This article is part of the series from the Higgerty Law statement of claim. You can read what a statement of claim and a Quistclose Trust is in the first article in this series.
This portion of the statement alleges –
- the Shepherds Village Loans were made for the construction of 75 seniors condo housing units.
- a number of people in positions of authority were in an inherent conflict of interest,
- that the loans were not consistent with the CEF mandate,
- the loans were contrary to the CEF Quistclose Trust,
- ABC District and/or ECHS, forgave $12,575,685.00 of the Shepherd’s Village CEF Loans and in so doing deprived CEF and the CEF Quisclost Trust of those funds,
- that LCC and/or LCCFM knew of and approved of this forgiveness or were wilfully blind to it
Please note that these are allegations only and this case has not been adjudicated in a court of law. As always, if you have any legal questions or need legal advice please consult appropriate legal counsel.
From Higgerty Law Statement of Claim
I. The Shepherd’s Village Loans
97. On July 28, 1999, Shepherd’s Village Ministries Ltd. (“SVML”) was incorporated for the purpose of acquiring acreages of real property in and about Valleyview, Alberta, and developing 75 seniors’ condominium housing units (the “Shepherd’s Village Lands”).
98. From 2004 to 2005, Chowne and Prowse Chowne were the solicitors for both SVML and ABC District
99. From 2006 to 2013, Taman and Bishop & McKenzie were the solicitors for both SVML and ABC District.
100. Between 1999 and 2014, ABC District advanced to SVML either directly or indirectly through ECHS, CEF monies in the total amount of approximately $17,000,000.00 for the purpose of acquiring and developing the Shepherd’s Village lands (the “Shepherd’s Village CEF Loans”).
101. LCC and/or LCCFM were aware of and approved the ABC District’s decision to make the Shepherd’s Village CEF Advances to SVML. Alternatively they were willfully blind to the said decision.
102. Beginning in 2005, ABC District and SVML were under common control, in that officers and/or directors of ABC District were also officers, directors and/or members of SVML, including (but not limited to): Mark Ruf, Judith Burns, Harold Haberstock and Kwang Soo Kim in 2005, Harold Haberstock, Judith Burns and Kwang Soo Kim in 2006, Donald Schiemann, Harold Haberstock and Judith Burns in 2007, Donald Schiemann and Mark Ruf in 2008, Donald Schiemann and Jim Kentel in 2009, and Donald Schiemann, Mark Ruf and Jim Kentel from 2010 through 2013. Further, from 2007 through 2013, Donald Schiemann was the President of the ABC District and at the same time the Vice-President of SVML.
103. By virtue of the foregoing, the ABC District, and its Officers and Directors including Mark Ruf, Judith Burns, Harold Haberstock, Kwang Soo Kim, Donald Schiemann and Jim Kentel were in a conflict of interest with respect to the ABC District’s dealings with SVML and failed to protect, or in the alternative adequately protect, the interests of the depositors to the CEF.
104. As of November 6, 2006, Taman was the solicitor for SVML.
105. The Shepherd’s Village CEF Loans were contrary to the mandate of the ABC District Church Extension Program and the terms of the CEF Trust, in that they were not made for the purpose of building churches and/or schools in which to carry out the ministry of the Lutheran faith, but rather for the purpose of enabling SVML to engage in speculative real estate development.
106. Further, the Shepherd’s Village CEF Loans were contrary to the policies and procedures of the ABC District Church Extension Fund, in that:
a. SVML was not a “congregation of the ABC District in good standing” nor an
institution or entity of the LCC whose constitution, policies and practices were consistent with those of LCC;
b. The loan-to-value ratio in respect of the Shepherd’s Village CEF Loans was greater than that which would be commercially acceptable;
c. The Shepherd’s Village development was commenced and continued in the absence of any, or any reliable, financial projections;
d. SVML lacked the experience and qualifications to bring the Shepherd’s Village development to successful completion;
e. SVML had no ability to service or repay the Shepherd’s Village CEF Loans;
f. SVML did not and was not required to provide financial support to ABC District and/or LCC in exchange for the Shepherd’s Village CEF Loans;
g. The Shepherd’s Village CEF Loans were unsecured or alternatively inadequately secured;
h. The officers of SVML were not required to sign Loan Repayment Agreements with ABC District in respect of the Shepherd’s Village CEF Loans;
i. Shepherd’s Village was not required to make a commitment to promote Church Extension deposts among its members or others;
j. SVML was not required to submit financial statements to the ABC District, or alternatively the ABC District failed to scrutinize those financial statements to assess the risk to the Shepherd’s Village CEF Loans.
107. Further, the Shepherd’s Village CEF Loans were contrary to the terms of the CEF Quistclose Trust in that:
a. SVML was not a congregation or agency of the LCC;
b. The loan-to-value ratio in respect of the Shepherd’s Village CEF Loans was greater than that which would be commercially acceptable;
c. The Shepherd’s Village development was commenced and continued in the absence of any, or any reliable, financial projections;
d. SVML lacked the experience and qualifications to bring the Shepherd’s Village development to successful completion; and
e. SVML had no ability to service or repay the Shepherd’s Village CEF Loans;
108. Between 2011 and 2014, ABC District and/or ECHS, forgave $12,575,685.00 of the Shepherd’s Village CEF Loans, thereby depriving the CEF Trust and the CEF Quistclose Trust of those funds.
109. LCC and/or LCCFM were aware of and approved the forgiveness of the Shepherd’s
Village CEF Loans. In the alternative they were willfully blind to said facts
ANO / Lutheran Watch 