ParkLane Gift Program
Settlements with Law Firm Defendants and with FFCF/Gleeson Defendants
On Friday, October 18, 2013, the Ontario Superior Court of Justice approved the settlements with the Law Firm Defendants (including Edwin C. Harris Q.C.), and with the Funds for Canada Foundation, Mary-Lou Gleeson, Matt Gleeson and Gleeson Management Associates Inc. (the “FFCF/Gleeson Defendants”). The settlement agreements are available to be viewed under the Documents Tab, below.
The settlement with the FFCF/Gleeson Defendants is for $950,000, and requires them to co-operate in the ongoing prosecution of the action by producing documents and giving evidence.
The settlement with the Law Firm Defendants is for a minimum of $23,130,789 and a maximum of $27,242,843. The Law Firm Defendants will also be obliged to produce documents and give evidence.
The Court has awarded legal fees to Class Counsel of $7,048,210 plus taxes, which is 25% of the total settlement amounts, with leave to request up to an additional 8% or $2,255,427 plus taxes (up to 33% in total) after delivering further submissions to the Court.
The Class Proceedings Fund will be paid 10% of the settlement fund, after deduction of legal fees, as required by statute.
The Orders of the Court approving the Settlements are posted in the Documents section, below.
The notice advising the Class Members of the settlement will be sent to the last known address for all Class Members at the end of November 2013. In addition, the Class will be sent a prepopulated claim form, which must be completed, signed and returned to the Claims Administrator (not to Class Counsel) in order to claim a pro rata share of the net settlement fund. The notice is posted under the Documents tab of this web page. Blank claim forms are also posted under the Documents tab of this web page. Please only complete the blank claim form if you have not received a prepopulated claim form by mid-December, 2013, or if you loose the form sent to you by the Claims Administrator.
Opt-Out Period for Distributor Class Members to be Terminated
By order of the Court dated September 18, 2013, the opt out period for Class Members who were also ParkLane’s distributors, and who have been named as Third Parties will expire on Wednesday, November 20, 2013 at 5 pm.
Motion to Refine Common Issues and Stay Third Party Claims – January 30 – 31, 2014
The Plaintiff brought a motion to refine the common issues to be tried by the Court, and sought a court order to stay the Third Party claims brought against ParkLane’s Distributors. The motion was originally scheduled for October 17 – 18, 2013, but has now been adjourned to Thursday and Friday, January 30 – 31, 2014, if the parties are unable to reach an agreement on the refinement of the common issues. If the Court makes the order requested, then the ParkLane Defendants’ Third Party Claim against the Distributors will only proceed after the common issues trial has been completed.
Class Counsel encourage all Third Party Distributors to seek independent legal advice regarding the Third Party Claims.
Motion to Pay Funds into Court
The Plaintiff is bringing a motion for an order requiring payment into the Ontario Court of a specific fund that he alleges continues to be held by Trafalgar Trading Ltd., and which was part of the funds paid by the Class to participate in the Gift Program. This motion was to be argued on August 20 and 21, 2013, but has been adjourned pending further cross-examinations, and will now be heard on January 21 and 22, 2014.
The Defendant, Appleby Services (Bermuda) Ltd. as trustee of the Bermuda Longtail Trust has given an undertaking that it will not disburse funds from the Trust Account, without prior approval of the Plaintiff or the Courts, so the remaining money in this account will be preserved.
Status of the Action
Following the determination of the motion to stay the ParkLane Defendants’ Third Party Claims against its Distributors, the Action will be proceeding to the next steps in the litigation. This will involve an exchange of all relevant documentation between the parties, followed by examinations for discovery (depositions) of all the parties. This will be a lengthy and time consuming process.
Further updates will be made as significant steps are reached.
This class action was commenced on September 18, 2008. The law firms Paliare Roland Rosenberg Rothstein LLP and Landy Marr Kats LLP are class counsel.
In 2005, 2006, 2007, 2008 and 2009, ParkLane offered a charitable tax shelter opportunity (the “Gift Program”) sold through financial advisors to Canadians. The claim alleges that the Gift Program was created for the purpose of enriching the promoters.
The promoters of the Gift Program represented to donors that for every $2,500 donation, that donation would be matched three times over by a Trust with a funding commitment of $200 million, whose purpose was to “promote charitable giving in Canada”. In other words, for every $2,500 donation, a Canadian charity would receive $10,000, and the donor would receive a charitable tax receipt for $10,000. However, CRA has disallowed the charitable deductions in full, including the amount actually paid out of pocket by the donors. In fact, the charities kept only 1% or less of the amount for which they issued receipts, and the rest was used to pay the promoters, and to purchase a royalty agreement under the terms of which the charity was supposed to receive an interest in a possible revenue stream to be generated by a computer software program trading futures contracts on a highly leveraged basis. This fact was not disclosed to the Gift Program participants, and in fact Trafalgar Trading has not been conducting the trading that it said it would be conducting under the royalty agreements. To date, since 2005, the charities have only received approximately an additional 1% of the amount they paid for the royalty agreements as “trading profits”.
Restitution is being sought for the Class Members of the money they paid into the Gift Program, as well as damages for the penalties and interest that CRA charged when it reassessed the Class Members’ income tax returns.
The remaining Defendants in this case include the promoter, ParkLane, its affiliated companies, and a Bermuda Trust, all of whom worked together to offer the Gift Program. The Defendants all deny the allegations made in the claim.
If you are a donor who participated in the Funds for Canada Gift Program between 2005 and 2009, and did not exclude yourself from the Class by the opt out deadline (February 22, 2013 for everyone but Distributors) you are automatically included in the Class.
If you have not been receiving notices from Class Counsel or the Notice Administrator, please contact us with your updated contact information.
Last Updated October 2013
- $144-million charitable tax scheme class action certified, Canadian Lawyer Magazine, February 3, 2012
- One tax shelter class action certified, another action settled, Financial Post, January 24, 2012
- Judge OKs massive class-action suit against inflated charity tax receipts ‘scheme’, National Post, January 23, 2012
- Court gives go-ahead to class action suit, Globe and Mail, January 20, 2012
- Lawyers targeted over charity tax schemes, Globe and Mail, August 23, 2012
Last Updated October 2012