CEF: Higgerty Law Statement of Claim Section N – Liability of Encharis Community Housing and Services and the Officers and Directors of ECHS.

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.

In this section the statement of claim alleges –

• ECHS and ABC District were run by the same people
• Both groups were subject to the LCCFM rules when operating CEF
• All of them were LCC members,
• these people executed various fraudulent schemes including the POP loans,
• they’re liable for these actions.

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.

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From Higgerty Law Statement of Claim

N. Liability of Encharis Community Housing and Services and the Officers and Directors of ECHS.

178. ECHS and the ABC District were at all times material hereto under common control.

179. Further:

a. ECHS and the ABC District and their respective Officers and Directors were subject to the same governance and administration policies established by LCCFM with respect to funds deposited in the CEF;
b. ECHS and their Officers and Directors knew of, or were willfully blind to, the existence of the CEF Trust or in the alternative, the existence of the CEF Quistclose Trust; and
c. All of the Officers and Directors of ECHS were members of a Lutheran congregation.

180. ECHS and its Officers and Directors knew or were willfully blind to the fact that:

a. ECHS was insolvent and operating at a deficit, and that ECHS had no reasonable prospect of repaying the POP Village CEF Loans;
b. The POP Village Lands had been purchased and developed with monies from the CEF Trust or from the CEF Quistclose Trust, that the proceeds of the POP Village CEF Loans originated in the CEF Trust or alternatively with the CEF Quistclose Trust, that the POP Village Lands had been transferred to ECHS, and the POP Village CEF Loans made to it by ABC District, in breach of the CEF Trust or alternatively the CEF Quistclose Trust;
c. The POP Village CEF Mortgage Loans were fraudulent and dishonest schemes, in that they were knowingly advanced by the ABC District to ECHS for the purpose of divesting the ABC District of the failing POP Village Development and its associated financial liabilities, and instead recording the POP Village CEF Mortgage Loan as an asset in the CEF mortgage portfolio for the benefit of ECHS and not for the benefit of the beneficiaries of the CEF and CEF Quistclose Trusts;
d. The proceeds of the Strathmore Loan originated in the CEF Trust or the CEF Quistclose Trust, and that the extinguishment of the Strathmore Loan deprived the CEF Trust of the CEF Quistclose Trust of the Strathmore Loan receivable, in breach of the CEF Trust and the CEF Quistclose Trust,
e. The transfer of the Strathmore Lands to the ABC District for $1.00, and the extinguishment of the Strathmore Loan payable by ECHS to the CEF, was a fraudulent and dishonest scheme, in that it deprived the CEF Trust of the Strathmore Loan receivable, it was for the benefit of ECHS and not for the benefit of the beneficiaries of the CEF and CEF Quistclose Trusts, all of which was done pursuant to a dishonest and fraudulent scheme which was for the benefit of ECHS and not for the benefit of the beneficiaries of the CEF Trust and the CEF Quistclose Trust, and which constituted a risk and a prejudice to the interests of the beneficiaries of the CEF and Quistclose Trusts that ECHS and its Officers and Directors knew that the ABC District was not entitled to take.

181. ECHS and its Officers and Directors are liable to the Plaintiffs and the Class and Subclass members for knowingly participating in and facilitating the breach of trust by the ABC District.

182. Further, ECHS and its Officers and Directors are liable to the Plaintiffs and the Class and Sub-class members for knowing receipt of the POP Village Lands and the proceeds of the POP Village CEF Loans acquired in breach of trust, and are a constructive trustee or alternatively a resulting trustee of the POP Village Lands and the proceeds of the POP Village CEF Loans for the benefit of the Plaintiffs and the Class and Sub-class members.