Dear Friends,
This is to explain why I am being sued for defamation and why I have filed for dismissal.
Over the years, as I have been following the funding of various causes, I have exposed the fact that some of the largest "charitable gifts" in Canadian history are a sham. As The Globe & Mail reported, in some cases, the donor got a tax receipt and got their donated shares back too. That's not a true gift so doesn't deserve a tax receipt.
Here's a few examples of large so-called "gifts" that weren't true in the sense that the "donor" got back "donated" shares, or a tax receipt was issued far in excess of true value:
- $ 15,000,000
- $ 23,000,000
- $ 30,000,000
- $ 30,560,060
- $ 45,175,000
- $ 70,000,000
- $ 74,711,535
That's seven gifts for $288 million.
The above amounts were towards a sports centre and a university:
Despite half a billion dollars in charitable gifts, both Fortius and Quest ended up in deep debt and were sold. The funny thing is, the "debts" were to the same charities that made the "gifts."
The so-called "gifts" for $23 million and $74 million went to Fortius Foundation.
In 2021, I wrote letters to warn the City of Burnaby against paying $26 million in cold hard cash to Fortius Foundation for the sale of its sports centre. At the very least, I urged the City to do more due diligence. Later that year, a defamation claim against me was filed by Fortius's founder. What I didn't know then is that Fortius was under a four-year CRA audit. The very same week that I was sued, CRA sent a letter to Fortius saying that its charitable status would be revoked - but I didn't learn that until two years later.
Fast forward to this year and CRA has now revoked Fortius because of egregious violations (as of July 29 2023). The person who is suing me applied for an injunction against CRA from the Federal Court of Appeal. When that was denied, he applied to the Supreme Court of Canada. Both courts dismissed the matter. Nonetheless, I am still being sued.
I have filed a motion for dismissal. Court is scheduled for December 7 & 8, 2023.
Below, here's some background and more details ...
BACKGROUND
The charity at the centre of this is "Charitable Impact Foundation," originally called "CHIMP Foundation," and known as CHIMP.
CHIMP says that it has received $1.2 billion and claims to be the "fastest-growing" charity in Canada. But, as I have said umpteen times at this blog, there are many signs of monkey business at CHIMP. For example, a few years ago, Deloitte, CHIMP's independent auditor, warned that it could not vouch for $193 million of CHIMP's unlisted securities.
One of the reasons I followed CHIMP is that it is part of a large network of charities, all set up by the same person, Blake Bromley, a tax lawyer, now retired.
Blake Bromley claims to have set up 650 charities that handled $2 billion.
One of the reasons that I am concerned about the Bromley charities is that some of them issue tax receipts for huge amounts. For example, last year, a charity that was originally set up by Bromley issued tax receipts for $512 million for real estate properties. That was the single largest amount of non-cash, tax-receipted gifts made by any charity in Canada last year.
Its not only the Bromley charities that receive gifts of real estate. Last year, another charity issued tax receipts for $139 million for real estate properties. These very large gifts of real estate warrant more scrutiny.
Over the years, I found so many red flags that during 2021 and 2022, I wrote letters to CRA requesting audits of the Bromley charities, including CHIMP.
Since last year, 19 charitied handled by Bromley have been revoked. Most of those were under audit well before I wrote to CRA.
CHIMP and Tides Canada (Makeway)
More than ten years ago, CHIMP first came on my radar because it funded Tides Canada (now called Makeway). The funny thing was, CHIMP’s first gift to Tides Canada was only $9 (nine dollars). Surely that was a typo, I thought, until I dug up CHIMP's tax return and found that CHIMP makes very small gifts to thousands of charities. In fact, CHIMP has made more than 10,000 gifts for $97 or less. More about this in a subsequent post.
My concerns about Tides Canada were two-fold: I was concerned about its activism and its Exchange Fund. While the activism funding got media attention, the Exchange Fund didn’t.
TIDES CANADA EXCHANGE FUND
The Exchange Fund was the first case of circuitous "gifts" that I noticed. The problem with such "gifts" is that they enable a donor to get a tax receipt without making a true gift. Charities should not engage in this at all.
In 2016, I wrote a paper about Tides Canada’s Exchange Fund and presented it to a Senate Committee as part of my testimony on the funding of activism against Canadian pipelines to export Alberta oil. Within weeks, there was an announcement that the Exchange Fund had been closed.
My concern about Tides Canada's Exchange Fund is that some of its transactions were circuitous. For example, an American company based in Pawtucket, Rhode Island, set up a registered charity in Mississauga. The charity issued tax receipts to the Pawtucket company for about $3.5 million and then transferred the entire amount to Tides Canada in Vancouver. If Tides Canada had spent that money on charity in Canada, that would have been great! But that’s not what happened. Instead, Tides Canada forwarded the money back to Pawticket via The Tides Foundation in San Francisco, using the Exchange Fund as the conduit. The American company’s donations did end up in two charities in Pawtucket. However, it does not seem right to me that the company got tax credits which could have reduced its taxes in Canada but then the "donations" went straight back to the US.
Another charity, Sentry Foundation was revoked solely for using Tides Canada's Exchange Fund and yet Tides Canada itself was not revoked. Seems inconsistent to me.
Around the same time as the Alberta Inquiry, I noticed several changes in the funding of activism. One of the top-funded organizations, Sisu Institute, simply closed. As for Tides Canada, it became the #1 top recipient of funds from CHIMP.
TIDES CANADA: CHIMP"s #1 TOP RECIPIENT
Last year, Tides Canada received more funds from CHIMP than any other organization, a total of $8.1 million (including $193,075 for Hollyhock). In total, Tides Canada has received $10.8 million from CHIMP, tax returns show.
Before I go any further, let me be very clear: I do not allege that Tides Canada is part of CHIMP’s monkey business.
But here the thing: If CHIMP wasn’t funding a large number of diverse organizations, the suspicious gifts that CHIMP makes would stick out like a sore thumb, like for example, CHIMP's $74 million gift to Fortius Foundation.
And now, finally, this bring me to why I am being sued…
CHIMP'S $74 MILLION GIFT
In 2019, when I noticed CHIMP’s $74 million gift, I wrote to Fortius Foundation, the recipient, and asked, hey, what’s the $74 million for? Pretty big gift. What are you doing with the money? No reply.
In 2020, Fortius Foundation announced that "pandemic pressures" forced the foundation to sell its sports centre. Huh? I couldn’t believe it. How could they be in any financial trouble having received $74 million just two years earlier? I obtained financial statements for Fortius Foundation and found out that, in fact, by 2017, long before COVID, Fortius already had a "debt" of $94 million. So no, it wasn't COVID that got Fortius into big trouble.
I tried and tried to contact the founder of Fortius Foundation. No response from him nor CHIMP so I wrote to the Mayor & Council of the City of Burnaby and urged them to do more due diligence before giving Fortius Foundation $26 million in cold hard cash for its sports centre. I also went to the RCMP – and I made no secret of that.
In an abundance of transparency, I made it publicly known (in my letter to Burnaby's Mayor & Council) that I had gone to the RCMP. My intention was to give the founder of Fortius every opportunity to correct me if I had said or written anything that was factually incorrect.
In September of 2021, the founder of Fortius filed a defamation claim against me.
THE $23 MILLION TRANSACTION
The founder of Fortius has claimed that he made a gift of $23 million for the sports centre. He told The Globe & Mail that he gave away "most of his personal fortune," including the inheritance of his wife & sons in order to make what Fortius called "the single largest" gift in Canadian sports history. But financial statements tell a dramatically different story.
According to financial records, Fortius started not with a gift but a debt of $23 million on a high interest loan (initially at an interest rate of 20 percent). The founder's family had a private foundation and it had a promissory note (that's like an "I.O.U.") for $23 million. So no, as I see it, there was never any true gift of $23 million.
As for the purported "gift" of $74 million, it is, in my words, a circular, self-cancelling transaction whereby the entire "gift" of $74 million was effectively unwound and the donor charity, CHIMP, got back the entire $74 million.
At the end of May of 2022, the Burnaby RCMP completed and forwarded its report to CRA. Also at the end of May of 2022, my legal counsel filed, on my behalf, a motion for dismissal of the claim against me on the grounds that it is without merit. Also filed, an affidavit (600 pages of exhibits). Not too long after that, on July 21, 2022, CRA notified Fortius that it would be revoked.
CRA AUDIT OF FORTIUS
According to CRA's audit, Fortius Foundation provided undue benefits to its founder’s for-profit business, in two ways: 1) there was an "unwritten expense sharing agreement" whereby the salaries at a for-profit company of the charity's president were being paid for by the charitable foundation, and 2) the foundation effectively provided the sports centre to the for-profit business on a rent-free basis. According to CRA, rent was not collected for six years in a row. CRA calculated that the undue benefits total $12.3 million and characterized Fortius 's violations as "egregious."
CRA audited Fortius Foundation but strangely enough, CRA did not audit Fortius for 2018 when it received the $74 million gift from CHIMP. However, CRA did audit and revoke Homestead on the Hill Foundation, one of the seven charities involved in effectively unwinding CHIMP's $74 million gift. CRA found that Homestead's gift to CHIMP, the only gift that Homestead made over eight years, was part of "a series of pre-determined transactions used to artificially inflate tax benefits for certain corporations and/or individuals and to allow other charitable entities to falsely meet its disbursement quote so that they may avoid revocation." So there we have it.
Never again should any one of the largest “charitable gifts” in Canadian history be a sham.
