KPIRG Sues Founder and Former Employee for Fraud

with files from Tristan Johnston, Contributor 

According to a notice of civil claim filed in the Supreme Court of British Columbia on March 23, the Kwantlen Public Interest Research Group is suing one of its founders and former administrative coordinator, Richard Hossein, for fraud.

Last year, Hossein allegedly made a series of false claims to KPIRG about the organization’s expenses, indicating the need to make nearly a dozen payments to companies that either did not exist or of which Hossein was the sole proprietor. In addition, Hossein allegedly altered official documents and made misleading statements to KPIRG in order to provide himself with a considerable severance payment and a contribution to his registered retirement savings plan.

Together, the total value of these alleged payments is $111,521.33. Through the claim, KPIRG is seeking relief for the funds lost as well as for general, aggravated, and/or punitive damages. Special costs—or costs at the highest allowable scale—and such further relief as the court finds just are also being sought.

Background

The Kwantlen Public Interest Research Group is a not-for-profit, student-directed society. It advocates for social and environmental justice through research initiatives. KPIRG is funded almost entirely by Kwantlen Polytechnic University students, receiving $0.80 per each credit that they earn through their classes.

The society and its accompanying fee were established via a Kwantlen Student Association referendum held in February 2013. At the time, Hossein was a director of the KSA and was the first to propose the creation of a Public Interest Research Group at KPU. With Hossein as a founding member of the board, KPIRG was officially incorporated in December 2013.

In mid-2014, Hossein resigned from the board and was hired as KPIRG’s administrative coordinator. As written in the notice of civil claim, he was chosen to fill this position because the society regularly experiences turnover and it was believed that, as a founding member, Hossein could provide institutional memory for new directors who lacked managerial experience.

In his role as administrative coordinator, Hossein was paid a salary in accordance with an employment agreement for the day-to-day administration of KPIRG’s affairs. His duties included record keeping, overseeing the society’s bookkeeping and accounting matters, and recording the minutes from meetings of KPIRG’s board of directors.

Payments to CPGA Consulting

The first of the allegedly illegitimate transactions overseen by Hossein was a series of payments made in mid-2017 to CPGA Consulting. Although he was the sole proprietor of CPGA, he asserted that it was a legal entity which KPIRG owed consulting fees to.

According to the notice of civil claim, Hossein told KPIRG’s board of directors that the previous board had authorized him to enter into an agreement with CPGA, an “experienced accounting firm” able to provide the services he needed as the administrative coordinator.

Hossein is recorded in the court document as saying that CPGA had provided their services but had not yet been paid. He also stressed that there was an urgency to pay the firm as CPGA was threatening legal action. Due to this urgency, Hossein reported that the firm “would only accept payment in cash and that cheques should be written to the defendant who would cash them and that he intended to then remit payment to CPGA on behalf of the plaintiff.”

Between May 9 and July 17, five separate payments of $1,050.00, three separate payments of $770.00, one payment of $8,600.00, and one payment of $6,300.00 were made to Hossein for a total of $22,460.00.

The notice of civil claim alleges that CPGA was not a professional consultancy, but an entity which was “one and the same” with Hossein. It states that KPIRG never entered into an agreement with CPGA for consulting services and no such services were provided to the organization. As such, KPIRG never owed fees to CPGA.

Furthermore, and also according to the notice of civil claim, Hossein “altered previous meeting minutes of the board of directors to indicate or suggest that an agreement had been entered with CPGA and/or that the board of directors previously had authorized or approved payments to the CPGA” at least once during his time with KPIRG.

Payment to Sunny Dhillon Ltd.

A month before the first CPGA transaction was completed, Hossein allegedly told KPIRG’s board of directors that shelving was needed in the organization’s office. For this, he had retained Sunny Dhillon Ltd. to install the shelving and had either paid or planned to pay for the work out-of-pocket. However, as written in the court document, he still owed Sunny Dhillon outstanding fees.

He claimed that, for covering the expense on KPIRG’s behalf, the society should cut him a cheque. They did, and Hossein received $7,070.53.

According to the notice of claim, no shelving was needed on the KPIRG premises, nor was any installed. This would mean that KPIRG owed no fees to Sunny Dhillon Ltd. and Hossein never remitted payment to it. The notice further states that “no such company exists under the name ‘Sunny Dhillon Ltd.’”

Payments for Severance

In or around mid-2017, Hossein informed KPIRG’s board of directors that he planned to resign as administrative coordinator. He then allegedly told the KPIRG bookkeeper that the board had approved severance pay for him in recognition of his service to the society, and presented a memorandum resembling minutes from a board meeting which authorized the payments.

However, the notice states that Hossein drafted the memorandum without the knowledge of the board, and that a board motion to officially authorize the severance payments was never passed.

In July of that year, KPIRG paid a total of $56,381.22 to Hossein in severance, as well as $17,209.58 to the Receiver General for associated tax remittances.

RRSP Contributions

Around the same time that he was receiving his severance payment, Hossein purportedly asserted to the board of directors that he was entitled to a contribution to his registered retirement savings plan, pursuant to the terms of his employment agreement.

However, the copy of the agreement that he presented to the board was altered to support his assertion, according to the notice of civil claim. As a result, KPIRG made a payment of $8,400 to Hossein on or around July 15, 2017.

Hossein also allegedly “improperly prepared or caused to be prepared and submitted to the Canada Revenue Agency on the plaintiff’s behalf a record of employment indicating that his employment had been discontinued due to a lack of work.” In addition, it is written that the record sent to the CRA overstated his insurable earnings.

What Comes Next

The payments to CPGA Consulting and Sunny Dhillon Ltd., as well as Hossein’s severance and RRSP payments, were all allegedly made between annual audits. As a result, KPIRG claims to have become aware of Hossein’s actions only after he had ended his employment with the group.

The notice asserts that, because Hossein knowingly made false and misleading representations to KPIRG, and because his conduct caused damage and loss to the society, his actions constitute fraud. It further states that Hossein committed the “tort of deceit” by concealing or omitting facts which led to payments being made to him. Finally, the notice of civil claim accuses Hossein of breaching the fiduciary responsibilities he owed to KPIRG and enriching his own life by doing so.

Both Hossein and KPIRG are required to prepare a list of documents that could prove or disprove the material facts of the case. They also need to provide their lists to each other in preparation of a trial.

If Hossein intends to respond to the action or make a counterclaim, he will need to file it to the Supreme Court of B.C. and the Kwantlen Public Interest Research Group within an allotted time period. According to the notice of claim, Hossein has 21 days to respond to the action if it is served to him while he is in Canada, 35 days if it is served to him in the United States, and 49 days if it is served while he is elsewhere in the world.

Until this morning, Hossein’s Facebook profile as “Richard Hosein” listed him as residing in Ho Chi Minh City, Vietnam. As of press time he has deleted his Facebook account.

Hossein is commonly listed on social media as “Richard Hosein” and has been referred to using this name by The Runner in the past. In the notice of civil claim, however, he is listed as “Richard Hossein”.

On Tuesday, March 27, KPIRG posted an open letter regarding this issue on its website. It opens, “In the fall of last year, KPIRG became aware of some accounting issues for the 2017 calendar year. This is a matter we take extremely seriously. We immediately began a full investigation and sought the advice of lawyer. From that investigation, we believe that an amount of money, totaling approximately $111,000, was involved.”

KPIRG is holding its annual general meeting today, during the afternoon of March 28. Reporters from The Runner will be there to ask questions and arrange interviews. More information on this case will be reported by The Runner as it is made available.