Lutheran Church accused of securities violations in failed housing investment

CALGARY — The president of the Lutheran Church of Canada said Thursday it will move away from the use of locally administered church funds after Alberta’s securities regulator accused it and its Alberta-B.C. district church of misleading investors.

The Alberta Securities Commission issued a notice of hearing Thursday into allegations against the national and district churches, a related company called Alberta-British Columbia District Investments Ltd. and five individuals.

They are accused of misleading investors who put more than $130 million into funds that backed a residential development east of Calgary that sought court insolvency protection in 2015.

“It’s caused a lot of hurt and bitterness, anger,” Rev. Tim Teuscher, president of the Lutheran Church of Canada, said in an interview from the Winnipeg head office.

“This precipitated a decision of restructuring at our synod last year, actually. Instead of having separate corporate groups within the church body that kind of do their own thing corporately, we decided we’re going to get rid of that.”

He said the church has never previously had problems with its extension funds, which have been used for decades to provide a return to investors while raising money for capital projects such as churches and schools.

The Ontario Lutheran district has such a fund that has operated without problems, but it is in the process of being retired, he said.

In its notice, the Alberta Securities Commission alleges that operators of the investment program failed to tell investors — many of whom were church members — what their money was being used for and at what risk.

The ASC alleges that more than $95 million had been invested by more than 2,600 investors in the Church Extension Fund (CEF) and over $37 million was invested by over 900 investors in the separate District Investments Ltd. fund as of Nov. 30, 2014.

A series of loans resulted in about 75 per cent of the combined funds being placed in a development called Encharis that included a school, church and seniors’ housing complex east of Calgary, the ASC said.

ASC staff allege that investors were never told about the high concentration of funding going into one project, nor did they find out about persistent loan defaults or cash flow problems.

The commission is set to meet with the parties on Aug. 13 to set a date for a hearing regarding the allegations of securities law violations. The charges have not been proven.

The list of respondents include the national and district churches, as well as company officers or directors Donald Robert Schiemann, Kurtis Francis Robinson, James Theodore Kentel, Mark David Ruf and Harold Carl Schmidt.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

UPDATED: Donations pour in for family of doctor killed in Red Deer attack

An online fundraiser has raised more than $50,000 for the family of… Continue reading

Overwhelming majority of Red Deer students could be back in classrooms this fall

Preliminary survey results show 94 per cent parental support

Some Red Deer County residents oppose a gravel pit proposed for a flood-prone area

Howell’s Excavation co-owner says the proposal meets or exceeds standards

Workers at Regina linen company contract COVID-19 but facility safe: officials

REGINA — Health officials say 18 employees at a linen facility in… Continue reading

More COVID cases among Manitoba meat plant staff, but no closure planned

BRANDON, Man. — Manitoba’s top doctor says stricter regional restrictions are possible… Continue reading

Alberta reports 257 new cases of COVID-19

The Alberta government reported 257 new cases of COVID-19 in its latest… Continue reading

Cast your votes for Best of Red Deer

The Advocate’s Best of Red Deer Readers’ Choice Awards are back. Community… Continue reading

Vigil held in Maskwacis for 10-year-old boy

Samson Cree Nation comes together for comfort, console each other

Cuts to environmental monitoring budget In Alberta’s oilsands are viewed as reckless

The 2019-2020 budget saw $58 million dollars being dedicated to environmental monitoring

N.L. reports second COVID-19 case linked to out-of-province TV series worker

ST. JOHN’S, N.L. — A second person who works on the St.… Continue reading

World shares march higher as S&P 500 nears all-time record

World stock markets rallied on Tuesday after U.S. President Donald Trump said… Continue reading

Russia’s approval of virus vaccine greeted with some alarm

MOSCOW — Russia on Tuesday became the first country to approve a… Continue reading

Police tried to cuff young boy at Florida school

KEY WEST, Fla. — A civil rights lawyer plans to sue the… Continue reading

Ministers, top public servant to be grilled by committee on WE affair

OTTAWA — Two federal cabinet ministers and the country’s top public servant… Continue reading

Most Read