Assaly accused of forgery in transfer of Florida mansion

Former treasurer of charity has no recollection of reviewing document

Thomas G. Assaly was accused Wednesday of forging a document purporting to show that directors of a charitable foundation he controls approved a deal in 2009 involving the transfer of ownership of a Florida mansion at the heart of current proceedings by a court-appointed receiver.

The explosive allegation came in an affidavit filed with the Ontario Superior Court of Justice by Jim Meuse, who was treasurer of the foundation until his resignation in February. Meuse’s affidavit was in response to a sworn statement by Assaly, the eldest son of the late developer Thomas C. Assaly, filed with the court Tuesday.

In his affidavit, Assaly says he and his wife, Karen, bought the mansion in Ft. Pierce, Florida — known as Canada House — in 2008 with their own money. They now live there with their eight children.

Later that year, a group of Ottawa residents made charitable donations to the Thomas C. Assaly Charitable Foundation, for which they received “very favourable” tax deductions in Canada, Assaly’s statement says. As part of the deal, they executed promissory notes to the foundation worth $805,125.

On the advice of the foundation’s charity law counsel, Assaly says he and his wife conveyed ownership of the Canada House property to the foundation in 2009.

In exchange, Assaly received the promissory notes as well as a first mortgage of $400,000 in favour of Thomas G. Assaly, his affidavit says.

According to Assaly’s sworn statement, the charitable foundation’s directors approved the transfer deal on Sept. 4, 2009. The statement includes a copy of the resolution Assaly alleges they approved, signed by each of the five directors, including Meuse.

In his affidavit, Meuse says he has “no recollection of ever reviewing or discussing this document, let alone signing it.” He says he contacted the other two third-party directors at the time, Denis Vincelette and Paddy Dupuis, and both are “equally adamant” that the alleged Canada House transaction was never discussed.

“I believe that the resolution attached to Assaly’s affidavit is a forgery,” Meuse alleges in his sworn statement.

Minutes of the Sept. 4, 2009, directors meeting, filed with the court, make no mention of the issue.

The provenance of Canada House is meaningful because it’s the major asset of the charitable foundation. Along with four Assaly companies, the foundation is now in receivership.

Its assets offer the best hope to investors who allege Assaly misappropriated millions of dollars they put into two of his real estate projects. Assaly denied that allegation in an affidavit filed with the court in March.

Acting in his capacity as president of the foundation, Assaly transferred ownership of Canada House to himself and his wife on May 24. In doing so, he cancelled the mortgage owed to him and released the promissory note debt, his affidavit says, eliminating $1.2 million of debt on the foundation’s books.

In a supplementary report filed with the court Wednesday, the courtappointed receiver, Doyle Salewski Inc., filed balance sheets for the foundation for the period Aug. 31, 2008, to Aug. 31, 2012.

All show Canada House and the promissory notes as assets of the foundation, and none show any material amount payable to Assaly and his wife. The books list annual liabilities in the $100,000 range — far below the $1.2 million that Assaly’s affidavit alleges the foundation owed him and his wife.

The duelling affidavits prompted Assaly’s lawyer, John Smith, and Shael Eisen, lawyer for the charitable foundation, to ask Superior Court Judge Paul Kane for a trial to settle the issue of who the rightful owner of Canada House actually is.

Last month, Kane ruled the transfer “prima facie void.” Doyle Salewski and the investors want Kane to confirm that preliminary finding this week.

In light of what Eisen called Meuse’s “inflammatory” allegation of forgery, both he and Smith argued that a trial should be held within 60 days to settle the ownership issue. “I don’t see how you can decide this based on two contradictory affidavits without cross-examination,” Smith told the judge.

But Kane said Assaly had been on notice for a month that the ownership issue would be on the agenda this week, and hadn’t produced any evidence at all until late Tuesday, when Smith filed his affidavit and another brief sworn statement by Frank Fee, an Assaly lawyer in Florida.

Kane said it was “too convenient and self-serving” for Assaly’s lawyers to now say, for the first time, that a trial was required to settle the matter.

Kane said Assaly’s “pattern” of moving assets out of Ontario to the United States has potentially led to a “deterioration in (the investors’) ability to receive anything through a receivership.” He said he will hear arguments Thursday and rule on the ownership issue after that.

Earlier Wednesday, lawyers for the receiver and the investors asked Kane to make Assaly, his companies and the foundation responsible for paying $712,000 in legal and other fees incurred as part of Doyle Salewski’s investigation of the investors’ allegations.

Justin Fogarty, the investors’ lawyer, argued that the complexity and cost of Doyle Salewski’s investigation escalated because of Assaly’s “blatant disregard for the spirit and intent” of Kane’s orders.

“He had no problem taking care of himself while my clients remained unpaid.” he said. “They chose to ignore, to obfuscate, to delay.”

But Smith and Eisen argued that the fees were excessive and should be limited to preserve any hope that investors can recover their money. “The point here was to ensure that the people who invested money get some money back,” Eisen said. “The way this is going, there won’t be any money.”

The two lawyers also argued it was unfair to make Assaly personally liable for the fees, pointing out that he has not been convicted of any offence. Smith complained that lawyers for the inspector and investors “are asking for a personal judgment in excess of $600,000 against my client without a trial.”

Kane reserved judgment but is expected to rule before he departs for three weeks vacation, starting next week.