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A Sigh of the Times :CRA SOTW

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Alan Baggett

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Nov 18, 2008, 9:12:56 AM11/18/08
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A Sigh of the Times :CRA SOTW

A legion of debt; Branch 9's collapse has brought financial woes to
widows and pensioners

Connie Raymond fell into a deep funk in the fall of 2000, after her
husband of nearly 40 years died.

For 10 months, the suddenly widowed 62-year-old could not eat or sleep
properly and barely left her house.

"Finally, my doctor just said to me, 'If you don't get out, I'm going
to have to admit you to St. Mary's for evaluation,' " says Raymond.

Although grief lingered, she decided by late 2001 that she had to get
on with her life and get active again.

"Stupid me, I joined the legion," says Raymond, a diminutive woman
with fashionably short white-and-grey hair. "I picked the wrong one."

Raymond, who had been a Royal Canadian Legion member decades earlier,
saw a newspaper advertisement for the celebratory reopening of
Kingston's oldest branch, No. 9, at its new headquarters on Railway
Street.

"After I joined, I heard all these rumours," she says. The gossip was
about money, fragmentary talk of missing cash and mounting debts.

She ignored the unsubstantiated chatter. Branch 9, celebrating its
75th anniversary that year, was renowned in the community for its
fundraising and community work.

Raymond was determined to move past the death of her spouse. The
challenge of volunteer work in a respected, non-profit organization
with a legacy of military commemoration was the emotional tonic she
needed. Within two years, she became an executive member.

In 2005, she was elected president - just in time to preside over the
historic organization's demise.

Three months after Raymond's installation as president, the 79-year-
old institution that was her new companion collapsed.

Hobbled by a debt that had swelled beyond $350,000, Branch 9 folded.
The charter was surrendered to senior legion officials. The building
was closed and all assets sold. More than 400 members, including many
who had been No. 9 members for decades, scattered. Some joined another
Kingston branch, No. 560. Some quit the legion in disgust.

Two years after Branch 9 closed, debts and questions linger.

Raymond, now a 68-year-old pensioner, lives in an apartment with a pet
cockatiel named Joey on $1,300 a month.

She has been told by the Canada Revenue Agency that she's personally
responsible for a $40,000 debt that the branch racked up and remains
unpaid.

"How do they expect me to live and pay that off?" she wonders.

There has been no public accounting of the financial calamity that
consumed an organization that annually elicited tens of thousands of
dollars in donations from citizens and gave thousands to local
organizations.

Governing legion bodies, Ontario command and the national office,
Dominion Command, have conducted no investigation and show no interest
in determining what went wrong.

Peter Williams basks in the late summer warmth in his secluded
Inverary backyard, a 20-minute drive north of Kingston.

The 65-year-old retired accountant lounges in a chair beneath a green
sun canopy erected next to a simple, sided bungalow. Beads of sweat
speckle the glass of iced tea on a table next to him.

Williams sweeps his right hand through the air, magician like, without
dropping the cigarette pinched between two fingers.

"We don't want to lose all this," he says. "Take a look around you."
Legion debts will cost Williams his home, he fears.

In 2003, he loaned the branch $90,000 by taking a mortgage on his debt-
free Inverary home. Branch 9 feared it would close that year without
an infusion of cash. The branch's move in 2001 from a large, downtown
complex to the much smaller building on Railway Street had not
stanched debts.

"We lent them the money [thinking] we were lending the money to the
Royal Canadian Legion, rather than the branch, so that they wouldn't
lose the charter," Williams says.

A member for more than 20 years, Williams loved the branch and did not
want to see it close. He had regularly put in hours of volunteer work
on charity projects and he served four years on the executive.

The legion began making repayments on the loan to Williams and his
wife, giving them $868 a month. When the branch closed suddenly in
2005, the payments stopped. After the sale of the branch's assets,
Williams was repaid roughly half of what was still owing.

Today, with interest, the couple is owed more than $70,000, according
to their calculations. They have continued to pay their monthly
mortgage payments, in part, using savings.

The couple lives solely on government pensions.

"We really scrape the bottom of the barrel because we're both seniors
now, money's not plentiful," says Williams. The monthly payments are
beginning to hurt.

Williams thought that by now, the loan to Branch 9 would have been
repaid. He thought that the national legion organization, or the
provincial office, to whom the local branch reported, backed the
debt.

"That's what we assumed," he says.

Both bodies have said it's not their problem.

In a letter to Williams in March, national legion president Jack Frost
stated that the sale of the branch did not allow the full repayment of
debts.

"Your legal recourse at this time would be to bring civil action
against the ex-members of the executive of the branch in an attempt to
recover your money," Frost wrote. Another legion official had already
told Williams the same thing.

"It's kind of sticking in my craw, the letter we got back from
Dominion Command was a snot-o-gram, as far as I'm concerned," Williams
says.

The branch had to get approval from the provincial body before
Williams' loan could go through.

"It was almost like they were underwriting it," he says. "I thought
they were like a co-signer."

The Canada Revenue Agency won't talk about its pursuit of pensioners
and war veterans for unpaid legion debts. "I wouldn't be able to
provide you with any comment in relation to any file," said Patricia
Dupras, a collections officer based in Kingston.

Dupras' name appears on letters sent out in May this year to more than
a dozen people, all former executive members of Branch 9, who've been
told they're personally liable for the branch's debt to the Canada
Revenue Agency.

Government officials won't tell those affected who received letters
and they won't say what the debts total.

Don Prue, a Korean war veteran and 55-year legion member, was told he
must pay $43,000.

"We don't know what's going to happen," says Prue, 77, who was
president of Branch 9 for three years beginning in 2002.

Officials at the legion's national and Ontario offices say they are
not responsible and can't be held accountable for these debts.

"Not in any way, no. It's the responsibility of the branch officers,"
says Dave Gordon, the recently installed executive director of Ontario
command. Branches are autonomous, he says.

"Right now, they're trying to talk their way out of it," says Prue,
who believes Ontario officials should he held responsible.

He notes that a committee of Ontario officials, led by local legion
member Erl Kish, seized control of Branch 9 in the fall of 2005.

Ex-soldier Prue speaks of this as a battle that can be won. Ontario
officials are liable for the debts, he claims.

"We gotta let them make the first move, the government and the Ontario
command," he says.

Dupras referred questions to a spokeswoman.

"Our collections policy is to resolve issues in a mutually
satisfactory way," said Jelica Zdero, a Mississauga-based spokeswoman
for the Canada Revenue Agency.

Citing privacy laws, she would not discuss specifics.

"What we do is encourage our clients to contact us and work together
so we can develop a suitable payment arrangement even when the
capacity to pay in full is not present," she said. "The Canada Revenue
agency is committed to fulfilling its mandate of collecting the full
amount of any debt owed to the Crown."

Connie Raymond believes the total debt to the Canada Revenue Agency
may be roughly $85,000, a combination of unpaid GST and employee
deductions. Interest continues to add up.

She has appealed the assessments filed against her, and she believes
most of the others who were assessed have done likewise, although
Raymond was recently told she must begin making payments while the
appeal is considered.

The federal government has sweeping powers to collect the money. It
can confiscate GST rebates, income-tax refunds and garnish wages.

The dissolution of Branch 9 in September 2005 was approved by Dominion
Command, the national office of the Royal Canadian Legion.

It authorizes the revocation of a branch's charter, based on an
assessment of the branch's viability by provincial officials.

"It came to the point where that was the [Ontario] command's option to
us, was to revoke the [Branch 9] charter and we agreed with their
recommendation," says Brad White, director of administration at
Dominion Command in Ottawa.

Ontario command appointed a three-person committee to take control of
Branch 9 and dispose of its assets. The group was led by Erl Kish, a
vice-president in Ontario command at the time.

"It wasn't a happy thing," says Kish, who lives in Kingston and is a
member of Branch 560. "I had a lot of good friends at Branch 9."

The executive of Branch 9 had closed the Railway Street operation in
August 2005 after it lost its liquor licence over unpaid provincial
sales taxes. Without alcohol sales, there was virtually no revenue.

At a meeting in the Railway Street building Sept. 6, Kish told about
100 Branch 9 members that they must surrender their charter or have it
revoked.

Kish and two colleagues assumed signing authority. Raymond was told
not to contact any creditors or the branch lawyer.

As the members left the hall that night, a locksmith went to work.

"As we walked out, he changed the locks on the door so we weren't
allowed to get anything," Raymond recalls.

Kish and his crew began packing up the contents of the legion hall and
seeking appraisals so they could sell the property.

Branch member Peter Martin believes they acted inappropriately.

"They should not have went in," he says.

Martin had good reason to be concerned about the disposal of the
legion's assets. He held a first mortgage on the property.

Martin had loaned the branch, of which he was a member for more than
30 years, $150,000 in 2001.

His loan was in the form of a chattel mortgage, meaning it was secured
by all of the contents, as well as the property. Martin had the right
to everything that Branch 9 owned.

"I guess I asked them if they could read," he says, recounting a
sarcastic, rhetorical question he posed to the men emptying the hall.

They told him they had read the agreement.

Before he could stop them, he believes "truckloads" of contents
disappeared, including liquor, pop, food, and money.

Martin contacted his lawyer and, roughly eight weeks later, the
Ontario command officials handed the keys to Martin.

"Legally, Peter Martin owned the whole thing," says Kish.

Kish says his team had time only to do an inventory, obtain appraisals
and prepare to have an auction, but they did not sell anything.

"We lost total control when [Martin] got the assets turned over to
him," Kish says.

Martin sold the property to A World of Rentals, a company operating
next door to the legion hall, for $266,000

Martin's mortgage was paid off. He received nearly $173,000, according
to records of the sale Peter Williams received nearly $36,000 of the
more than $90,000 he was owed. A retail sales tax lien of more than
$26,000 was paid off. Outstanding city taxes of more than $9,200 were
paid. The balance of the money covered legal and real estate fees.

Some debts remained unpaid.

Martin also profited from the sale of other contents although he could
not provide a value.

If it's possible to conduct a post-mortem on the death of Branch 9,
and learn lessons or affix blame, senior legion officials don't seem
to want to do it.

It is surprising, in a national organization that is withering.

In the last 10 years, the legion lost roughly a quarter of its
membership as more than 125,000 names vanished from the roll,
according to figures provided by the national office.

From 1997 to 2006, membership plummeted from roughly 514,000 to
roughly 389,000. In the last year alone, the organization lost nearly
17,000 members.

The decline is largely because aging veterans are dying and are not
being replaced by new members, even though the legion permits any
citizen to join.

For two years now, Ontario Command, based in Toronto, has had an
estimated 10 boxes of files and documents that were seized from Branch
9 in 2005 when it closed, according to executive director Dave
Gordon.

"We have the files that were turned over to us by the committee that
wound down the operations of the branch," Gordon says.

He says he hasn't really looked through the files, other than to
cooperate with the Canada Revenue Agency's efforts to recover unpaid
taxes.

Don Prue says Ontario officials can't claim they did not know the
situation at Branch 9.

When the branch secured the $90,000 loan from member Peter Williams in
2003, Prue, who was president at the time, says he got approval from
Ontario Command.

"I had to, anything you do, you gotta get provincial command to
approve it," Prue says.

The bylaws of the legion require that major financial dealings, such
as mortgages, must be approved in writing by provincial officials.

Approval doesn't mean that the provincial or national bodies are
accountable for the local decisions.

"The branches are autonomous, in that they look after their day-to-day
operations," says Gordon. "It would be the branch that would be
responsible for keeping the finances up and their debts paid."

Gordon could not confirm that Branch 9 got approval from Ontario
command for the $90,000 loan, or for the $150,000 loan from Peter
Martin in 2001.

He also could not say if the branch got approval for other major
initiatives, such as the sale of its downtown headquarters in 1999 and
the purchase of the Railway Street site the following year.

Gordon says he's new to the executive director's post, did not handle
the Branch 9 file and could not put the newspaper in touch with anyone
who could answer detailed questions.

Former executive members of Branch 9 say they don't have access to any
branch records so they can't provide any evidence that shows the
branch followed the rules in its financial dealings.

White,of the national legion office says branch autonomy is a double-
edged sword.

"They don't want us interfering in their affairs and then branches,
when they get into trouble, say, 'It's your responsibility to come and
bail us out,' " he says.

The notion of autonomy chafes for some ex-Branch 9 members.

Prue points out that a significant chunk of the money each legion
member pays yearly goes into the coffers of the national and
provincial bodies. At Branch 560, Prue pays a $42 a year membership
fee.

Dominion Command gets $10.55 of that. Ontario Command gets $11 and
$7.42 goes directly to the separately operated legion magazine. Every
legion member gets a membership and must pay for it.

"You tell me who runs the legion?" asks Prue. "They do."

While the Legion's national and provincial offices revoke charters and
wind up branches, they don't help them stay afloat.

"We've never had a branch assistance fund," White says.

That's the fault of members, he says. The organization is bottom-up,
he says, since members from across the country meet at regular
conventions to revise and establish bylaws.

The death of Branch 9 was 20 years in the making, Chuck Beavis
believes.

A member of the branch for more than three decades when it folded,
Beavis is the grandson of a Vimy veteran. His grandfather was wounded
at the famous First World War battle of 1917 that cemented Canada's
international reputation as a formidable military force.

Beavis points to the branch's decision in 1984 to build a large
addition onto its existing home at 64 Barrack St. as a turning point
in branch history.

"That was a big mistake," says Beavis.

He is one of the former Branch 9 executive members being held
personally responsible by the Canada Revenue Agency for unpaid debts.

Beavis received notices saying he's liable for more than $66,000 in
unpaid taxes.

Branch 9 moved to the roughly 20,000-square-foot Barrack Street site
in 1977.

It bought the property from the Greenwood family for $920,000,
entering into a high-interest mortgage with it to cover more than 80
per cent of the cost, according to public records.

At the time, the branch had a small headquarters on Princess Street.
In September 1984, the branch secured permission from the city to
build a three-storey addition that would add a bingo hall and two
floors of meeting and games rooms.

Two months later, the branch took out a $1-million mortgage.

"That was the downfall," says Beavis. "The building was paid for, we
were debt-free."

The legion hall roughly doubled in size. With a booming membership
that is estimated to have hit 2,000 at one point, the hall was busy.
But the branch was servicing a large debt and membership began to
decline.

The yearly fees collected from members comprise a small portion of
branch revenue, but it counts on them to visit the hall and spend
money on food and drink.

In a controversial decision, the branch sold the Barrack Street
property to Kincore Holdings for $1.25 million in 1999, property
records show.

The branch bought a new home, 142 Railway St., in October 2000 for
$207,500. By this time, membership had shrunk by 70 per cent, to
roughly 600 people.

Beavis says many more, disaffected by the move, left after the branch
reopened at Railway Street in 2001.

Although the new building was much smaller, and the Barrack property
had sold for a third more than the branch paid for it, the branch was
still in financial trouble, although members claim they didn't know
it.

"When we moved to Railway Street, I was under the understanding that
we were debt-free," says Beavis.

New debts began piling up.

The Railway Street building required costly renovations before it
could open with a bar and kitchen.

By 2004, Beavis was branch president. The job was tantamount to
lifeguard, as he tried to save the branch from drowning in debt.

"We were in such bad straits then, that I just worried about it all
the time," he says.

Wracked by anxiety, Beavis had to quit the job after just a few
months.

"My doctor advised me to give it up," he says.

There was one more short-term president before Connie Raymond stepped
into the breech in 2005. Elected in May, she took over on June 1. That
day, she arrived to a dark legion hall.

The electricity had been cut off because the utility bill had not been
paid.

"That was my introduction to presidency," says Raymond.

The Royal Canadian Legion is an independent, non-profit, fraternal
organization. Revenue comes from dues and sales in restaurants and
bars located inside legion halls.

It also raises money through the national Poppy Remembrance Campaign
each fall, part of its mission to perpetuate the tradition of
remembrance for more than 117,000 Canadians who have died in two world
wars, the Korean war and other conflicts.

The poppy trust fund in Kingston, a registered charity, took in more
than $36,000 last year, according to government records.

The legion has given back thousands of donated dollars to Kingston
hospitals to buy equipment. As branches disappear, so do the charity
contributions and the untold hours of volunteer work done by legion
members.

Branch 496 in Sydenham, with nearly 300 members, ran two fundraising
events last year for needy citizens, raising more than $26,000 at two
one-night events.

A screen printing business is the first tenant to move into the last
Branch 9 legion hall.

The Railway Street building, bought by a neighbouring business, is
being converted into rental space for commercial and retail
operations.

A painter is applying finishing touches to part of the renovated
building on the fall day that Connie Raymond and Chuck Beavis visit
for one last time.

"Oh my God, the cabinets are still here," says Beavis, as he walks
into a foyer and discovers a bank of floor-to-ceiling displays cases,
perhaps five metres long.

The blond pine cabinets, glass from waist height to the ceiling, are
dusty and empty, where once dozens of war medals and other memorabilia
was proudly displayed. The impressive wall of wood and glass was
abandoned when the building was sold.

Raymond frowns and shakes her head at what she sees.

Furniture, light fixtures and appliances, legion remnants, are strewn
throughout the 7,000-square-foot space, discarded rather than sold to
pay off debts.

"That cost us a fortune," says Raymond, looking up at the elaborate
system of duct work that was installed to vent the building.

The tour rekindles memories and reinforces a lingering feeling.

"I thought I could make a difference and I still think if they'd left
us alone we could have survived," Raymond says. "We'll never know."

rtr...@thewhig.com


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