Mikestrathdee’s Blog


Look to the U.S. for the next big catalyst for charitable giving

A couple of decades ago, some of the largest Canadian charities were suffering. Federal cuts to transfer payments, seen as necessary to balance the national government books, were a body blow to universities, hospitals and others.

Help for the charitable sector came in the form of a policy change in line with what donors enjoy in the U.S.  After considerable lobbying, Ottawa agreed to “temporarily” reduce in 1997, then permanently eliminate in 2006, the capital gains tax on appreciated securities when donors gifted them in kind to charity.

By some estimates, that single change resulted in charities receiving an extra $1 billion in donations almost every year since 2006.

With the Canadian donor pool aging and reportedly shrinking, maybe it is time for the sector to look to the U.S. once again for a big idea to kick start the next wave of giving.

In December 2015, Congress passed a bill making permanent a charitable gifting option that allows donors aged 70.5 and older to withdraw IRA funds – a tax-deferred retirement account analogous to our Canadian RRSPs –  to donate to their favorite charities. Withdrawals of up to $100,000 each year can be made without these distributions registering as taxable income.

Given the billions of dollars of RRIF (Registered Retirement Income Fund) income that Canadian baby boomers have to begin drawing down as they turn 72, there are massive possibilities here. Not only do some people not need all of the income they are forced to begin drawing, many are not looking forward to the accompanying tax hit.

A significant number of Canadians will move into the top tax bracket when they draw their last breaths, if that occurs before they have depleted their RRIFs.  In Ontario, that top bracket current stands at 53.5%. Charitable tax credits have been adjusted to match.

Getting a cash-strapped federal government to consider a break for retirement funds donated to charity will not come easily. Many leaders in the charitable sector will say their top lobbying priority will be convincing Ottawa to reinstate the proposed capital gains exemption for gifts of real estate and private shares that was accepted, but not enacted, by the former Harper government.

(Donald K. Johnson, who led the successful lobby for favorable treatment of donated securities some years back, is also pushing Ottawa to give exemptions for real estate and private share gifts. A Toronto Star story says such a change would result in additional donations to charities of about $200 million a year. The cost to the federal treasury would be between $50 million and $65 million.)

But it’s also time to start asking whether the lowest-hanging fruit for growing charitable donations could lie with the ever-increasing wave of RRSP savings that need to be converted to RRIFS and withdrawn.

Lots of good causes sure could use the help.

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Where did all the money go? – old stories from the late 90s
September 4, 2014, 2:03 pm
Filed under: Business, Financial Management, Fraud, Investing, Uncategorized

Copy of K-W Record article, March 29, 1999 – front page, A1.

Shareholders left to wonder where money went

Mike Strathdee
RECORD STAFF
Monday 29 March 1999

Former executives of Struthers Inc. admit that they broke Ontario securities laws when they sold shares in a controversial swine-breeding company that is millions of dollars in debt and has left hundreds of area investors with virtually worthless shares.

“There’s clearly infractions,” Jason Struthers, son of company founder Ron Struthers, admitted in an interview with The Record.

Struthers Inc. is one of a handful of companies started by Ron Struthers to commercialize swine breeding and embryo transplant technology. Building on his father Stan’s breeding business, Struthers had offices in Guelph until last fall, until he was evicted for non-payment of rent.

Struthers Inc. is now largely based in South Carolina. Its Canadian presence consists of space in a lawyer’s office in Mississauga.

Jason Struthers, formerly the company’s secretary/director of international business development, and colleague Paul Allcock, who served as director of corporate affairs, say they ran afoul of securities law after receiving bad advice.

Under provincial securities law, a company must clear a prospectus, a detailed offering document, with regulators in order to sell shares to more than 50 shareholders. The Record has obtained a shareholders list which indicates that shares in several Struthers companies were sold or issued to more than 1,200 people, including 300 in Ontario and close to 200 within the Waterloo Region-Wellington and Perth County area.

Investors paid tens and in some cases hundreds of thousands of dollars for Struthers shares, which were sold at various times for $1, $3 and$4.50. Struthers Inc. stock began trading on the U.S. over-the-counter bulletin board at $6.50 a share last June, but quickly fell to only a few cents and never recovered. The shares last traded for 1.5 cents each, earlier this week.

At least two regulatory bodies — the Ontario Securities Commission in this province, and the Securities and Exchange Commission in the U.S. — are investigating the Struthers companies, The Record has learned.

The OSC has sent a five-page questionnaire to investors asking them about their investment knowledge, how they became aware of the Struthers companies, what information “were you provided with that induced you to make your investment,” in which Struthers business the investment was made, and who sold them the investment.

And the RCMP has interviewed a number of people in an effort to determine whether it has grounds to launch a criminal investigation. “I’ve been co-operating with the RCMP on this,” a haggard-looking Ron Struthers told The Record.

Struthers says he has met with RCMP officers a handful of times since an initial, four-hour interview two months ago. He wouldn’t comment on what the RCMP or securities regulators are looking into.

He did confirm when asked, however, that Revenue Canada has been looking at the books of the Struthers companies for the past three months in connection with money owed for employee payroll deductions.

“I don’t have the books, I don’t have access to the books, but I do know Revenue Canada has been in and done the audits.”

The OSC can ask a court to force a company to file financial statements and a prospectus. The agency can also seek an order directing a person to repay any part of the money paid by a security holder for securities.

Struthers raised at least $6.5 million US through the sale of shares over a period of several years. Shareholders have never received financial statements for the company, and only received share certificates early this year.

“You’ve got to understand something,” Jason Struthers said when asked about why the company didn’t comply with regulatory requirements. “When Ron started this company, he had zero knowledge of how a public company functions. We relied on counsel to do this; now it turns out that the information which counsel gave us was dead wrong.”

Allcock also pointed fingers elsewhere when asked about why proper procedures weren’t followed when shares were sold. “We were always advised that we didn’t need it (a prospectus),” he said. Our advice has been the pits. We could’ve gone to the variety store and got better advice.”

Jason and Ron Struthers were removed from the board and management of Struthers Inc. in a December restructuring.

Allcock, who said he and Jason raised the first $500,000 for the company, claims to have left the firm earlier in a dispute over the best way to raise money.

© Copyright Kitchener-Waterloo Record 1998

Copy of K-W Record article, March 29, 1999, business section, page C1.

Guelph contractor sues U of G

Unpaid renovations at SRI office prompt Van-Con’s $130,000-plus claim
By Mike Strathdee
RECORD STAFF

A Guelph contractor is suing the University of Guelph to recover payment for renovations he did at a university research park for swine breeding companies formerly operated by area businessman Ron Struthers.

Van-Con General Contractors is seeking more than $130,000 plus costs for renovations done to an office building at 150 Research Lane between October 1997 and January 1998.

The company, operated by Ike Van Soelen, received a judgment last July against Struthers Research Inc. (SRI), one of several companies started by Ron Struthers, a Cambridge businessman and former Pentecostal minister.

But after being told that SRI has no assets, Van Soelen decided to pursue a claim against the university, which has since rented the research park space he renovated to a Guelph marketing company.

Ironically, that firm has also received a court judgment against a Struthers company for work it never received payment for.

The university, in its statement of defence, denies any liability or responsibility for work done by Van-Con. In a cross-claim, however, it seeks to hold SRI and Struthers International Research Corp., another associated firm, responsible for any amount it is found to be liable to Van-Con.

It also seeks a judgment for $100,000 against Struthers “as damages for breach of contract regarding the agreement to lease between the university and Struthers IRC.”

Van Soelen says the university is benefiting from work he did in the building. He has also placed a lien against the property.

In its statement of claim, Van-Con alleges that a university official approved drawings and specifications for work done at the building, but at one point, expressed concerns about the financial viability of Struthers and instructed Van-Con to cease work.

The statement of claim goes on to allege that, subsequently, the official said the university “no longer had any financial concerns about Struthers,” and that Van-Con could proceed with its renovations “since everything was now in order.”

Van-Con also alleges that university officials “inspected the quality of work from time to time during the course of its progress,” and that Struthers was indebted to the university “for the rent of facilities elsewhere, in the amount of $148,946.00.”

A letter sent by a university lawyer to a former Van-Con lawyer indicates that Struthers’ tenancy in the research park “was terminated on March 4, 1998, as a result of arrears in the payment of rent.”

Earlier this month, a few days after the university filed its statement of defence in connection with the Van-Con lawsuit, the office of research issued a brief press release distancing itself from Struthers.

“In 1994, Struthers Research began investing in swine embryo research at the University of Guelph,” the announcement stated. “The University of Guelph no longer has a research contract nor any research involvement with Struthers Research and parties related in any way to Struthers Research. The University of Guelph does not have a licensing agreement with Struthers Research or any other Struthers entity.”

Larry Milligan, U of G’s vice-president of research, said in an interview that the university is “quite deliberately declaring that there is no linkage, that there is no licence for the technology in place.”

But more than a week after the announcement was made, a share-offering document available by fax from the South Carolina office of Struthers Inc., the U.S. parent firm of the companies named in the lawsuits, still indicated that the company “intends to take full advantage of it’s (sic) strong working relationship with the University of Guelph, a
world-renowned leading animal science institution.”

Doug Beatty, vice-president of operations for Struthers Inc., brushed off the U of G announcement. “They can say whatever they like,” he said.

“There’s things happening behind the scenes here. It’s unfortunate. They pushed Struthers out of Canada.”

Company founder Ron Struthers broke his silence on the events Thursday, and provided the Record with a copy of a 1994 contract between U of G and Struthers Research.

Money owing to U of G is for subsequent, related work, and doesn’t affect Struthers Inc.’s ability to commercialize the embryo-transplant technology, he said in an interview.

“Basically, the technology is basically there for the use of this corporation (Struthers Inc.),” he said.

U of G moved to dissociate itself from the Struthers companies following months of talks because “we’re not getting anywhere in clearing up the back debt” of more than $200,000 owed to it by Struthers, Milligan said.

Milligan said he has received a legal opinion which suggests that the swine- embryo transplant technology “is owned by the university.”

U of G hopes to recoup its losses by commercializing that technology, possibly through a licensing agreement with another firm.

Struthers Inc. has not publicly commented on its view of the millions of dollars in debts run up by Ron Struthers and other firms which bear his name. The company said in December that Ron Struthers no longer holds a management role with the firm.

A November share-offering document for Struthers Inc., which has shares quoted through the U.S. over-the-counter bulletin board, claimed that the firm is “not presently a party to any material litigation,” and that its liabilities totalled $1,510.

The document doesn’t refer to litigation or liabilities involving its subsidiaries. Struthers officials have not responded to written questions submitted earlier this year to Richard Lane, their New York-based lawyer.

Beatty said this week that “Struthers Inc. is a debt-free organization.”

He wouldn’t say whether Struthers Inc. has any responsibility for debts run up by its subsidiaries or Ron Struthers. “You’ve sort of blindsided me. I don’t know.”

Ron Struthers says company officials verbally promised him, when he relinquished control of the firm in the fall, that all of the millions of dollars in debts run up by Struthers corporations and promissory notes to shareholders signed by him would be taken care of. “I’ve been told that they (Struthers Inc. officials) have a block of shares set aside for repayment of debts,” he said.

But he can provide no proof that any such agreement exists, as he didn’t get anything in writing. “No. I didn’t. Just trusted them.

© Copyright Kitchener-Waterloo Record 1998

Copy of K-W Record article, March 29, 1999, business section, page C2.

Newsletter to Struthers investors long on predictions, short on details

By Mike Strathdee
RECORD STAFF

Struthers Inc. has a bright new future ahead, the company’s latest newsletter to investors says.

The pork biotechnology company plans to train a team of surgeons in embryo-transplant techniques at a major United States university and announce contracts with major swine breeders, the newsletter states.

But the four-page document, which can also be seen on the Struthers Web site, is long on predictions and short on specifics.

Titled “the Rooter’s News,” the newsletter refers to several upcoming developments without providing any specific details.

“The commercialization of the embryo-transfer technology, through relationships already formed with leaders in swine genetics in North America, will represent a positive cash flow situation for the company and will allow for future growth and expansion,” the newsletter states.

Doug Beatty, vice-president of operations at Struthers’ Charleston, S.C., office, said the company won’t be able to identify any of its partners nor the university where the surgical training will take place, until after April 2.

Struthers has had to sign non-disclosure agreements with the universities involved, as “they don’t want a slew of people calling,” he said in a telephone interview.

“Unfortunately, we couldn’t (identify partners) in that newsletter,” he said.

”We wanted to, but we couldn’t.”

Contracts will be solidified and signed when company officials visit Iowa, Missouri and Illinois in coming days, he predicted.

Company president Don Bowden, a veterinarian from Iowa, is handling the negotiations, the newsletter stated.

The company also plans to purchase a mobile operating theatre, a surgical trailer, from Alpha Omega, an Indiana company which builds mobile CT and MRI scanners, Beatty said.

Struthers plans to have a six-metre (20-foot) surgical trailer based in Canada as embryo-transplant work progresses, he said.

Company founder Ron Struthers, who has not had a management role with the company since a restructuring last fall, told the Record last week that he is “pretty happy with the guys in the States” and the way efforts to commercialize embryo-transplant technology are proceeding.

He remains interested in working with the company which bears his name.

“My offer to the company is that anything I can do to take the company forward, any knowledge I have, I will give it to them.

“I’d like to help grow the company if it’s possible, if there’s a place for me to be there.”

Struthers said that when he handed over control of the firm late last year, he planned to go to South Carolina and work out of the Struthers office there with current management.

But poor health, including several operations related to kidney problems, have kept Struthers in Cambridge. “At this point, it’s not certain whether they want me there (U.S), ” he added.

© Copyright Kitchener-Waterloo Record 1998

HEADLINE Company ex-president has ‘no idea’ where close to $4 million has gone
BYLINE Mike Strathdee
SOURCE RECORD STAFF
DNOTE Ran with related story “Shareholders left to wonder where money went: Former executives of Struthers Inc. admit they broke securities law” Page A1 “Guelph contractor sues U of G: Unpaid renovations at SRI office prompt Van-Con’s $130,000-plus claim” Page C1 and “Newsletter to Struthers investors long on predictions, short on details” Page C2

There are a number of mysteries surrounding events involving Struthers Inc. over the last year.

Shareholders who have contacted the Record wonder how shares in Struthers Inc., which began trading at $6.50 each last June on the U.S. over-the-counter bulletin board, quickly fell off to only a few cents in value, and never recovered. The shares last traded at 1.5 cents on Friday.

They also wonder why, if the company’s new management wanted to assure investors that Ron and Jason Struthers no longer held any management positions in the company as of early December, the share certificates which were issued to shareholders Dec. 29 were signed by Jason Struthers, secretary, and Ron Struthers, president.

The certificates were printed before the management restructuring occurred, Ron Struthers told the Record this week. “Maybe it’s even prudent,” he said. “Why waste another $15,000 to $20,000 (to print new shares)? Use up the (old certificate) stock.”

It is unclear why Ron Struthers agreed to relinquish control of the company without having a detailed, written agreement as to the royalty stream he is to receive for his past work. Ron Struthers says he trusted his longtime advisers to take care of his interests.

Struthers Inc. documents suggest Ron Struthers will receive royalties, but don’t specify the amount. “It’s never been flushed out,” Ron Struthers asked when questioned on the subject.

“I’m not (financially) in a point where I could go to a lawyer, or even hire one.”

Another unanswered question is the issue of what happened to the millions of dollars raised by the company, given that scores of creditors, large and small, weren’t paid for services rendered.

A Struthers Inc. offering document available to prospective investors through a fax-on-demand service states that the company had total assets of $2,824 as of Nov. 15.

Ron Struthers insists that all of the money raised from investors — at least $6.5 million US, by some accounts more — was used to pay expenses related to research and market development efforts.

But The Record has obtained a copy of a draft, unaudited consolidated balance sheet that states it was prepared for the management of Struthers Inc., dated July 31, 1998, months before Ron Struthers stepped aside from the management of the company.

That document, which investors have never seen, stated that the company had cash of $3,933,191 at the July 31, 1998, end of year.

“I have no idea,” Ron Struthers said Thursday when shown the statement and asked about the discrepancy. “I’ve never seen these documents (before).”

If the company had that much money last summer, “we would not have been in problems,” he insisted.

Companies which have stock quoted through the over-the-counter bulletin board in the U.S. are not required to make the detailed filings of their financial statements with regulators which other publicly traded firms must do.

Struthers Inc. is in the process of having its financial statements examined by auditors, company spokesman Doug Beatty said. “When they’re ready, we’ll post them” on the company’s web site, he said.

One of the reasons that the financial statements are being changed is because the company’s asset base is changing, he said. “There was a lot of stuff that went missing.”

Beatty did not elaborate.

Ron Struthers denied that any assets of real value remain unaccounted for when the company was evicted from a leased research farm south of Guelph in October. “Nothing’s gone missing that would influence those books by more than $5,000 or $10,000,” he said.

“There was no assets you could pick up and walk away with.”



Why Business Matters to God – And What Still Needs to Be Fixed
January 9, 2013, 9:50 pm
Filed under: Business, Environment, Generosity, Investing, Theology, Uncategorized, Work

Why Business Matters to God (And What Still Needs to Be Fixed)
Jeff Van Duzer Inter Varsity Press, 2010, 201 pages
For Van Duzer, business is about much more than the bottom line. “Business is intended to serve the common good by providing goods and services that enable the community to flourish and by providing opportunities for individuals to express aspects of their God-given identities through meaningful and creative work,” he writes in Why Business Matters to God.
The author is a lawyer and Dean of the School of Business and Economics at Seattle Pacific University. His keynote address at the opening of the 2012 Mennonite Economic Development Associates (MEDA) convention of in Niagara Falls in November was by far the highlight of the event.
Van Duzer’s reflections on business and why it does matter as part of God’s redemptive plan for humanity encompass the scope of the biblical narrative – creation, fall, redemption and consummation. His incisive analysis will give pause to entrepreneurs and church leaders alike, for a variety of reasons. He persuasively explains why the cherished notion of the free market, for instance, is a post-fall construction, given its dependence on scarcity. His analysis touches on the role of a providing a living wage and care of the environment in conducting business, among other considerations. “Business must concern itself with redemptive as well as creative work.’’
The even-handed approach that he brings to this work is shown by the fact that early reviewers – business people and theologians, all found something different to pick at. “Business associates criticized the text as being too negative about business… My theology friends, however, argued just the opposite.”
I often read while traveling, but have never been asked by strangers about what I am reading. This book elicited questions from several people curious about its message. Well worth taking in at several sittings and pondering at length.