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.

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.

The End is Nigh

ABC District’s CCAA (bankruptcy protection) is nearing its end. On January 5, 2015 ABC District declare itself in a “sufficient cash flow shortage.” That particular baffle-gab (re: bullshit) was the first volley in a series of misses and misdirections from Distrct and Synod leadership when the insolvency was announced. Of course it only took a couple of weeks for District and Synod to put a clamp on communications and rig for silent running.

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.

Review Task Force Report – Conclusion – Pages 99-101

In early 2015, the ABC District Board of Directors initiated a Task Force to identify factors contributing to the CEF crisis. The scope of the Task Force mandate was broad and complex. It included analyzing not only financial and legal, but also underlying cultural, structural, and procedural principles and practices that helped set the stage for the current crisis. The Review Task Force said, “Identifying, understanding, and addressing these is vital to help our church walk wisely into the future.” These are pages 99 to 101, and the end of the report.

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.