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Sunday, May 5, 2013

Putting London on the map

When Joe Fontana decided to resign from his position as MP for London North Centre in order to take a run at the mayoralty race in London in 2006, he announced that he would “put London on the map.” 

It’s now 2013, and indeed he has. Not by bringing the world figure skating championships to London—that had already been done by the council that served until 2010 under the leadership of former mayor Anne Marie DeCicco Best—but by the distinction of having headed up the largest charity in Canada, an organization which on Friday had its charitable status revoked.

That's because, according to the Canada Revenue Agency (CRA) news release, Trinity Global Support Foundation, had been involved in activities that weren't all that charitable. While Trinity had been boasting about the thousand of lives it was saving through the provision of antiretroviral drugs for AIDS sufferers in Africa and the Carribean, it had in fact been inflating the value of those drugs, if indeed they had been delivered, to allow “donors” to escape paying taxes. While Trinity claimed to be feeding hungry school children, it failed to mention that it had been feeding the pockets of its directors and related individuals and corporations with hundreds of thousands, perhaps millions, of dollars.

And that's while Trinity was relatively small potatoes. The CRA based its audit on the period from 2007, when Trinity was first set up the mayor's childhood friend and former business partner Vince Ciccone, until May 31, 2010. Fontana was recruited as a board member at the end of 2008, quickly became president, and then moved to chairman of the board to let his son, Ugo, take over the presidency. Over that period, according to the CRA, Trinity had collected some $25M in cash and “in kind” donations for which it issued tax receipts. The following year, it would collect about $72M and last year, $152M. Those more lucrative years seem not to be included in the audit.

Still, even on that reduced scale, the case for revocation becomes pretty compelling. Trinity had teamed up with a tax shelter, Mission Life Financial Inc. Together, they drummed up $1.13M in cash donations and paid themselves $1.03M. Somehow, those cash donations turned into $16M in pharmaceuticals, at least on the tax receipts issued to donors. The CRA refers to these receipts as “grossly inflated”. Indeed.

Another scheme was Canadians Care whereby donations to Trinity were “invested” in Ciccone's group of companies. In 2010, Ciccone declared bankruptcy leaving his investors without their capital investment and no sign of the 20% return on investment promised. Last fall, Ciccone reached a settlement with the Ontario Securities Commission (OSC) after promising to pay back his investors $15M, to stop dealing in securities, and paying a penalty of $750,000 and a fine of $100,000 to the OSC. It is doubtful that any creditors, including Trinity which forked over $7M to Ciccone, will ever see their money.

At the hearing at which Trinity attempted to retain its charitable status, Trinity lawyer Duane Milot argued that Trinity had learned from its mistake about investing in Ciccone's business; it had only done so because Ciccone had promised a high rate of return. It a tough argument to buy, since Ciccone himself was on the board of Trinity, and one of the people making the pitch for investing in his group of companies was none other than Joe Fontana, chairman of the board of Trinity. Not exactly arm's length.

Somehow, about $865,000 of those “leveraged” donations ended up in the pockets of individuals and organizations related to Trinity's directors. Ciccone himself got $325,000 for arranging the deal and a partner a similar amount. Still, Milot had suggested that Trinity should retain its charitable status so that it could recoup the losses.

Recently, someone suggested to me that, as chairman of the board, Fontana could not really be expected to know about these activities; he would be operating at too high a level to give oversight to the details. But the audited statements reveal that over those early days of his tenure, Fontana was paid $41,000 in consulting fees for promotion, advice, communications and government relations. His son, Ugo, received over $62,000 as president. Surely one of them would have known what was going on!

The CRA media release is very brief and short on details. Only 223 words are devoted to dealing with the specifics of the case; the remainder is a standardized statement for all cases of revocation. It names no individuals, only organizations. And it doesn't deal with the years 2011 and 2012 when Trinity became the largest of Canada's 86,000 charities, issuing receipts more than three times the next in line.

Fortunately, local media has been more forthcoming. Chip Martin of the London Free Press has dealt extensively with this case even before the CRA issued its warnings to Trinity. His investigative work has shone a light on matters which are usually dealt with behind closed doors.

Martin's reports have been picked up by media outlets around the world. Thanks to the activities, alleged and founded, of our mayor, London Ontario is indeed “on the map.”

Too bad it's not in a good way.

The following is a list of some of the articles by Chip Martin dealing with Trinity.
Fontana-run charity pulls in $152M in gifts
Feds yank tax shelter-linked charity’s status
Fontana-led charity cuts tax shelter tie
Feds target charity chaired by Fontana
Mayor’s integrity takes another body blow
Trinity’s claim gobsmacks agency official
Fontana charity loses fight against taxman
Fontana pocketed $41K from his charity, CRA says
Trinity's astonishing growth caught CRA's eye
Fontana's connections draw scrutiny
LFP 'hot on my trail,' mayor says
Eyebrows raised over Fontana associates
Fontana-led charity threatens lawsuits


Solid Gold Casino said...

Trinity Global Support Foundation's PURPORTED Mandate:

* Assist in the relief of poverty
* Support children and youth programs
* Support the advancement of spiritual tenets and teachings

The real one they neglected to mention:

* To line the pockets of its directors, officers and associated cronies,
including London Mayor Joe Fontana

R. Cain said...

He did say that this is the City of Opportunity.

Anonymous said...

wonder where the missing $7 M went? I would bet it is off shore in an account in the names of Fontana and Ciccone.

Gord Drimmie said...

It may not be public information...but I would sure love to see a list of donors to Trinity. Specifically, I'd be interested to know if Mr Fontana - or any other Board members or associates - were contributors and were therefore gaining outsized tax credits in return for undersized donations. It would really be interesting because it's a given that all those recent inflated tax receipts will be cancelled by the CRA leaving contributors owing the Government a lot of money.

Anonymous said...

Hey Gord, starting to see the light about JoFo?

Barry Wells said...

"The TGSF operates under the guidelines and regulations of the Canadian Revenue Agency. It will continue to do so. Its financial statements are audited and public." ~ Mayor Joe Fontana, July 24, 2012