Sandy Bay CFS is suing its former director. Photo: APTN file
Armed with the results of a forensic audit, an Indigenous-led child welfare agency in Manitoba is suing its former executive director for $10.6 million.
Richard De La Ronde, who has not been charged with a crime, is alleged to have defrauded Sandy Bay Child and Family Services (CFS) of funds meant for children and families, according to a statement of claim filed in Manitoba Court of King’s Bench Tuesday.
Sandy Bay CFS is seeking $10.6 million in damages claiming De La Ronde and other defendants allegedly committed fraud, were negligent and breached contractual, fiduciary and equitable duties.
None of the allegations have been proven in court.
De La Ronde and Tim Catcheway, a former director on the agency’s board, have 20 days to file a statement of defence.
Both are accused of “conspiring to defraud” the agency for personal “benefit or profit”.
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The alleged crimes have caused “irreparable loss and damage” to Sandy Bay CFS that provides services for Sandy Bay Ojibway First Nation in south-central Manitoba, the claim said.
The agency is seeking further general, special, punitive and aggravated damages to be awarded at trial, as well as an immediate court order to freeze the alleged missing funds.
“Sandy Bay CFS pleads that it is entitled to an interlocutory and permanent injunction restraining the defendants from disposing of their assets in Manitoba or removing them from the province,” the claim said.
“Sandy Bay CFS pleads that it is entitled to a declaration that it is entitled to trace the said amounts received by the defendants and to recover the same, and an accounting of what monies (allegedly) belonging to Sandy Bay CFS have (allegedly) wrongly come into the defendant’s hands.”
The agency accuses De La Ronde, who worked there for 15 years before being fired in 2021, of operational and financial fraud. It claims he used the organization’s money to form two companies – Radka Inc. and Shawendasaawin Inc. – that allegedly bought and leased properties to the agency at “inflated” rates.
Shawendasaawin corporation
It said De La Ronde was the sole director, officer and shareholder of Radka, and Catcheway was the president and a director of Shawendasaawin.
The agency alleges Catcheway, a member of the CFS board from 2017 to 202, “influenced” the board to approve proposals presented by De La Ronde.
Sandy Bay CFS, which is funded and regulated by the provincial government to provide child welfare and family services in Sandy Bay Ojibway First Nation, said it trusted De La Ronde to act in the best interests of the agency.
“In accordance with the terms of his employment agreement,” the claim stated, “De La Ronde was given significant control and discretion to oversee Sandy Bay CFS.
“This included, but was not limited to, the discretion to select, engage, oversee and administer third party contracts, enter into leases … and make representations and recommendations to the board of directors regarding contracts and/or leases they ought to approve and/or enter into.”
Sandy Bay is located two hours northwest of Winnipeg.
Forensic audit
The agency said it received the results of a forensic audit on June 28, 2023 that showed De La Ronde and “close associates” incorporated several companies that allegedly received inflated and/or fraudulent payments from Sandy Bay CFS during De La Ronde’s term.
The audit identified the ‘close associates’ as De La Ronde’s wife, Arlyne De La Ronde, and her parents, who were not named in the document. It claims De La Ronde “directly or indirectly caused Sandy Bay CFS to pay more than $718,000 to a company started by his wife and her parents”, and more than $170,000 to Shawendasaawin.
The audit also found that De La Ronde, Catcheway and Justin Richard, the former IT manager of Sandy Bay CFS, incorporated Shawendasaawin. The audit also found Radka would buy properties it would then lease to the agency, the claim said the audit discovered.
“Sandy Bay CFS accounting to date indicates that over $6 million were paid to Radka by Sandy Bay CFS …,” the 23-page claim noted. “From May 2018 to September 2020, at least $4.7 million was paid to Radka under a lease agreement … to organize and pay for a contractor to build a new facility for Sandy Bay CFS as well as lease the actual land.
“This property is located on land already owned at all material times by Sandy Bay CFS.”
Alleged wrongdoing
The audit further identified allegedly fraudulent invoices, invalid credit card charges – “more than $1 million over an eight-year period” – and inappropriate payments among other alleged “wrongdoing”, the claim stated.
The “wrongdoing” included lease agreements for vehicles at “unconscionable rates that covered the full cost of the vehicle and exceeded market value for a total sum of $345,727.00” and purchased snowmobiles worth more than $77,000 that were never used by Sandy Bay CFS, the claim alleged.
The claim said De La Ronde’s alleged actions were a “blatant breach of trust, resulting in significant financial harm to Sandy Bay CFS and the children who were the intended beneficiaries of these fund.”
As of March 31, 2024, the agency had 365 children in care, said a spokesperson.
