The Law Courts complex in downtown Winnipeg. Photo: APTN file
A private company is alleging the newly reinstated leader of the Southern Chiefs Organization (SCO) in Manitoba defaulted on a mortgage and soured a multi-million-dollar land deal in east Winnipeg.
Its countersuit and statement of defence filed in Manitoba’s Court of King’s Bench on May 3, 2024 in response to a lawsuit filed by the SCO Economic Development Corp. (SCEDC), centres on the alleged actions of Grand Chief Jerry Daniels.
The numbered company – 7475323 Manitoba Ltd. – claims Daniels requested a personal loan to buy a condo while it was negotiating to sell five parcels of land to SCEDC for $20 million along Dugald Road. The amount of the loan was not disclosed.
The Dugald Road property was to change hands by Dec. 15, 2020, the company says in the documents obtained by APTN News.
The numbered company’s shareholders and directors – Rijad Hadzic and Paige Peach – claim they received a $100,000 deposit from SCEDC on the multi-acre property on May 1, 2019, and agreed to provide a mortgage to Daniels.
“Shortly after the execution of the letter of intent, in or about December 2018, Jerry Daniels, the Grand Chief of the plaintiff … through whom the (SCO) had been negotiating … asked for a personal loan in the form of a mortgage, for the purchase of a condominium housing unit in Winnipeg,” their claim states.
“(We) agreed to do so through an associated corporation and a mortgage agreement was completed with Jerry Daniels completing the purchase of the residence.”
But SCEDC says it was the other way around and Daniels “was approached about a potential mortgage.”
The company further alleges Daniels “defaulted” on the mortgage “several times”, prompting it to request “payment” and advise “of its intent to pursue” a legal solution.
“On numerous occasions,” their court document claims, “Daniels advised that he could influence the progress of the transaction agreed on if the defendant … did not desist in its’ demands (for payment).”
“Ultimately, Daniels as directing mind of the (purchase negotiations) advised that this property transaction would not proceed further … (and) secured alternate financing to buy out the debt owed (for the mortgage).”
SCEDC, in its statement of defence to the counterclaim, denies this. It confirms Daniels bought a condo but did not default on the payments.
“Southern Chiefs EDC admits that Grand Chief Daniels obtained a personal mortgage for a condominium from a corporation related to 747 Manitoba … (and) pleads that the details of Grand Chief Daniels’ personal mortgage with a non-party to this litigation are wholly irrelevant to this action.”
SCEDC sued the company on Nov. 23, 2023 seeking the return of its deposit. The company says in the documents it won’t return the deposit because SCEDC allegedly “defaulted” on the contract.
None of the allegations have been proven in court.
Neither SCO nor Daniels responded to APTN’s requests for comment.
SCEDC, according to SCO’s website, was formed in 2018, shortly after Daniels was first elected, to “enhance the economic base” of its 33 member First Nations in southern Manitoba and create employment for their citizens.
Company seeks $1 million in compensation
The company is asking the court to order SCEDC to forfeit the deposit and pay interest and damages of more than $1 million in addition to the $765,797.39 it says it spent preparing the land (“collectively located at 1266 Dugald Rd.”) for sale.
SCEDC, in its reply and defence to the counterclaim, denies it entered into a binding purchase or sale agreement or “defaulted on the contract as alleged or at all.”
“At all material times, 747 Manitoba knew or ought to have known that the transaction contemplated by the contract was not guaranteed to close, including because there was no binding sale and purchase agreement and because Southern Chiefs EDC had not secured the financing that it required to complete the transaction,” the organization says.
Daniels back as grand chief
Daniels, 42, saw his leadership reconfirmed on Jan. 22 at a private chiefs’ gathering in Winnipeg, according to Derek Nepinak, chief of Minegoziibe Anishinabe (also known as Pine Creek First Nation), who attended the meeting. Daniels was elected to a third term as grand chief last summer.
Nepinak said Daniels addressed the fight that broke out between the grand chief and two other men following an argument at an Ottawa bar on Dec. 3. Daniels has since revealed – in a letter of apology to SCO chiefs obtained by APTN – he has “a problem” with alcohol and is seeking treatment.
“There was healing there,” Nepinak said of the meeting where chiefs talked about the addictions among themselves and in their communities.
But Nepinak said the meeting at Fort Gibraltar was characterized as an informal “gathering” and not the formal “chiefs-in-summit” he was expecting. Under SCO bylaws, chiefs-in-summit make decisions on the record for the grand chief to follow.
“There is a lack of transparency and explanation,” Nepinak said in an interview Monday. Not only about what happened with Daniels in Ottawa but what is going on at SCO, he noted.
“When I heard Daniels had been hospitalized, I immediately thought of the late Cathy Merrick (grand chief of Assembly of Manitoba chiefs who died suddenly in September). I was shocked. We just lost a leader; I wanted to help.”
But his offer and enquiry was rebuffed, Nepinak added.
“It was suggested (my nation) could leave SCO.”
SCO, which has not responded to APTN’s questions or publicly explained what happened in Ottawa, had announced it would hold a chiefs-in-summit meeting in response to a request from the Southeast Resource Development Council (SERDC), which is comprised of eight chiefs who represent communities that are also part of SCO.
Those chiefs suggested in a letter obtained by APTN they had concerns Daniels was returning to work without a chiefs-in-summit say-so. Earlier, SCO’s chief executive officer Joy Cramer revealed in a letter to SCO staff – also obtained by APTN – a small group at SCO had accepted a private apology from Daniels and would see him back at the office in a few weeks.
No one from SERDC responded to a request for comment from APTN Monday about the gathering held last week. SCO and Daniels did not respond to emails from APTN Monday.
Ottawa police have closed their investigation into the fight and are not laying charges, as first reported by APTN.
Senior employees put on leave
Now, Cramer and chief operating officer Jennifer Rattray have been placed on leave, according to a staff memo obtained by APTN.
“This memo is to inform you that, as directed by the chiefs of the Southern Chiefs’ Organization, Jennifer Rattray and Joy Cramer are currently on administrative leave until further notice,” says the Jan. 24 memo signed by Daniels.
“In the interim, Ryan Bear will serve as Acting CEO. We have full confidence in his ability to lead during this time.”
Bear is listed on SCO’s website as chief executive officer of SCEDC. He did not respond to an email from APTN.
Cramer did not respond to a request for comment and Rattray could not be reached.
Daniels encouraged “all staff” to continue the “great work you are doing. Your dedication and contributions are deeply valued, and we thank you for your ongoing commitment to the SCO’s mission.”
Nepinak noted that putting senior employees on leave wasn’t discussed at the gathering last week.
“I feel that the organization is rogue,” he said. “I don’t think that it follows its constitution. I don’t think that there’s a mandate from the chiefs-in-summit.
“I think the mandate is what Jerry Daniels decides he wants it to be.”
Meanwhile, APTN has learned the SCEDC was disbanded by the Manitoba Companies Office after not filing its annual report for 2024.
Since it’s no longer a legal entity, the lawyer for the company, Richard Beamish, said in an interview he has informed SCO the lawsuit would proceed against directors personally instead.
Editor’s Note: This story has been updated.
