Happy Triskaidekaphobia Monday

There are Mondays, and then there are Mondays. And tomorrow is the 13th. It’s a trifecta of bad.

This is just a reminder that Monday, August 13 is the day Lutheran Church Canada will get a sense if its actions as a religious corporation were legal or not. If things have gone this far, probably not.

Alberta Securities Commission Hearing

Two pastors, three laymen, the ABC District, and Synod itself – Lutheran Church Canada – are facing an Alberta Securities Hearing tomorrow.

Why is this happening? Because there is concern that regulations and laws were broken when tens of millions of dollars were emptied from the Church Extension Fund to a real estate investment called Prince of Peace Village.

We’re likely to hear there were unchecked conflicts of interest and  breaches of fiduciary duty.  There could eventually be a referral to the crown for criminal charges. Church leadership is treading water in a deep legal cesspool – they’d rather not switch on the lights, for obvious reasons.

What does it mean if the entire church body is complicit in fraud? Well, it’s within the realm of possibility that charitable status for the church body could be in jeopardy. You can bet no one is saying any of it out loud. It’s a discussion you should be having where you live. My own sense is that LCC will be treated like any other corporation. Then again, the church doesn’t garner the respect it once did…for obvious reasons…

Here are some reminders of what the church leadership is facing tomorrow”

Take notice that orders or settlements made by the Commission may form the basis for parallel orders in other jurisdictions in Canada. The securities laws of some other Canadian jurisdictions may allow orders made in this matter to take effect in those other jurisdictions  automatically, without further notice to you.

Docket: ENF-010583 – Page 1 – Reciprocation

This means securities commissions across Canada may be able to adopt the Alberta Securities Commissions findings and levy similar sanctions in their jurisdictions. Synod will need to follow up in all the provinces to clarify its legal status once the dust settles. Whether it will or not is an open question. I’m guessing after this experience, Synod may be more attentive to “compliance issues.” It’s always been a big deal Synod is involved. This was never about just what was happening in Alberta and BC. Remember, Synod’s own documents say there is but ONE body. What happens in ABC District doesn’t necessarily just stay in ABC District…

Staff of the Commission allege that the Respondents breached Alberta securities laws in connection with a long-term, large-scale investment program. …However, while representing the investments to be safe, diversified, and “guaranteed”, the Respondents placed the overwhelming
majority of the invested funds into a high-risk, loan-defaulting, speculative land development project without appropriate disclosure to investors. 

Docket: ENF-010583 – Page 2 – Paragraph 1 – Overview

Ouch can be spelled two ways. ouch, and Ouch. That’s an Ouch. Why so Ouchy? Because it’s a pile-on. Let’s tabulate the highlights so we can see how the words stack up in the mind, rather than the page:

LONG TERM
LARGE SCALE
HIGH-RISK
LOAN-DEFAULTING
SPECULATIVE LAND DEVELOPMENT
WITH NO APPROPRIATE DISCLOSURE

Actually, looking at that again, that’s what honest advertising would have looked like when ABC district was selling CEF. Yeesh.

Here’s the crazy thing: this is all from JUST the Notice of Hearing. These are general headings. When we see the list of charges, it’ll be significantly uglier and more detailed.

Sleep tight Lutheran Church Canada. Tomorrow is a big day.

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

The Wartburg Letter

Twenty-five years ago the Rev. Paul DeBlock, and his banker brother Joel, wrote a paper questioning the financial and theological approach LCC was taking toward missions. Why do Synod and Districts spend so much money on a growing administration when membership is in steady and predictable decline? Why is spending up while membership dropped, putting increasing financial pressures on congregations.

The DeBlock brothers’ paper was censured and buried by Synod officials as damaging.

Of course, the District President and Synod president at the time were right: the contents of the paper painted a picture of a church that demanded ever more from a shrinking donation base. That didn’t even address the “why are we doing this because administration isn’t a mission.” I was a full-time journalist in those days. I read the paper did some research to confirm the findings. My follow-up research was revealing. I couldn’t have access to public documents like budgets, and no official at the time would speak on the record.

Let’s be generous and say it was clear enough in 1993 that ABC District was taking financial actions that were ill-advised. District’s behaviors were bad enough that I decided to write a little newsletter to let people know that ABC District and Synod were breaking down and heading in a direction that was a serious risk for financial and spiritual catastrophe. That was in 1993.

Fast-forward 25 years, and one of my co-writers sent me the front page of the two editions of “The Wartburg Letter.” I’m sure there is one person out there who has just said, “I knew it!” The Wartburg Letter was a tempest in a teapot. It was a minor controversy at the time.

Looking back, I’m genuinely shocked how right I got it 25 years ago. Then again, I was really echoing the essay, research, intellect, and insights of the formidable DeBlock brothers.

Glancing over the front page of the Wartburg Letter, I remember the excitement of researching and writing the articles, having editorial meetings to focus on the angle of stories, and verifying the information we were publishing was correct. I recall the disappointment of having questions rebuffed by District staff. Granted it was a long time ago, but the attitudes and behaviors that lead to the collapse of CEF/DIL were firmly in operation in 1993. You can’t get to 2015’s collapse without all the decisions and actions District took in the 1990’s. The church’s problems have been decades in the making.

The March 1 cover is a personal favourite. In 1991 Synod issued a questionnaire about how much people trusted Synod and District financial management. The results of the survey were never published. If the results were that people trusted Synod, that would be exposed as a mistake. If the results were that people didn’t trust Synod, then it makes sense they buried the report. Either way, the perspective of history really doesn’t improve the picture for ABC District or Lutheran Church Canada.

If nothing else, it’s an interesting insight into just how early problems in Synod and District were identified, published, and ignored a quarter century ago.

Frankly, I’m a little shocked how well they hold up. Neither cover seems out of date.


Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

Unwanted Attention

So, yes, it’s another church scandal. The roman Catholics kicked things off with the endless horrors and abuses at Mount Cashel Orphanage. The Anglicans dragged out their scandal over decades of Residential Schools. To round out the trifecta of scandal, LCC dropped tens of millions of church members money into a black hole.  Not a real black hole. Real black holes require physics. LCC can’t manage a balance sheet let alone physics.

One thing LCC can do: get media attention.

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

Save the Date for the Alberta Securities Commission: August 13, 2018

It’s been a long time, but hey, we’ve been busy retooling our life from deaf, to #deafnotdeaf. Mrs. Solagratia’s Cochlear implant is a miracle and we’re just overjoyed and under-grateful. There just isn’t enough gratitude.

The funny thing about Cochlear Implants is that you mark your life by calendar dates. For example, candidacy day (the day you find out if you get a CI or not) was October 5. Implant surgery was December 12. Activation was January 29. Each date has its own moments, anxieties, and story.

The ABC District and by Extension LCC has a red-letter date its own: August 13, 2018. That’s the day the Alberta Securities Commission is going to hold a hearing because, the ASC says…

“1. Staff of the Commission allege that the Respondents breached Alberta securities laws in connection with a long-term, large-scale investment program. The program generally was designed to provide a means for church members to invest and earn interest on funds by pooling and loaning them to Lutheran churches and schools for capital improvement projects. However, while  representing the investments to be safe, diversified, and “guaranteed”, the Respondents placed the overwhelming majority of the invested funds into a high-risk, loan-defaulting, speculative land development project without appropriate disclosure to investors. The program and the corporate Respondents collapsed financially in early 2015, with court protection under the Companies’ Creditors Arrangement Act (CCAA) being sought and granted.

2. Staff allege that the long pattern of positive representations, without including necessary risk related disclosures, amounted to misleading statements. The Respondents knew or ought to have  known that the information withheld from investors was material, and meant that the statements which had been made were misleading. The Respondents knew or ought to have known that the price or value of the securities in issue was dramatically affected by the non-disclosures.

3. Investors in the program have lost many millions of dollars as a result of its collapse, with the exact value not yet determined. In recognition of investors’ losses and in order not to deplete assets  that may be available in ongoing CCAA proceedings, Staff will seek no monetary administrative penalties against the corporate Respondents.”

So, in spite of the many protestations of being nice people, the Alberta Securities Commission alleges ABC District breached securities laws and mislead church members/depositors. In order NOT to cause more loss to the investors, the ASC isn’t going to go after money from District. Which is nice. It’s more than District or Synod have ever done for depositors in meaningful terms (any defence to the contrary is silly because…well…the ASC says “breached securities laws,” and depositors are suing District, so there’s that.

As is the way in LCC, the gospel will take the back seat; lawyers and the courts will have the final say.

Click here for the entire Alberta Securities Commission Document

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.