Judge ordered removal of Lighthouse head over controversial financial dealings

A Saskatoon judge ordered the immediate removal of Lighthouse Supported Living Inc. executive director Don Windels from the organization in December due to controversial financial dealings.

The decision couldn't be publicly shared until Monday due to a publication ban that has since been removed after a successful challenge by CBC and other media organizations.

The Lighthouse is a non-profit, charitable organization that provides supported housing and services to vulnerable populations. It operates a shelter in Saskatoon and previously operated one in North Battleford. It also has a subsidiary, Blue Mountain Adventure Park Inc., which runs an outdoor adventure park near North Battleford.

The organization has gone through a months-long conflict that saw, among other things, two board members take over management in January 2021 and then fire five managers less than a month later.

Meanwhile, Windels and board members were tied up for several months in a legal battle that media outlets couldn't report about until Monday, when the Saskatchewan Court of Appeal dismissed Windels's appeal to keep the publication ban in place. 

Windels 'failed to … discharge his duties honestly': judge

Windels asked the Lighthouse for a loan in 2017 so he could buy a house for his recently divorced daughter. Instead, the Lighthouse itself bought the property for $60,000. The Lighthouse paid for insurance, utilities and property taxes.

The amount was not recorded as a loan. It went on the Lighthouse's books as a capital asset worth $60,000.

The judge found that, "Don Windels had sole and exclusive possession of the Walmer House for the entire time it was owned by the Lighthouse." The deal was approved by the Lighthouse board in a closed-door meeting.

In his Dec. 6 judgment, Justice David Gerecke ordered that "effective immediately," Windels was to be removed from the board of directors for the Lighthouse and Blue Mountain, and as executive director of both organizations.

"Mr. Windels failed to at all times exercise his powers and discharge his duties honestly and in good faith with a view to the best interests of the corporation," Gerecke wrote.

Windels is also barred from holding office with either organization — or any present or future affiliate — prior to Dec. 1, 2023.

The judge ordered amendments to the Lighthouse bylaws, including that a director can't serve for more than 10 consecutive years or for more than 10 out of any 12 years, and that no employee of the charity can be eligible for election as a director. 

The judge also ordered that Lighthouse auditors must accurately reflect the Walmer House transactions and Windels's interest in the house in a transparent manner.  

Lighthouse board members must also participate in a one-day training session on the fundamentals of corporate governance, the judge ordered. 

Inspector appointed after 'all-out war' breaks out on board

Gerecke appointed an inspector to investigate "irregular" loans made to Windels and former Lighthouse president Pierre Trudel.

"There is a power struggle at the Board level that has escalated into an all-out war," Gerecke wrote in a Sept. 10 decision, in which he ruled that an inspector should be appointed to investigate the house deal.

The battles in this war played out in boardrooms and in court, and included efforts to turf board members, create an audit committee, call a special meeting of members and unilaterally call an annual general meeting.

Two controversial deals — including the one made with Windels — triggered the sequence of events and created "a deep and potentially irreparable split among board members," Gerecke wrote.

The court case was originally under a publication ban but CBC, CTV, Glacier and Postmedia fought in court to get the ban lifted. 

"I have concluded that this is not a case where exceptional circumstances exist of the kind that would justify a continuing restriction on access to the court file or on publication of information," said the ruling from the Saskatchewan Court of Appeal, released on Monday.

Windels is not the only Lighthouse board member to participate in a controversial financial deal.

Pierre Trudel, who was president of the Lighthouse board from 2010 to 2017, got a loan from the non-profit corporation.

"His company, Mech-El Services, borrowed $30,000 from the Lighthouse in March 2010 to enable Mech to pursue a business opportunity for patenting a device," Gerecke wrote.

That loan and the interest calculated have not yet been repaid, but Gerecke said the court has recently been told that Trudel signed an agreement to address repayment. 

Earlier last year, three Lighthouse board members applied to have an inspector appointed to look into the transactions. The three members, Jerome Hepfner, Twila Reddekopp and Ian Hamilton, also serve on the Lighthouse audit and finance committee, created in April 2021. 

"No explanation was provided for why such a committee did not exist before then," Gerecke wrote.

The Non-Profit Corporations Act requires such a committee to exist.

The Lighthouse's 2019 annual report shows its income comes from a mix of rental and services, operating and capital grants, donations, and money from cabin and resort rentals and activities at the Blue Mountain park. 

The creation in April 2021 of the audit committee is what apparently triggered the schism on the board. The committee identified what it described as loans to Windels and Trudel, and also raised concerns about a foundation which has Windels as a director.

The Kowach Foundation for Advancing Education Inc. is a non-profit created to hire summer students to work at the North Battleford adventure park.

"[Windels] operates a foundation that has engaged in transactions with Blue Mountain. The applicants argue that such transactions also warrant scrutiny," Gerecke wrote.

In May, Reddekoppp and Hepfner met with Windels and gave him two choices — to take medical leave or an administrative leave. Windels opted for the former.

Reddekopp and Hepfner then appointed themselves co-executive directors. Gerecke wrote that the removal of Windels and self-appointment by Reddekopp and Hepfner as his replacement happened without the board's knowledge or approval.

The pair then tried to change the signing authority for the Lighthouse at multiple financial institutions.

At the end of the month, Windels declared himself fit to work and returned to the office with medical notes to that effect.

In July, Hepfner, Reddekopp and Hamilton formally set in motion a charge document to remove Windels as executive director.

This all led to Justice Gerecke appointing the inspector. 

Value increases on Walmer House

Gerecke says that in 2020, Windels paid $60,000 to the Lighthouse for the house and received the property title. He also paid some interest and reimbursed the Lighthouse for insurance, utilities and property taxes it had paid. However, the value shown on the new title in the name of Don and Bonnie Windels [his wife] was $230,000.

No accounting has been provided as to the increase of value, according to Gerecke.

The inspector found that from 2017 to 2020, Windels made "extensive renovations" to the property. Windels claimed the Lighthouse held title to the property as security on a "loan."

It has also been revealed that the Lighthouse leases houses from members of the Windels family. The inspector identified five instances of that.

From 2009 to September 2021, the Lighthouse paid about $417,000 to the Windels family under the leases. The Lighthouse earned $534,400 of revenue from its low-income tenants in those houses over that period, earning profits of about $117,000, according to the inspector.