CALGARY—Lutheran Church members in Alberta and B.C. are waiting for answers as the Alberta Securities Commission moves ahead with a hearing to examine accusations of misleading investors in a church-directed fund.
The ASC has alleged that the Alberta-British Columbia district of Lutheran Church Canada misled investors about a large-scale investment program. According to a notice of hearing, church members invested in a program meant to let them earn interest on loans to other churches for improvement projects, but the “majority” of those funds were placed in “a high-risk, loan-defaulting, speculative land development project without appropriate disclosure to investors.”
The ASC panel set May 13, 2019, as the start date for the hearing, which will last seven weeks.
A notice of hearing says the church district didn’t adequately inform investors in the Church Extension Fund (CEF) and the separate District Investments Ltd. (DIL) fund what their money was being used for and at what risk.
“Investors in the program have lost many millions of dollars as a result of its collapse, with the exact value not yet determined,” the ASC said.
The allegations have not been proven.
When proceedings for court insolvency protection started in January 2015, 2,674 investors in the CEF were owed approximately $96.7 million. More than 900 investors in the DIL fund were owed $37.1 million, according to the notice of hearing.
Brian Kehler, a member of Foothills Lutheran Church, attended the hearing Monday as a proxy for 14 investors who are concerned about the case. He said that while setting a date to move ahead is a step forward, people are frustrated by the uncertainty.
“To me, it’s delay, delay, delay. … You want to get on with this. You want to get it moving so that we can get results, get on with our lives,” he said.
Kehler and many of the people he attended on behalf of live in the Prince of Peace Village, a seniors community east of Calgary that the church district previously invested in. The ASC says that for more than a decade, a large concentration of investors’ funds were put toward the development.
The ASC says about 60 per cent of CEF investors were older than 70 when the district became insolvent in 2015.
Kehler said some of those people are worried they will die before the matter is resolved, leaving their family members with an added financial burden. He also said many of the people who invested money in the funds over decades were expecting to be able to use it for retirement.
“A good majority of them are seniors that are on fixed incomes, and they can be having some struggles and difficulties.”
In addition to the ASC hearing, Veronica Rossos, one of the lawyers for the investors, said four civil claims — two in Alberta and two in B.C. — have started against the Lutheran district.
Kehler said the instability has shaken many church members.
“We’re still a good community. … But people are concerned about their well-being and their investments and what’s happening.
“They just want to get it over with.”