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By Jim Coggins
He was commenting on decisions announced by the Ontario Securities Commission (OSC) on August 13 regarding three men who had worked for the organization. The case involves an alleged "Ponzi scheme" operated by a man named Gordon Driver between 2006 and 2009. Although the OSC has ruled that the three men associated with Crossroads were "not party to the fraud," it has concluded that they acted inappropriately. Crossroads, founded by David Mainse, produces 100 Huntley Street, the longest running daily Christian television program in Canada. In 2007, his son Ronald was serving as president of Crossroads, and another son, Reynold, was president of World Class Communications, which had contracts with Crossroads to promote international humanitarian aid missions. David Rutledge, a cousin of Ronald and Reynold, was also working under contract with Crossroads. Allegations According to a Statement of Allegations issued by the OSC on August 12, Gordon Driver "was the directing mind of a fraudulent scheme involving Axcess Automation." Driver apparently told investors that he had developed computer software that would give better guidance for trading in stocks (S&P 500 futures) and generate very large returns. Between February 2006 and March 2009, 200 investors invested over $15 million in the scheme. Driver invested $3.7 million in stocks, losing all but $150,000. He returned $10.4 million to some investors to maintain the illusion that the scheme would generate remarkable returns, and "misappropriated" $1.1 million for his personal use. These allegations have been made by OSC investigators, but the case has not yet been heard by the OSC. Driver had worked briefly for Crossroads in 1977, but had then moved to the United States, where he eventually established Axcess Automation. Driver returned to Canada, moved into the same neighbourhood as Ronald Mainse in 2005 and started attending the same church. Because they had known Driver before and trusted him as a Christian brother, Ronald and Reynold Mainse and David Rutledge began investing in Driver's scheme in 2007. When Driver offered them a commission for bringing in new investors, the three also began encouraging friends and family to invest. Rutledge and Ronald even set up an investors' group to facilitate these investments. According to a settlement agreement announced by the OSC on August 13, Ronald Mainse invested $31,200 and convinced other friends and family to invest a further $55,000. Driver returned to Ronald commissions and profits amounting to $138,176 - a return on investment of over 400 percent in less than two years. According to another settlement agreement announced by the OSC on August 13, Rutledge invested $26,000, encouraged others to invest over $2 million more and received $262,818 in profits and commissions. According to the Statement of Allegations, Reynold Mainse convinced 22 investors to put over $4 million into the scheme and received commissions of $210,219. |
Settlement In the Statement of Allegations, the OSC stated that Rutledge, Ronald and Reynold "were not party to the fraud." That is, they did not know the scheme was fraudulent. However, Ronald and Rutledge admitted that they lacked knowledge about investing in securities and "failed to exercise due diligence." In addition, the OSC stated that none of the men, including Driver, was licensed to sell securities in Ontario. In accepting commissions, the three Crossroads men were violating securities laws. In their statements to the OSC, the three said that they had not realized this was improper until late in 2008. On August 13, 2010, the OSC announced negotiated settlements with Ronald and Rutledge. Simmonds told CC.com that the two had "paid dearly" for their mistakes. According to the settlement reached with Ronald, he loses his $31,200 investment; he must repay the entire $138,176 he received (which will go to compensate other investors); he was fined $10,000 plus $700 for costs of the investigation; and he has been forbidden to trade in securities for eight years. According to the settlement reached with Rutledge, he must repay the entire $262,818 he received (which will go to compensate other investors); he was fined $35,000 plus $2181 for costs of the investigation; and he has been forbidden to trade in securities for 15 years. Rutledge has paid $90,000 of the money, he must pay $120,000 from the proceeds of the sale of his house, and he still owes $90,000. The case against Reynold has not yet been settled. A warning Simmonds told CC.com that the Crossroads board handled the situation prudently. Not only were the three men involved asked to step back from the ministry for a time, but the board also ordered a complete audit. This confirmed that no Crossroads ministry activity nor any of its funds had been involved in the scheme. The three men had promoted the scheme to family and friends, but had not mentioned it on air. As acknowledged in the OSC documents, the reputations of the three Crossroads men have suffered significantly. Neither Reynold nor Rutledge has been under contract with Crossroads since 2008. After being suspended from the ministry for a time, Ronald has returned -- but not as president. He appeared on 100 Huntley Street in October 2009 and talked about his failures in the matter. After Simmonds was appointed CEO of Crossroads in November 2009, he invited Ronald to return to Crossroads as executive producer of 100 Huntley Street and spiritual director of the ministry. While acknowledging Ronald's failures, Simmonds noted that the three men associated with Crossroads had cooperated fully with the investigation. He said he has been "absolutely impressed" with the way Ronald has admitted his failures and handled the situation. Simmonds said that the ministry is convinced Driver targeted the men associated with Crossroads. "Unfortunately, the faith community can be easily taken advantage of because it highly values trust in relationships, said an August 13 Crossroads news release. "This situation underscores the need for greater awareness and diligence to avoid vulnerability." Simmonds told CC.com he hopes Crossroads' "terrible experience" will serve as a warning to other Christians. He added, "It's a fallen world." August 26/2010 | ||
"CHRISTIANS are vulnerable because our value of trust causes us to
want to trust people," said Don Simmonds, CEO of Crossroads Christian
Communications. "We need to make sure we are diligent so we are not
taken advantage of."