ParkLane Gift Program
Settlement reached with ParkLane and other Remaining Defendants
Settlement reached with the Remaining Defendants – ParkLane Financial Corporation, Trafalgar Associates Limited, Trafalgar Trading Limited, and Appleby Services (Bermuda) Limited as the Trustee of the Bermuda Longtail Trust
On March 8, 2017, the Plaintiff entered into a settlement agreement with the remaining Defendants in this action.
Under the terms of the proposed settlement, the Remaining Defendants will pay to the Class $17,500,000 plus $164,931.50 of accrued interest in exchange for a full and final release of all claims brought in the proceeding.
The settlement also requires the dismissal of all Third Party Claims, cross-claims and counterclaims. It is intended to bring all aspects of the dispute to an end. The Remaining Defendants have not admitted any liability, and continue to strongly deny any wrongdoing.
The settlement requires the approval of the Court before it will take effect. The motion for approval of the settlement is scheduled for Friday, April 24, 2017. The notice advising of the settlement approval hearing, and your rights with respect to that hearing is posted under the Documents tab, below.
Class counsel will also be seeking approval for the payment of their legal fees and disbursements from the settlement fund, in accordance with the terms of their retainer agreement with the representative plaintiff. They will be asking the court to approve legal fees of $5,829,427.20, or 33% of the settlement fund (+ HST). In addition 10% of the net settlement must be paid to the Class Proceedings Fund as its levy.
The settlement agreement can be reviewed in full under the Documents tab, below.
The affidavits of Class Counsel and of the representative plaintiff, Mr. Cannon, which set out why they have concluded that this settlement is fair and reasonable and in the best interests of the class will also be posted under the Documents tab, below, by no later than March 31, 2017.
Questions regarding the proposed settlement should be directed to:
Settlements with Law Firm Defendants and with FFCF/Gleeson Defendants
The Ontario Superior Court of Justice previously approved settlements totalling over $28 million 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 proceeds from that settlement were distributed in 2014.
Refined Common Issues and Stay of Third Party Claims
On March 14, 2014 the Court refined the common issues and stayed the Third Party claims brought against ParkLane’s Distributors.
Class Counsel encourage all Third Party Distributors to seek independent legal advice regarding the Third Party Claims, and their intended dismissal under the terms of the settlement agreement with ParkLane and the remaining defendants.
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 undertaking will be released, if the settlement is approved.
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
If the proposed settlement with ParkLane and the other remaining defendants is approved, the action will be at an end.
This class action was commenced on September 18, 2008. The law firms Paliare Roland Rosenberg Rothstein LLP, Landy Marr Kats LLP and Phillips Gill 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. Since 2005, the charities received only approximately an additional 1% of the amount they paid for the royalty agreements as “trading profits”.
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 Claims Administrator, RicePoint, please contact us with your updated contact information.
This action is receiving financial support from the Ontario Class Proceedings Fund. There will be a levy payable to the Fund that will reduce the amount of the 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 March 2017
- 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