Saskatoon Lighthouse director used shelter funds for personal loans

An independent investigation has revealed an "overarching culture" of mixing personal financial interests with those of one of Saskatoon's most high-profile non-profits.

The court-ordered investigation, conducted by accounting firm MNP, was sought by three Lighthouse Supported Living board members after they became concerned by transactions uncovered during an internal audit.

The bulk of the transactions investigated by the accounting firm involved Lighthouse executive director and board member Don Windels.

In mid-January, Don Windels was placed on leave with two members of the board, Twila Reddekopp and Jerome Hepfner, taking over his responsibilities.

The shake-up came after the Saskatoon Fire Department revealed it had found dozens of issues at the shelter during inspections over the previous year.

Windels has served as director since 2003, leading day-to-day operations at the organization.

In a decision originally issued on Dec. 6, largely based on the findings of the investigators, Justice David Gerecke ordered Windels immediately removed from both roles.

Windels mounted an appeal in December just as a publication ban, which concerned the decision and MNP's findings, was set to expire.

A consortium of local news media, including CTV News, fought to overturn the ban.

On Monday, the Saskatchewan Court of Appeal issued a ruling which lifted the restriction on publicly sharing details related to the matter.

The court said Windels' future with the organization and other aspects of Gerecke's decision will be dealt with as a separate matter.

However, due to the court's ruling, the findings of the investigation can be shared publicly for the first time.

$287,000 IN PERSONAL LOANS

The MNP report outlines how, according to Windels' own admission to investigators, a series of loans were issued by the Lighthouse to his family's corporation between 2008 and 2013 that added up to $287,000.

Windels, his daughter Tiffany Klassen and his son-in-law Cory Klassen were on the Lighthouse board and signed the resolution authorizing one of the loans, worth $110,000, issued in 2009.

However, the authorization came after the funds had already been borrowed and repaid.

"On the whole, it appears the Lighthouse board was aware of and approved some of the loans," the MNP report says.

However, in some cases, Windels did not appear to have "strictly adhered" to the authorized terms of the loan, according to the investigators.

"For example, in one instance the amount loaned exceeded the approved amount and in another instance, the Lighthouse did not receive interest as required under the agreement."

In a sworn affidavit, Windels, who is also a certified accountant, called MNP's findings "misleading" and said all loans have been repaid.

"I deeply regret having failed in past, on several occasions, to completely separate my personal interests from that of the Lighthouse, " Windels said.

Attempts by CTV News to contact Windels have been unsuccessful.

Another chief concern for investigators was a transaction that effectively amounted to a $60,000 loan from the non-profit to Windels so he could purchase a home.

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In 2017, the board approved the purchase of a home in the city's Caswell Hill neighbourhood, according the MNP report.

The Lighthouse retained ownership of the home, while Windels spent years renovating it with the intention of eventually moving his daughter in.

Windels then bought the home from the Lighthouse in Dec. 2020 for $81,671, an amount that covered the cost of the home and the utilities, property taxes, insurance fees and interest on the initial loan.

MNP found the amount Windels paid in interest was "understated" as it didn't include the amounts "effectively borrowed" from the non-profit to cover the other costs the Lighthouse shouldered while acting as the home's owners.

"Mr. Windels was essentially a tenant of the property for four years, rent-free," the MNP report said.

Once he owned it, in Jan. 2021 Windels borrowed $176,250 against the property which was valued at $230,000 — a $170,000 increase in market value from when the Lighthouse sold the home to him.

"Effectively both parties invested in the property, but only Mr. Windels benefitted from any appreciation while the Lighthouse bore any risk of ownership."

In an affidavit, Windels said his daughter was in the midst of leaving an "unfortunate relationship" in 2017, and he was unable to obtain financing through traditional channels to purchase her home.

In his decision, Gerecke wrote scathingly of the arrangement.

"The Lighthouse expended $60,000 of its own money for a transaction that was solely to benefit Mr. Windels," Gerecke said.

"For nearly four years the Lighthouse did not have those funds available for programming or capital acquisitions and it also bore all the carrying costs concerning (house)."

Real estate also features prominently in another section of the MNP report.

Five houses owned by Windels' immediate family members, including his wife, were leased by the Lighthouse which in turn rented out rooms in the homes to clients.

The monthly leases ranged between $1,100 and $1,425.

While the arrangement has ended for three of the homes, at the time of the investigation two of the homes were still leased by the non-profit.

BLUE MOUNTAIN ADVENTURE PARK

Another area of focus for the MNP investigators was the relationship between the Lighthouse-owned Blue Mountain Adventure Park in North Battleford and the Kowach Foundation for Advancing Education Inc. — a company owned by Windels.

Blue Mountain is a non-profit corporation that operates a site where low-income people can participate in outdoor activities like camping and hiking.

Kowach applies for summer students under the federal Canada Summer Jobs program and the workers are used to staff the adventure park.

In turn, Blue Mountain reimburses Kowach for the portion of the student's wages not covered by the federal funding.

When interviewed by the MNP investigators who prepared the report, Windels said the company's purpose was to allow Blue Mountain to hire more students at a subsidized rate than it could otherwise.

Based on information available to investigators, Kowach posted a $39,000 surplus during its 2021 fiscal year, due to payments from the Canada Emergency Wage Subsidy that came in addition to routine payments from Blue Mountain.

"We do not have sufficient information to confirm if this amount flowed to the benefit of Blue Mountain after April 1, 2021," the investigators wrote in the report.

In his affidavit, Windels said he received "no financial benefit from Kowach's relationship with Blue Mountain."

Windels said if he transferred the surplus to Blue Mountain it "could jeopardize its charitable status."

BOARD ASSUMES CONTROL

In a sworn affidavit, Twila Reddekopp, who serves on the board of both the Lighthouse and Blue Mountain, said "both corporations are in crisis."

"I remain hopeful that through this court process and with the hard work and dedication of our boards, staff and community we can come through the other side," Reddekopp said.

Redekopp, along with board members Jerome Hepfner and Ian Hamilton, requested the court-ordered investigation after reaching an impasse with Windels and other members of the organization who support him.

Reddekopp and Hepfner effectively took on Windels' role after he was placed on leave in January.

Five members of the senior leadership team at the Lighthouse were let go, less than a month after he was removed by the board.

In an interview with CTV News, Hepfner called the ruling a "milestone"

"(We're able) to actually start talking about what we've been going through for the better part of the last year and we can actually shed some light and start healing and engaging with our stakeholders," Hepfner said.

Although Windels is on leave, he remains the organization's executive director until the Court of Appeal decides whether Gerecke's decision to remove him will stand.

"We're at the mercy of the courts and that's one of the unfortunate realities that we're still dealing with."