Court Finds Fundraiser Guilty of Fraud

Susan M. Manwaring, Toronto

Adam Gour stands charged that  "...between the 1^st day of September in the year 2009 and the 30^th day of November in the year 2009, … at the Town of Bradford West Gwillimbury, … and elsewhere in the Province of Ontario, he did by deceit, falsehood or other fraudulent means defraud the people of Ontario the sum in excess of $5000.00..." (R. v. Gour, 2012 ONSC 4082, para. 1)

And thus began a recent decision of Mr. Justice McIsaac of the Ontario Court of Justice summarizing the charges brought against a fundraiser for circumstances that the Court subsequently found to constitute fraud.  The facts of the case, R. v. Gour, are not good ones.  Mr. Gour appears to have been involved with questionable fundraising for some years prior to the time of these allegations.  It appears that the main objective of his efforts and the efforts of those who worked for his charity was to provide a living for those involved rather than to provide funds in support of a charitable mission.  And, of course, the charitable mission of the entity in respect of which this behaviour occurred – the Northern Ontario Sick and Disabled Children’s Foundation – is a mission that tends to be attractive to donors and thus leads to successful fundraising.

Mr. Gour and his canvassers stated that they were raising funds to support medical expenses for needy children with medical afflictions not covered by the provincial medical program. The facts before the Court included evidence that the canvassers were paid by commission, that they failed to disclose the commissions they received to the public, and that in fact Mr. Gour had instructed them not to disclose the commissions.  Further, there was evidence before the Court that the children in the “posters” used in connection with the fundraising efforts never benefited from the funds raised.  Even worse, in one case the parents had not authorized the use of their daughter’s name and image by the organization.

The Court, having reviewed the facts, held:

“Applying those criteria to the facts as found by me, I am satisfied beyond a reasonable doubt of the following:

1. the failure to disclose the handsome commissions being paid to these apparent "volunteers" constituted the hiding of a fundamental and essential element of this fundraiser-contributor relationship; and
2. this failure to disclose was such as to mislead the reasonable contributor.”

Interestingly, the Court also confirmed that it had turned its mind to the issue of whether the charges under the Criminal Code were appropriate or whether an action should have been brought civilly against Mr. Gour and the others involved in the fundraising.  In considering this argument Mr. Justice McIsaac stated:

“I am similarly unimpressed with the submission that the alleged misconduct canvassed in this case would be better dealt with under the Charities Accounting Act, instead of being policed under the heavy hand of the Criminal Code. There is no question that the allegation herein could have formed the basis for civil proceedings under that legislation… However, I do not see the Crown's choice to proceed under the Criminal Code as being in any way inappropriate.” (para. 25)

Finally the Court said:

“In coming to this conclusion, I reject [defence counsel’s] suggestions that the commissions described in this case are an unfortunate "fact-of-life" given the prevailing competition in the charity industry of present-day Canadian society.

In responding to this submission, I want to make it clear that I am not ruling that charities cannot employ the necessary evil of third party fundraisers. They can do so and even allow them to charge 95% of their collections so long as they give the potential contributor an informed and transparent choice. If the donor is prepared to opt for a high-commission charity as opposed to a low or no-commission option, that is his or her choice. But, at least it is a choice that is fully informed.” (para. 23)

Needless to say the Court was less than impressed and on the facts as you read them, the conclusion of guilt is not that surprising.  The facts that were the most damaging related to the lack of transparency and accountability to the donors.

That said, there remains the question of the implications of the decision for fundraisers and charities generally.  One technical concern is that the decision can be read as requiring disclosure in all instances – even if the public doesn’t ask.  That standard may be an easy one to apply where the fundraisers are paid by commissions, but what of other scenarios?  Some provinces have regulated fundraising and the nature of the disclosure required.  Others have chosen not to pass fundraising legislation.  The lawyer for Mr. Gour suggested an appeal would be filed based on this concern and we have confirmed that an appeal of the conviction was filed on July 26.

Another implication is that the publication of these kinds of decisions leads to public mistrust of the sector.  These scenarios are the exception not the rule.   Rarely do we see the good stories in the papers – more often (as is the case with this article) the decisions such as the one in R. v. Gour get the coverage.  An argument can be made that the decision by the Crown to charge Mr. Gour should be viewed as a positive one and that the conviction could make others who might try to take advantage of the public think twice. 

However, those who work in the sector will undoubtedly recognize that references to “the necessary evil of third party fundraisers” or comments that cast fundraising in an unsavoury light as not helpful to the sector generally.  The bottom line is that people who use the charitable system to their own personal benefit bring the sector as a whole into disrepute.  They need to be stopped to preserve the integrity of charitable fundraising and the Crown in this instance took a bold step to stop these individuals from continuing to deceive the public for their own personal benefit.   Stay tuned for the results on appeal.  And query whether a decision such as this may result in the Ontario government introducing charitable fundraising legislation similar to that which exists in Alberta or Saskatchewan.

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