott Cousens, a Vancouver business person. Interviewed by Matt Sekeres for the Globe & Mail, Cousens claimed that he had spent his sons inheritance and a substantial portion of his net worth in order to make a donation of $23 million, described by Fortius as "the single largest donation in Canadian sports history." Financial records, however, tell a dramatically different story.
While the alleged donation was made in 2008 and 2009, the sports centre opened about five years later, in 2o13 and the mega-gift of $74.7 million came five years after that, in 2018.
Tax returns and financial statements for Fortius Foundation show that the sports centre was financed not by one charity but by an arrangement between three charities. Cousens was a director of all three. The first of the three is New Dimensions Foundation ("New Dimensions"), the second is Imladris Foundation ("Imladris") and the third is Fortius Foundation ("Fortius"). (NOTE: Originally, Fortius was named Multisport Centre for Excellence, and then changed its name. Imladris also changed its name; it was originally Elysium Foundation).
The applications for registration filed by Fortius, New Dimensions, Imladris and CHIMP show that all four were set up by the office of Blake Bromley, a Vancouver lawyer with a reputation for sophisticated tax planning arrangements. The applications for all four were signed by either Blake Bromley or his son, John Bromley.
Over the course of his 30 year career, Bromley claims to have set up 650 charities that handled $2 billion in donations. Since all of these charities were set up by Blake Bromley, and since the directors of these charities consist mainly of Bromley's employees, I refer to them as "the Bromley charities." The largest of these is Charitable Impact Foundation ("CHIMP"), run by Bromley's sons, John and Clif.
One of the significant aspects the $74.7 million gift is that the same people were at both ends. John Bromley, CEO of CHIMP, was also a co-founder of Fortius, according to documents filed with CRA in 2007. Likewise, Christopher Richardson, CHIMP's Vice-President of Finance & Administration was a director of New Dimensions (2006-2009).
New Dimensions Foundation
The three co-founders of New Dimensions were John Bromley, Christopher Richardson and Leslie Brandlmayr, an employee of Blake Bromley.
The role of New Dimensions in the financing of Fortius is that it issued tax-receipts for non-cash donations for a total of $17,885,500. That's the only donation that New Dimensions ever received and then it closed.
If New Dimensions had used the $17,885,000 to directly pay for construction costs of building the sports centre, that would have been good. But that's not what happened. Instead, New Dimension made a loan to Fortius Foundation and then transferred the note receivable on that loan to Imladris. This is clearly indicated in the 2008 financial statements for Fortius Foundation which report that Fortius Foundation owed $17,392,300 to New Dimensions as of September 30, 2008.
In return for the $17.4 million loan, Fortius Foundation gave New Dimensions a mortgage over all its land and assets. This happened while Scott Cousens was a director of both Fortius and New Dimensions. Not only that, the mortgage was transferred to Imladris, mortgage records show. The net effect of the transfer of the mortgage loan is that Scott Cousens' private foundation received the assets that he claimed to have given away as a tax-receipted, charitable gift.
In summary, instead of directly using the $17,885,500 to actually build the sports centre, New Dimensions transferred the entirety of its assets to Fortius Foundation, not as a gift but as a loan. This meant that Fortius became in debt to Scott Cousens' private foundation. Furthermore, the interest rate on the mortgage was set initially at 20 percent per year. Thus, two years before construction of The Sports Centre had even begun, Fortius already owed $28.2 million to Scott Cousens' private foundation. The $28.2 million consisted of $19.8 million plus $8.4 million accrued interest). Eventually, Scott Cousens' private foundation was forced to lower the interest rate from 20 percent to 5 percent, pursuant to a CRA audit.
Even at 5 percent, interest accrued at about $1 million per year so that by 2018, Scott Cousens private foundation was owed approximately $9.6 million in interest alone. Financial statements for Fortius Foundation, show that by 2018, it owed a total of $28.9 million to Imladris.
An important point to note is that when all of this occurred, Christopher Richardson was one of the directors of New Dimensions Foundation. Richardson was recently elected and sworn in as a trustee of Vancouver School Board, despite objections due to the fact that he is deemed an "ineligible individual," not permitted to be a director of any registered charity in Canada because of his involvement in the Bromley charities that have had their charitable status revoked (CTV Sept. 26, Vancouver Sun, Oct. 27 & CTV Oct. 31).
Imladris Foundation
Imladris a private foundation run solely by Cousens, his spouse, sons and other relatives. Imladris has no outside directors. This means that all decisions regarding Imladris are made solely by the Cousens family.
Even though the three charities are legally distinct entities, New Dimensions, Imladris and Fortius must, in my view, be assessed as a whole because of the transactions between them and because Scott Cousens is a director of all three. These three charities made numerous loans between themselves and earned millions of dollars in interest payable on the loans. But far from serving a charitable purpose, these charities burdened the Sports Centre with tens of millions of dollars in debt, setting it up to fail and for the Bromley Charities to benefit from the eventual sale of the sports centre.
Another point to note is that there was never any need for a trio of charities. Donations could have been made directly to Fortius Foundation. But because three charities were involved, transactions between related parties appear to be between unrelated parties and the whole picture of what is actually going on is obscured. Furthermore, it’s not just three charities that were involved. According to my detailed analysis, at least 15 of the Bromley Charities have been involved in gifts and loans with Imladris and Fortius.
According to an affidavit filed by Scott Cousens, CRA again began auditing Fortius Foundation in 2017. This audit went on for four years until September 7, 2021 when CRA informed Fortius Foundation that it stood to lose its charitable status because of "egregious" violations of the Income Tax Act.
Key Dates in the Revocation of Fortius Foundation
The timeline leading to a Federal Court of Appeal decision on October 19, 2022 is significant when one considers that Christopher Richardson signed his candidate declaration to stand for office, on August 22, 2022. Key dates are as follows:
- July 21, 2022 - CRA's Charities Directorate sent Fortius Foundation a notice of intention to revoke its registration as a charity. The notice informed Fortius that its registration would be immediately revoked 30 days after the date of the notice, on August 20, 2022.
- August 18, 2022 - On an "urgent basis," Fortius appealed to the Federal Court of Appeal for an injunction to stop CRA from publishing its decision to revoke the news of Fortius' revocation.
- August 19, 2022 - The Minister of National Revenue agreed not to publish the revocation notice in the Canada Gazette until 30 days after the Court has issued its decision on the motion. In essence, CRA agreed to temporarily keep confidential the negative findings of the CRA audit report.
- October 19, 2022 - The Federal Court of Appeal published its decision to deny Fortius' request for an injunction against CRA.
Christopher Richardson and Fortius Foundation:
- For four years, from 2006-2009, Christopher Richardson was a director of New Dimensions Foundation. The only transaction that this charity ever did was issue tax-receipts for nearly $18 million towards Fortius Sport & Health Centre.
- Richardson was a director of NDF when NDF charged $3.2 million interest on the loan made to Fortius and when NDF transferred the loan for $20 million (the original loan plus accrued interest) to Imladris.
- For nine years, Richardson was also a director of Charitable Impact Foundation ("CHIMP"). In 2018, CHIMP made a gift of $74.7 million to Fortius Foundation. The problem is, as this blog has shown, the $74.7 million "gift" went back to CHIMP in a series of circular, self-cancelling transactions. For more about that, click here.
Photo credit: Jeff Vinnick, The Globe & Mail.
