‘Potentially personal’ spending by Assaly charity identified
Receiver’s report to court points to nearly $223,000 in expenses
Doyle Salewski Inc. has identified nearly $223,000 in spending by a charitable foundation controlled by Thomas G. Assaly that is “potentially personal in nature,” according to the court-appointed receiver’s latest report to Ontario Superior Court.
The report, dated Aug. 2, lists 13 types of potential personal spending by the Millennium Educational & Research Charitable Foundation — formerly known as the Thomas C. Assaly Charitable Foundation — between January 2008 and January 2012.
They include $104,456 to Maryvale Academy, the Ottawa private Catholic school that Assaly’s children then attended; $22,182 for life insurance; $26,668 for fuel; $8,281 for meals and entertainment; $9,672 for medical expenses; and $18,500 for scholarships.
The Doyle Salewski report came as Judge Paul Kane heard Tuesday from lawyers for Assaly, the charitable foundation, the receiver and investors who have alleged that Assaly misappropriated $3.3 million they invested in two of his real estate projects. Assaly has declined several interview requests by the Citizen but denied any wrongdoing in an affidavit filed with the court in March.
Tuesday’s hearing was supposed to be Assaly’s opportunity to respond to orders issued by Kane in early July that greatly expanded Doyle Salewski’s powers as receiver, froze Assaly’s assets and those of the charitable foundation, and declared the May transfer of a Florida mansion known as Canada House from the foundation to Assaly “prima facie void.”
Despite firm filing deadlines laid down by Kane, neither Assaly nor the foundation filed any evidence prior to Tuesday’s hearing. Nor did Assaly, eldest son of the late developer Thomas C. Assaly, provide an accounting of his spending or grant Doyle Salewski access to financial records, despite Kane’s orders to do so.
That prompted Jason Dutrizac, the receiver’s lawyer, to ask Kane to find Assaly in contempt of court.
The judge declined, but said if Doyle Salewski gave him a list of records it is seeking, he would order Assaly to produce them by a firm deadline.
Justin Fogarty, the lawyer for the investor group, told Kane that Assaly’s failure to abide by his orders and his alleged ongoing efforts to delay proceedings are “making a mockery of this court.”
“We’ve seen the tactics employed throughout this proceeding,” he said.
“It’s time to put Mr. Assaly’s feet to the fire here. He’s living on my clients’ money.”
Much of Tuesday’s proceeding focused on the status of Canada House, a $1.6-million oceanfront residence in Ft. Pierce, Florida, where Assaly, his wife Karen and their eight children now reside.
The house was formerly owned by the charitable foundation and was by far its largest asset. But on May 24, in his capacity as the foundation’s director, Assaly transferred ownership to himself and his wife, Karen — a transaction investors allege was designed to shelter Canada House from creditors.
Lawyers for Doyle Salewski and the investor group argued Tuesday that, in the absence of any evidence from Assaly justifying the transfer, Kane should confirm his preliminary finding and declare the transaction void.
Assaly lawyers John Smith and Shael Eisen argued that Kane should defer the Canada House decision pending a two-day hearing in September that will determine whether the foundation should be declared bankrupt and a Sept. 30 hearing by a bankruptcy court in Florida that will rule on whether to recognize Kane’s orders.
Smith told the court that he received sworn affidavits late Monday from Assaly and Frank Fee, a Florida lawyer who is holding some Assaly and foundation assets in a trust account, that responded to the Canada House order and other orders by Kane.
Assaly’s position, Smith said, was that he and his wife “have a lawful right” to the transfer of the Canada House property.
He said he was reluctant to file the affidavits with the court because he hadn’t had a chance yet to fully review them, and asked Kane to extend the date for Assaly to provide evidence about the Canada House transaction “as a matter of fairness to him and his family.”
Fogarty reminded the judge that Assaly has known for a month that Tuesday’s hearing would deal with Kane’s orders, including the one dealing with Canada House. “I thought this was going to be a full battle royal on material. There’s been no explanation. And this has been going on in one form or another since Feb. 6,” he said.
In the end, the judge told Smith to provide him and the other parties with the affidavits Tuesday if he wanted him to consider them. Rather reluctantly, Smith agreed. Kane will rule on the Canada House transfer after hearing arguments Wednesday.
Kane rejected a request by Smith to exempt Assaly’s personal assets from his freezing order, saying that would place Canada House at risk if Assaly chose to sell it. “I’m not prepared to assume that risk.”
The judge may also rule on a motion that would confirm and extend Doyle Salewski’s powers as receiver over four Assaly companies whose liabilities exceed their assets by more than $3 million. “They may be considered insolvent,” the receiver’s report says.
Meanwhile, Ottawa resident Jim Meuse has made an offer to Doyle Salewski to purchase the charitable foundation’s 50 per cent share of assets held by Assaly Meuse LLC for $215,000.
The company owns four rental properties in Florida, and Meuse and his wife Rebecca already own the other 50 per cent.
Doyle Salewski wants Kane to approve Meuse’s purchase of the company before he leaves on vacation at the end of this week.