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. Therefore one must be in subjection, not only to avoid God’s wrath but also for the sake of conscience. Romans 13:3-5
In this case the “servant of God” is the Alberta Securities Commission and their next step in their service is to determine the hearing date at which time they will consider the substance of the allegations and what should happen to the defendants.
From the Alberta Securities Commission
ALBERTA SECURITIES COMMISSION
Citation: Re Lutheran Church-Canada, the Alberta-British Columbia District, 2018 ABASC 102
NOTICE OF HEARING
- Lutheran Church–Canada, the Alberta-British Columbia District
- Lutheran Church–Canada, the Alberta-British Columbia District Investments Ltd.
- Donald Robert Schiemann
- Kurtis Francis Robinson
- James Theodore Kentel
- Mark David Ruf
- Harold Carl Schmidt
- (collectively, the Respondents)
Notice: 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).
Location: Alberta Securities Commission, 5th Floor, 250 – 5 Street SW, Calgary, Alberta.
- You may obtain disclosure and particulars of the allegations in this Notice
from Janet McCready, c/o Alberta Securities Commission, 600, 250 – 5 Street SW, Calgary, Alberta, T2P 0R4, telephone: 403.297.8049, email: firstname.lastname@example.org.
- You may be represented by legal counsel and you or your counsel may make representations and introduce relevant evidence.
- If you or your counsel fail to attend at the Set Date, or as directed, the hearing may proceed in your absence and an order may be made against you without further notice.
See attached sections 29, 198, 199, and 202 of the Act, and Commission
Rule 15-501 – Rules of Practice and Procedure for Commission Proceedings.
Reciprocation: Take notice that orders or settlements made by the Commission may form the basis for parallel orders in other jurisdictions in Canada. The securities laws of some other Canadian jurisdictions may allow orders made in this matter to take effect in those other jurisdictions automatically, without further notice to you. If an order is made or a settlement agreement is reached in relation to this Notice, you should contact the securities regulator of any other jurisdiction in which you may intend to engage in any securities-related activities.
- 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.
- 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.
- 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.
See the official publication for the rest of the notice.
Curiously, the Notice of Hearing stated, “Staff of the Commission allege that the Respondents breached Alberta securities laws in connection with a long-term, large-scale investment program,” but then the Notice concluded, “Staff will seek no monetary administrative penalties against the corporate Respondents.” [Emphasis added]
Correct – District the corporate entity (which includes CEF & DIL) is bankrupt and its liabilities far outstrip the value of its collective assets resulting in the sale of everything it owned in order to compensate the depositors. If the ASC asked for and got monetary penalties that would only diminish the amount returned to the depositors, many of whom are elderly individuals in retirement.
If District had declared insolvency back in the early 2000s when it first became clear the POP operation would never pay back its loan, there was a chance it would’ve had enough assets to pay the depositors back in full and exit the resulting CCAA process as a still-viable operation. If that had happened, I have no doubt the ASC would’ve gone for monetary penalties against the corporate body in addition to everything else it is asking for in response to District’s alleged activities.