Feds sue over miss­ing mil­lions meant for First Na­tion

Firm al­legedly di­verted fund­ing for health care

Edmonton Journal - - NP - Brian Platt

The fed­eral gov­ern­ment is su­ing an On­tario com­pany over al­le­ga­tions it di­verted and mis­ap­pro­pri­ated mil­lions in health-care fund­ing in­tended for one of Canada’s most im­pov­er­ished First Na­tions.

The law­suit also re­veals that Health Canada re­peat­edly re­newed its con­tract with the com­pany even while it was the sub­ject of an in­ves­ti­ga­tion by both the gov­ern­ment and RCMP over con­cerns it was fraud­u­lently man­ag­ing funds in­tended for the Kashechewan First Na­tion.

In Septem­ber 2016 the RCMP charged one of two broth­ers named in the suit, Giuseppe Crupi (who goes by Joe), for fraud­u­lently ob­tain­ing and mis­ap­pro­pri­at­ing $1.2 mil­lion meant to feed 400 el­e­men­tary school chil­dren in Kashechewan. He faces eight counts re­lated to fraud and laun­der­ing the pro­ceeds of crime.

But a law­suit filed Oct. 2 by Health Canada against Crupi and his brother Franco con­tains a new al­le­ga­tion in­volv­ing a fur­ther $1.4 mil­lion in Health Canada funds, in­clud­ing un­doc­u­mented pay­ments to com­pa­nies run by the broth­ers and “Christ­mas bonuses” paid out of money des­ig­nated for Kashechewan health projects.

The al­le­ga­tions cen­tre on a Thun­der Bay, Ont., com­pany called the Crupi Con­sult­ing Group. Franco Crupi is still the com­pany’s pres­i­dent, while Joe Crupi was the trea­surer un­til about 2014.

The suit names both broth­ers plus four com­pa­nies they’re al­leged to have been di­rect­ing.

In an in­ter­view, Franco Crupi — who has not been crim­i­nally charged — told the Na­tional Post he will be fully de­fend­ing him­self.

“It’s gone to my lawyers and they’ll be deal­ing with it,” he said. The fraud al­le­ga­tions con­cern his brother, Crupi said, with whom he is not on speak­ing terms.

“I had noth­ing to do with that file. I am the pres­i­dent of the com­pany, but I had noth­ing to do with the file. What can I say right now? It’s go­ing to be looked into, be­cause many of those ex­pen­di­tures had been au­tho­rized by Health Canada.” (The Na­tional Post was un­able to reach Joe Crupi for com­ment.)

Kashechewan, lo­cated on James Bay in On­tario’s far north, is one of Canada’s most iso­lated and trou­bled re­serves, deal­ing with an­nual flood­ing, a chronic sui­cide cri­sis and other se­vere health and in­fra­struc­ture is­sues.

Un­til this year, Crupi Con­sult­ing was on a list of com­pa­nies ap­proved by the fed­eral gov­ern­ment to bid on man­age­ment con­tracts for First Na­tions that de­fault on their fi­nances. Since 2007 it has been in­volved in fi­nan­cial man­age­ment for at least seven dif­fer­ent First Na­tions. When Kashechewan de­faulted on its fi­nances more than a decade ago, the band gov­ern­ment brought Crupi Con­sult­ing on as co-man­ager, with Joe Crupi tak­ing the lead.

Then in 2010, Health Canada ap­pointed the firm as the third-party man­ager of the Kashechewan Health Ser­vices Board, mean­ing the gov­ern­ment pro­vided the money al­lo­cated for Kashechewan’s health-care di­rectly to Crupi Con­sult­ing, which was en­trusted to de­liver the ser­vices.

In 2011, the au­di­tor gen­eral’s of­fice in­formed the gov­ern­ment of con­cerns over pos­si­ble fraud in Joe Crupi’s Kashechewan work, and Indige­nous and North­ern Af­fairs Canada opened an in­ter­nal in­ves­ti­ga­tion. That in­ves­ti­ga­tion was turned over to the RCMP in De­cem­ber 2012, which even­tu­ally led to the crim­i­nal charges against Joe Crupi in 2016.

Yet Health Canada’s own law­suit claims the min­istry re­newed its health-fund­ing agree­ment with Crupi Con­sult­ing for Kashechewan three times while the in­ves­ti­ga­tion was un­der­way, in 2012, 2013 and 2014. The com­pany re­mained as third­party man­ager of the health board un­til March 2015, ac­cord­ing to the law­suit, and co-man­ager of Kashechewan First Na­tion un­til 2014.

Asked why it re­newed the con­tract, Health Canada only re­sponded that “once the De­part­ment was in­formed of the RCMP in­ves­ti­ga­tion into the Crupi Con­sult­ing Group, Health Canada au­dited its agree­ments with the com­pany and the Kashechewan Health Ser­vices Board.”

The law­suit re­lies on a spe­cial au­dit com­pleted by Health Canada in Novem­ber 2016 that con­cluded Crupi Con­sult­ing “mis­ap­pro­pri­ated and/or mis­man­aged” a to­tal of $1,395,133 be­tween 2008 and 2015.

The gov­ern­ment has re­cov­ered $232,056 by with­hold­ing pay­ments to the com­pany, but is seek­ing to re­cover the bal­ance plus in­ter­est, puni­tive dam­ages and court fees. It ac­cuses the broth­ers and their com­pa­nies of breach of con­tract, un­just en­rich­ment, de­ceit and neg­li­gent mis­rep­re­sen­ta­tion.

In one ex­am­ple, the au­dit showed $259,892 in ex­penses paid to 6721672 Canada Ltd., a com­pany that listed Franco Crupi as a direc­tor and was dis­solved in 2009. The pay­ments came with scant de­scrip­tions, such as “Nu­tri­tion Pro­gram (Freight in­cluded)” and “ADI Sup­plies.”

“Dur­ing the au­dit, Giuseppe (Joe) Crupi in­formed Health Canada that Crupi Con­sult­ing had paid most of these ex­penses in cash and that re­ceipts could not be lo­cated,” the law­suit says. “The in­voices to sup­port these ex­penses in­cluded min­i­mal de­tails about the goods or ser­vices ac­quired and the De­fen­dants pro­vided no ad­di­tional sup­port­ing doc­u­ments.”

The law­suit al­leges an­other $129,100 was spent on com­put­ers and tele­con­fer­enc­ing equip­ment from a com­pany owned in part by a friend of Joe Crupi, and says the Crupis “were un­able to ex­plain who re­quested the equip­ment or which pro­gram it was in­tended for” and couldn’t pro­vide ship­ping doc­u­men­ta­tion to show it ever ar­rived in Kashechewan. (Franco Crupi in­sists it was de­liv­ered, say­ing it’s the air­line that can’t keep their records straight.)

The au­dit also found claims for thou­sands of dol­lars in HST, though Kashechewan is ex­empt from pay­ing that tax.

In a sec­tion out­lin­ing in­el­i­gi­ble pay­ments, the law­suit shows $26,015 for “Christ­mas bonuses paid to KHSB Board mem­bers,” and $1,0171 for “a pay­ment to ‘Happy Time Tours.’” It al­leges $244,477 was spent on “pur­ported ad­min­is­tra­tive ex­pen­di­tures that were not ac­tu­ally in­curred by Crupi Con­sult­ing,” and an­other $212,987 was paid for in­el­i­gi­ble wa­ter and sewer fees.

Franco Crupi main­tains that Health Canada had ap­proved these ex­penses, and just doesn’t un­der­stand the in­for­mal na­ture of how trans­ac­tions are con­ducted in the re­gion.

“I’ll tell you one thing, I feel be­trayed by every­body,” he said. “By the gov­ern­ment not liv­ing up to the de­ci­sions it’s made, by staff mem­bers who have done things to me and my com­pany that I never ex­pected would have been done, and even you as re­porters.”

It is still un­clear why the gov­ern­ment re­newed con­tracts with a com­pany it was si­mul­ta­ne­ously in­ves­ti­gat­ing for fraud. A gov­ern­ment spokesper­son said Thurs­day Crupi Con­sult­ing has been re­moved from the list of com­pa­nies pre-qual­i­fied to bid on First Na­tions man­age­ment con­tracts, though they re­mained on that list as re­cently as March of this year.

Mean­while, in Fe­bru­ary 2016, INAC started con­tact­ing other First Na­tions who had re­tained Crupi Con­sult­ing’s co-man­age­ment ser­vices around the same time, in­clud­ing the Obashkaanda­gaang, Aroland, Cat Lake, Ojib­way Na­tion of Saugeen, Gull Bay and Pic Mobert First Na­tions. The let­ter re­quested a joint re­view of their records.

Asked if Health Canada or INAC had de­ter­mined whether Crupi Con­sult­ing had mis­ap­pro­pri­ated the funds of any other First Na­tions, a gov­ern­ment spokesper­son re­sponded: “That work is still cur­rently un­der­way.”


Franco, left, and Joe Crupi. Crupi Con­sult­ing was brought in to co-man­age Kashechewan af­ter its de­fault in 2007.


The North­ern On­tario re­serve of Kaschechewan has been be­set by nu­mer­ous prob­lems, in­clud­ing an­nual flood­ing, a chronic sui­cide cri­sis, and other health and in­fra­struc­ture is­sues.


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