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Wednesday, April 24, 2013

The judge didn't buy it

It was ironic: first, the Corporate Services Committee at the urging of the mayor voting unanimously to support retaining an integrity commissioner to enforce a new and improved code of conduct and then, an hour or so later, a ruling by a federal court judge that that same mayor's charity should not receive a stay of execution in losing its charitable status.

I continue to be interested in both issues. While I was on council, I had pushed hard for an integrity commissioner to help us draft and enforce a code of conduct. I thought the matter had been decided in 2009 and needed only to be implemented but apparently not. The new council decided it didn't need a babysitter; it could create its own code of conduct and magically enforce it.

But, with another visit from the ombudsman, and an election in the offing in another year, some have clearly had second thoughts. Maybe it was time to listen to public opinion.

It's hard to say whether the Canada Revenue Agency's (CRA) intention to strip the mayor's charity, Trinity Global Support Foundation, of its charitable status played any part in this. The resistance to an integrity commissioner clearly came from what has been known as Fontana's 8. The proposed actions of CRA in all likelihood created a crisis in the solidarity of that group by challenging the moral authority of its leader. After all, when you've been claiming to help the sick and hungry but the feds cast doubt on those claims, supporters are bound to get a little nervous. Especially when their own credibility, not to mention their re-election chances, are on the line.

No doubt the mayor himself was getting a little edgy as well. The case before the Federal Court of Appeal had been heard five days ago. The judge, J. A. Near, had indicated that he would be releasing a decision the following week.

At issue was whether the charity which Mayor Fontana had been chairing for the last four years and four months could continue to issue tax receipts. Fontana had been brought onto the board at the invitation of his boyhood pal, Vince Ciccone, who was having difficulties with the Ontario Securities Commission. Fontana quickly moved from board member to president of Trinity and then invited some friends and family to join him. His son, Joe Junior became president and Joe Senior took over as chairman of the board from Ciccone who was declaring bankruptcy and being disciplined by the OSC for defrauding investors out of some $28M.

The new board and administration ran a successful business, increasing the tax receipts issued from $72K in 2008, when Fontana joined the board, to $152M in 2011. It helped that, in 2009, it had picked up a charity, the Children's Emergency Fund, that had recently lost its status for consorting with two tax shelters and not directing enough of its donations to its stated charitable activities. The staff of the disgraced charity was taken on to run it as a program of Trinity Global Support Foundation, executive director and all. A year later, Trinity hooked up with the Global Learning Gifting Initiative, a tax shelter that arranged for the purchase of medicine and computer courseware licences at inflated valuations in the form of tax receipts issued by Trinity.

It's the beauty and curse of the internet that eventually these activities come to light. It's hard to avoid the limelight when you have such spectacular successes, especially if you are in public office and the business you are in requires a degree of transparency. Pretty soon people are beginning to ask questions. The questions make their way to the media and the CRA.

The media, in the form of Chip Martin and the London Free Press, had begun to ask questions publicly in the summer of 2012. When the CRA began its investigations, I don't know. Suffice it to say that it seemed to be basing its decision to remove charitable status on returns prior to 2011. A few local bloggers also followed developments with interest.

In any case, CRA notified Trinity on February 1, 2013 that it would be revoking its tax receipting privileges. Trinity was understandably not happy with that decision. It wanted an extension of time while it pulled together a case contesting the decision. That meant it had to approach the Federal Court of Appeal to ask for an extension.

The bases for appeals to the Federal Court in these situations are limited. You have to convince the judge that a) the issue is serious; b) the applicant will experience irreparable harm; and c) the balance of convenience favours granting the request.

Trinity had its day in court last Thursday. The judge agreed that the issue was a serious one. No argument there.

But on the matter of irreparable harm, the judge begged to differ. Although Trinity argued that foodbanks would be devastated and children would go hungry, the judge was not convinced. Trinity, by its own admission, still had some liquid assets which it could disperse. It might have to give out somewhat smaller amounts but, given the inflated valuations of what was dispersed, who knows?

And it seems that the program dealing with hungry kids is already looking to break with Trinity. Although this was not disclosed during the proceedings, Show Kids You Care, has already notified its “partners” that it will be going its own way without Trinity effective this summer.

The other argument Trinity had put forward was that its reputation, which had already been harmed by the London Free Press and a couple of local bloggers, would suffer further injury by the immediate revocation of its status. There too the judge disagreed.

“It is clear from the evidence that the reputation of the Foundation has already been subject to intense public scrutiny for reasons distinct from the notice of intention to revoke,” he wrote. “As such, I see no basis upon which to conclude that any possible further harm to the Foundation's reputation will be such as to amount to irreparable harm.”

In short, the public is already suspicious. There is little reputation left to harm. 

In light of these considerations, the balance of convenience was not an issue, the judge decided. I'm not entirely sure what that means, but I think the upshot is the suffering of Trinity pales in comparison to the harm that is done to the integrity of the concept and institution of charity in our society by the use of tax shelters

The appeal was dismissed with costs assigned to the appellant.

There is always the Supreme Court, of course. But first you need leave. And it's expensive.

But who knows? Perhaps the costs can be used to reduce one's taxes.

10 comments:

Truth Serum said...

I know no one with a full deck or a full marble bag would would buy Joe Fontana's baloney or that of his charity's lawyer.

Anonymous said...

Oh what a tangled web we weave if only to decieve and there is a lot of that going on!

R. Cain said...

With a thoroughly discredited Mayor at the helm, the good ship London will continue to drift down the river (Thames) for at least the next year and a half.
This is a shame because London is functioning far below potential.
There must be alternatives/solutions to this quandary.

Anonymous said...

Truth will set you free, free from elected office. It might put you in jail too.

Vicki Van Linden said...

Thanks for playing your part in investigating the apparent nefarious deeds of this group, Gina.

I know how difficult it is to fund raise for worthy causes. Now I see what so many of us have been doing wrong. We have been appealing to people's good hearts and altruistic natures to help the vulnerable and relieve suffering. Instead we could have been dreaming up ways to help tax payers cheat the system.

Groups like these tax shelter scams are an insult to the many hard-working and ethical groups who rely on donations to do good work.

Why's woman said...

There seem to be only 2 or 3 recipients of funds/donations/goods from Trinity Global which have had their names in the news (and I feel sorry for them to be associated!).

Given the millions and millions of dollars that go through Trinity Global, there must be many - MANY! - recipients of funds/donations/goods on a list somewhere. Does the list exist? Did the judge get to see it? Has any reporter spoken with, perhaps, a full dozen of the organizations to see if they know they are really getting funds/donations/goods from Trinity Global?

It seems to me that, if TG is a legitimate charity, it would want to hand over to a journalist its long list of recipients, so that they could be checked and found to be able legit.

No list, no legitimacy?

Hope you are having a good day!

Best regards,

Why's Woman

Rod Morley said...

So waht you are saying is that our mayor's change of heart about an Integrity Commisioner had nothing to do with London politics but our Mayor's standing with a disgraced charity?

Anonymous said...

The Honorable Joseph Fontana repeatedly assured us that he sleeps well at night. I am relieved to know that London's Mayor and Chief Magistrate gets lots of rest.

Anonymous said...

Shocked, shocked to find out that the Mayor was involved in a crooked charity and that the crooked charity invested in a scheme run by the Mayor`s boyhood chum. Wonder what he is taking from the city`s cookie jars

Anonymous said...

This is the best piece of investigative reporting I have seen on this matter. The Free Press needs to hire you.