The CBC recently had a report, “Manitoba investors, 2 charities, out over $1M after being misled into investing in Bolivian bank“.
The media does not cover investments of charities that much, so it was interesting. Charities have assets of around $500 billion. Private and public foundations have assets of about $130 billion, much of which is just investments, and it makes sense that some more questions are asked about how charities invest.
The CBC has a lengthy article, and here is an excerpt. You can read the rest of the article on the CBC website:
Manitoba investors, including two charities, are out more than $1 million after they were misled into investing in a Bolivian bank, according to a recent Manitoba Securities Commission decision.
The decision, released Jan. 4, says the investors were individuals and two charities: Youth for Christ’s Portage la Prairie branch and Back to the Bible. The investors agreed to invest in a Bolivian mortgage lender, Mutual Guapay, that was facing liquidity problems in 2005, according to the decision.
YFC Portage la Prairie and Back to the Bible bought into the Bolivian deal, which was touted as safe and profitable, to the tune of $120,000 and $250,000 respectively. The private citizens invested about $772,000.
They were told they were putting up money to be held in trust to fulfill Bolivian bank laws which require a certain amount of money to be held in reserve.
At the centre of the misrepresentations to investors is Jack Neufeld of the The Jack Neufeld Family Charitable Foundation, according to a Manitoba Securities Commission decision that found that Neufeld and the foundation violated several sections of the Securities Act including:
- Making material misrepresentations to investors.
- Acting contrary to the public interest.
- Trading in securities without being registered and without a prospectus.
On a very separate note, I thought it was also interesting that the picture used by CBC has the following caption, “Jack Neufeld violated the Manitoba Security Commission Act after soliciting investments for a Bolivian bank deal. (samaritanspurse.ca)”
Why would CBC use a picture of someone from a Canadian charity? So, I looked at the filings of The Samaritan’s Purse – Canada, and I noticed that Jack Neufeld is a director of The Samaritan’s Purse – Canada. According to the T3010 filings of The Samaritan’s Purse – Canada, he has been a director for about 22 years. As of this note, he is still a director. (PDF) It appears that The Samaritan’s Purse – Canada has nothing to do with this investment issue covered in the article, but it is also interesting that after this became public, and even CBC News covered the story, he is still listed as a director. From a reputational point of view, some charities would look to find another director.
Also, on a different note, it appears that The Samaritan’s Purse – Canada is a soliciting corporation under the CNCA and is required to file their financial statements every year with Corporations Canada. They do not appear to have filed those financial statements over the last seven or so years. For an organization that has annual revenue of over $40 million, it is a significant oversight to not file mandatory financial statements.
There has been far more public awareness of the importance of transparency and hopefully they will arrange to file those financial statements.