CEF/DIL – ASC Notice of Hearing

When you sell investments to the general public, there are rules you must follow to ensure that people make informed decisions with their savings and that what they buy is what they get.

When you don’t follow the rules, tell them one thing when the reality is something else, and deprive people of their investments – the left-hand kingdom of God’s authority may weigh in to do God’s work.

For rulers are not a terror to good conduct, but to bad. Would you have no fear of the one who is in authority? Then do what is good, and you will receive his approval, for he is God’s servant for your good. But if you do wrong, be afraid, for he does not bear the sword in vain. For he is the servant of God, an avenger who carries out God’s wrath on the wrongdoer. Romans 13:3-4

district-logo-clearWhere the ABC District CEF and DIL is concerned the Alberta Securities Commission has investigated what happened, come to a preliminary conclusion, and has posted a Notice of Hearing.

Following are some excerpts:

The Alberta Securities Commission (the Commission) will convene at 10:30 a.m. 
on Monday, August 13, 2018 (Set Date), at Calgary, Alberta, to set a date for hearing regarding the allegations in this Notice. At the hearing, the Commission will consider whether it is in the public interest to make orders against you under sections 198, 199, and 202 of the Securities Act, RSA 2000, c S-4, as amended (Act).

1. Staff of the Commission allege that the Respondents breached Alberta securities laws in connection with a long-term, large-scale investment program. The program generally was designed to provide a means for church members to invest and earn interest on funds by pooling and loaning them to Lutheran churches and schools for capital improvement projects. However, while representing the investments to be safe, diversified, and “guaranteed”, the Respondents placed the overwhelming majority of the invested funds into a high-risk, loan-defaulting, speculative land development project without appropriate disclosure to investors. The program and the corporate Respondents collapsed financially in early 2015, with court protection under the Companies’ Creditors Arrangement Act (CCAA) being sought and granted.

2. Staff allege that the long pattern of positive representations, without including necessary risk related disclosures, amounted to misleading statements. The Respondents knew or ought to have known that the information withheld from investors was material, and meant that the statements which had been made were misleading. The Respondents knew or ought to have known that the price or value of the securities in issue was dramatically affected by the non-disclosures.

3. Investors in the program have lost many millions of dollars as a result of its collapse, with the exact value not yet determined. In recognition of investors’ losses and in order not to deplete assets that may be available in ongoing CCAA proceedings, Staff will seek no monetary administrative penalties against the corporate Respondents.

The document re-iterates a fair bit of information already reported here as well as adding some details pertaining to CEF / DIL’s history. It also names names.

Towards the end there’s a “Harm to Investors” section which sums up CEF/DIL’s overall losses, how much the investors have gotten back, and how much is still tied up in Sage Properties.

Harm to Investors
50. On January 23, 2015, the Alberta Court of Queen’s Bench made an order under the CCAA granting a stay of proceedings against the District, DIL, and others, and appointing Deloitte LLP as the Monitor (the CCAA Proceedings). The CCAA Proceedings were initiated as a result of the insolvency of the District and DIL.

51. As of January 23, 2015, CEF had a total of 2,674 investors—1,694 from Alberta and 980 from British Columbia—with a total amount (principal and interest) owing to investors of approximately $96.7 million. Approximately 60% of these investors were over 70 years old.

52. As of January 23, 2015, when the CCAA Proceedings were initiated in court, DIL had 914 investors—660 from Alberta and 254 from British Columbia—with a total amount (principal and interest) owing to investors of approximately $37.1 million.

53. As at the date of this Notice of Hearing, and based on the reports of the Monitor in the CCAA Proceedings, the CCAA restructuring process appears to have provided CEF investors with total cash disbursements of less than $20 million, plus restricted securities in a new corporate entity known as Sage Properties Corp. The value of the securities in Sage Properties Corp. remains uncertain and is disputed by some affected parties.

54. As at the date of this Notice of Hearing, and based on the reports of the Monitor in the CCAA Proceedings, the CCAA restructuring process has provided DIL investors with total cash disbursements of approximately $30.7 million, with no further disbursements anticipated.

Sadly – in spite of the mountain of evidence, in spite of the overwhelming damage done to the fiscal and spiritual health of the people in ABC District and beyond, a senior player in this mess is still a clergy in good standing and vacancy pastor at Good Shepherd Lutheran Church Valleyview, AB. And as incredible as that may seem, I’ve also seen reports that one or more pastors named in the AB Representative Action have been nominated for the position of Regional Pastor.

Given everything that we know, I have to ask – what, exactly, is needed for LCC to take justice and righteousness seriously and hold its members to account? Has LCC learned nothing from the Roman Catholic Church’s failure to police it’s own ranks?

Scripture says this about the qualities of an overseer –

The saying is trustworthy: If anyone aspires to the office of overseer, he desires a noble task. Therefore an overseer must be above reproach, the husband of one wife, sober-minded, self-controlled, respectable, hospitable, able to teach, not a drunkard, not violent but gentle, not quarrelsome, not a lover of money. He must manage his own household well, with all dignity keeping his children submissive,  for if someone does not know how to manage his own household, how will he care for God’s church?
1 Timothy 3:1-5

That LCC continues to allow clergy who’ve breached these values to remain in place, one has to ask if LCC really believes in the totality of Scripture.

Update: See what Sola Gratia has to say about this development.

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