CEF: Higgerty Law Statement of Claim Section R – Liability of ABC District Officers and Directors

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.

The allegations in this section can be summed up by the “Negligence” section which is started by this paragraph:

214. It was reasonably forseeable that failure to take reasonable precautions with respect to the investment of monies received from the Plaintiffs and the putative Class and Sub-class members would result in the loss of those monies and damage to the Plaintiffs and the Class and Sub-class members.

The individual portions of this section detail specifics of “who did what when” .

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

R. Liability of ABC District Officers and Directors

a. Negligence

214. It was reasonably forseeable that failure to take reasonable precautions with respect to the investment of monies received from the Plaintiffs and the putative Class and Sub-class members would result in the loss of those monies and damage to the Plaintiffs and the Class and Sub-class members.

215. Further:

a. all of the ABC Officers and Directors were members of congregations of the LCC and held positions of leadership in their congregations;

b. at all times material hereto, all of the Presidents, Vice Presidents and Secretaries of the ABC District were Directors of the ABC District and ordained ministers in the LCC, save and except for Rhonda Buck, who was secretary from 2012-2015;

c. the Officers and Directors of the ABC District knew, or were willfully blind to the fact that funds deposited to the CEF had a uniquely religious purpose and that the funds were to be used for building churches and schools to carry out the ministry of the Lutheran faith (the CEF Trust) and, or in the alternative, to support the mission and ministry of congregations and agencies of the LCC (the CEF Quistclose Trust).

d. the Officers and Directors of the ABC District knew that the vast majority of the depositors to the CEF were fellow members of Lutheran congregations, and that those who were not Lutheran were members of other Christian faiths.

216. By virtue of the foregoing, the ABC Officers and Directors owed the Plaintiffs and the putative Class and Sub-class members a common law duty of care to exercise the care, skill and diligence of a reasonably prudent person in comparable circumstances and specifically, to use the monies on deposit in the CEF for the purposes of:

a. investment in accordance with the mandate and policies of the ABC District’s Church Extension Program, and, or in the alternative,

b. assisting in the mission and ministry of congregations and agencies of the LCC.

Liability of 1997-2000 ABC Board of Directors and Officers

217. The 1997-2000 ABC Board of Directors and Officers breached their duty of care to the Plaintiffs and the Class and Sub-class members by way of conduct including, but not limited to:

a. With respect to the POP Village Lands and the CEF POP Village Advances, by way of authorizing, directing and approving the conduct set out in paras. 43 – 60 herein;

b. With respect to the Shepherd’s Village CEF Loans, by way of authorizing, approving and directing the conduct set out in paras. 97 – 107 herein;

Liability of 2000-2003 ABC Board of Directors and Officers

218. The 2000-2003 ABC Board of Directors and Officers breached their duty of care to the Plaintiffs and the Class and Sub-class members by way of conduct including, but not limited to:

a. With respect to the POP Village Lands and the CEF POP Village Advances, by way of authorizing, directing and approving the conduct set out in paras. 43 – 60 herein;

b. With respect to the Shepherd’s Village CEF Loans, by way of authorizing, directing and approving the conduct set out in paras. 97 – 107 herein; Liability of 2003-2006 ABC Board of Directors and Officers

219. The 2003-2006 ABC Board of Directors and Officers breached their duty of care to the Plaintiffs, the Class and Sub-class members by way of conduct including, but not limited to:

a. With respect to the POP Village Lands and the CEF POP Village Advances, by way of authorizing, directing and approving the conduct set out in paras. 43 – 60 herein;

b. With respect to the Shepherd’s Village CEF Loans, by way of authorizing, directing and approving the conduct set out in paras. 97 – 107 herein;

c. With respect to the transfer of the POP Village Lands to ECHS, and the extension of the POP Village CEF Loans, by authorizing, directing and approving the conduct set out in paras. 61 – 81 herein.

Liability of 2006-2009 ABC Board of Directors and Officers

220. The 2006-2009 ABC Board of Directors and Officers breached their duty of care to the Plaintiffs and putative Class and Sub-class members by way of conduct including but not limited to:

a. With respect to the transfer of the POP Village Lands to ECHS, and the extension of the POP Village CEF Loans, by authorizing, directing and approving the conduct set out in paras. 61 – 81 herein;

b. With respect to the Prince of Peace Congregation Loan, by authorizing, directing and approving the conduct set out in paras. 82 – 90 herein;

c. With respect to the Strathmore Loan, by authorizing, directing and approving the conduct set out in paras. 91 – 95 herein; and

d. With respect to the Shepherd’s Village CEF Loans, by authorizing, directing and approving the conduct set out in paras. 97 – 107 herein.

Liability of 2009-2012 ABC Board of Directors and Officers

221. The 2009-2012 ABC Board of Directors breached their duty of care to the Plaintiffs and putative Class and Sub-class members by way of conduct including but not limited to:

a. With respect to the Prince of Peace Congregation Loan, by authorizing, directing and approving the conduct set out in para. 88 – 90 herein;

b. With respect to the Shepherd’s Village CEF Loans, by authorizing, directing and approving the conduct set out in paras. 97 – 108 herein.

Liability of 2012-2015 ABC Board of Directors and Officers

222. The 2012-2015 ABC Board of Directors and Officers breached their duty of care to the Plaintiffs and Class and Sub-class members by way of conduct including but not limited to:

a. With respect to the Shepherd’s Village CEF Loans, by authorizing, directing and approving the conduct set out in paras. 97 – 108 herein.

223. The ABC Board of Directors and Officers breached their duty of care to the putative Class and Sub-class members by authorizing, directing and approving actions and schemes of the ABC District which they knew were dishonest and fraudulent, or in the alternative they were willfully blind to the dishonest and fraudulent schemes of the ABC District, for the purpose of preferring or promoting their own personal interests and, or in the alternative, the interests of the POP Congregation and, or in the alternative, the interests of SVML and, or in the alternative, the interests of ECHS, and not the interests of the ABC District or the CEF depositors. Further, the ABC District Officers and Directors who were in conflicts of interest as previously described failed to disclose them.

224. Further, the actions of the Officers and the Board of Directors of the ABC District were themselves dishonest and fraudulent in that they knowingly authorized, directed and approved risks which they knew that the ABC District had no right to take, resulting in prejudice to the CEF depositors, in circumstances where the Officers and Directors were in undisclosed conflicts of interest.

225. As a result of the foregoing, the Plaintiffs and the putative Class and Sub-Class members have suffered damages and loss.

b. Knowing Participation in a Breach of Trust

226. The Officers and Directors of the ABC District knew of the existence of the CEF Trust and the CEF Quistclose Trust. Alternatively, they were willfully or recklessly blind to the existence of the CEF Trust and the CEF Quistclose Trust.

227. The Officers and Directors of the ABC District caused, facilitated or participated in the breach of trust by the ABC District by knowingly approving, directing and assisting in the dishonest and fraudulent schemes of the ABC District described in paragraphs 153 – 157 herein, or by authorizing, directing and approving knowingly wrongful risks which they knew the ABC District had no right to take, resulting in prejudice, loss and damages to the Plaintiffs and the Class and Sub-class members.

228. In the alternative, the Officers and Directors of the ABC District caused or facilitated the breach of trust by the ABC District by approving, assisting and participating in the ABC District’s schemes in circumstances where they were willfully or recklessly blind to the dishonest and fraudulent nature of the ABC District’s schemes, resulting in prejudice, loss and damages to the Plaintiffs and the Class and Sub-class members.

229. By virtue of the foregoing, the Plaintiffs and the Class and Sub-Class members have suffered damages and losses.

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