ParkLane Gift Program
Settlement Funds to be paid out
The Claims Administrator has completed processing and validating the claim forms delivered by class members. Payments will be mailed out on July 23, 2014 and will be delivered by cheque to the address on the claim forms.
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 originally approved legal fees to Class Counsel of 25% of the settlement amounts, and after receiving further written submissions, the Court has approved legal fees of 33%, in accordance with the retainer agreement made with the representative plaintiff. Fees of up to $9,303,638 plus taxes will be paid to Class Counsel, dependent upon the final determination of the amount to be paid by the Law Firm Defendants under their settlement.
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.
Refined Common Issues and Stay of Third Party Claims
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 was adjourned several times before it was ultimately argued on February 14, 2014. On March 4, 2014, the Court made the order requested, and the ParkLane Defendants’ Third Party Claim against the Distributors will only proceed after the common issues trial has been completed. The order refining the common issues and staying the Third Party Claim is under the “Documents” tab below.
The ParkLane Defendants sought leave to appeal from the order staying the Third Party Claims. Leave was denied by court order dated May 30, 2014.
Class Counsel encourage all Third Party Distributors to seek independent legal advice regarding the Third Party Claims.
Motion to Pay Funds into Court
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.
The motion as against Trafalgar Trading Ltd. has been withdrawn.
CRA offer to settle Objections to Reassessment
It has been brought to our attention that CRA is now making offers to settle to class members who filed valid Notices of Objection when their taxes were reassessed by CRA disallowing the tax credits for participation the Donations for Canada Gift Program. If you filed a Notice of Objection, you will receive a letter from CRA setting out the terms of their offer. Please see the June 2 Newsletter from Class counsel under the Documents section below for more information.
We strongly urge you to review the CRA offer with your own accountant or tax advisor. Class Counsel cannot provide individual advice to class members regarding these offers.
Status of the Action
Now that the Third Party Claims against ParkLane’s Distributors have been stayed, 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.
This action is receiving financial support from the Ontario Class Proceedings Fund.
The Fund pays for some of the disbursements incurred in the course of prosecuting this action, and it will pay any adverse court costs that might be ordered payable by the representative plaintiff.
There will be a levy payable to the Fund that will reduce the amount of any settlement or judgment award to which the class may become entitled. The levy will be comprised of repayment of any disbursements paid by the Fund and 10% of the net award or settlement funds.
Last Updated January 2016
- Action launched on September 18, 2008
- Motion for Certification heard on August 22-26, 2011
- Certification granted by Honourable Justice Strathy, January 18, 2012
- Motion for leave to Appeal heard June 28, 2012
- Defendants' motions for leave to appeal dismissed October 29, 2012
- Settlements with Law Firm Defendants and FFCF/Gleeson Defendants approved October 18, 2013
- Last day to submit claim forms re settlement with Law Firm Defendants and FFCF/Gleeson Defendants – February 28, 2014
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