OBAC Files Victim Impact Statement With Crown Attorney

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The following is a transcript of the victim impact statement the Owner-Operators’ Business Association of Canada (OBAC) filed with the Crown attorney. It outlines the impact of the theft of its start-up funding by former accountant Tony Leckie:

To: Crown attorney

Regional Municipality of Durham

Whitby, Ontario

Victim: Owner-Operator’s Business Association of Canada (OBAC) et al

Accused: Anthony Leckie

Emotional Loss

Although the theft of funds from an organization is often considered a “victimless” crime, the victims in this case are many, and the loss has impacted them in a variety of ways.

The stolen money was start-up funding that had been advanced to the newly incorporated not-for-profit association, and the only money it had to work with at the time. The money had been earmarked to establish OBAC’s corporate identity, select the volunteer Board of Directors, develop a Web site, and plan and execute the public launch of the association.

All of these activities took place – but were not paid for – hence OBAC was in debt even before it got off the ground, a fact not known to Directors and other volunteers until after the discovery of Leckie’s disappearance, just after the official launch of OBAC, at two major truck shows held on consecutive weekends in September 2002.

The Board of Directors had met for the first time six weeks prior to that, and were very optimistic about OBAC’s future; the initial meeting was an extremely positive experience and spirits were running high. Signals from the industry were also positive, and a great deal of interest was generated at Truck World 2002 in Toronto, and the following week at Truxpo in Abbotsford, BC.

All came to a halt in the days following the truck show in Abbotsford when it was discovered that not only was Leckie missing, but also Directors did not have access to their own bank account, because Leckie had not acted upon Board resolutions to change signatories.

This fact alone caused extreme distress among Directors, as they were unable to gain financial control of the organization they were responsible for, or even to determine a bank balance.

This led to public embarrassment, as rumours began to circulate around the trucking industry that “the accountant had run off with the money” and Directors were unable to defend or even explain their situation.

The organization and its supporters became the target of negative, sometimes “sensational” media coverage, which was to continue for some time, and an inordinate amount of time and energy was expended just doing “damage control.”

As well, Leckie’s disappearance coincided with the deadline by which the organization (through its accountant) was to account for the advance of funds it had received from Industry Canada. This deadline could not be met, and OBAC was put in default of its funding agreement with Industry Canada. There followed weeks of tension and stress while Directors worked with Industry Canada officials to determine the extent of the loss, and to satisfy themselves and others that there was no wrongdoing or mismanagement on the part of OBAC Directors and other volunteers. While it was clear that OBAC was a victim of fraud, it was months before Leckie was found and charges laid.

As well as trying to deal with negative media coverage, suspicion and innuendo, Directors, who had agreed to be members of a volunteer policy and advisory board, were now faced with responsibility for “running” the organization.

Daily housekeeping duties fell to individual Directors and other volunteers who were ill prepared to undertake this work, especially with no resources. This led to a great deal of confusion and internal turmoil and friction, and the personal resources of Directors and others involved in starting up the association were continually being tapped to keep the project operational.

Tragically, without resources to hire the full-time services of an Executive Director, OBAC was unable to properly set up an office and develop operating and business strategies, implement a communications strategy and recruiting campaign, or begin to develop products and services for members. In effect, it could not operate. This made it impossible to generate revenue through memberships, which were intended to sustain the organization once the start-up funds had been properly disbursed.

Most importantly, this lack of stability caused an intractable skepticism among individual truck drivers and owner-operators across Canada who were to benefit from OBAC.

Negative coverage by the trade press continued. With each depressing turn of events, there were resignations from the Board (the most high profile of which was a front-page item in the trade press). This particular aspect of the process proved to be very difficult for all who were involved.

The protracted nature of the case caused by the inability to resolve the longstanding accounting irregularities drained the spirits of Directors and mocked their enthusiasm. It generated hostility from the trucking community and cast a pall over the credibility of the association, its Directors and supporters. It is difficult to describe the disappointment and frustration that overshadowed the entire project.

OBAC’s first members, who joined the organization in good faith during its launch, and then got nothing for their money, were also victims of this crime. They lost out the first time around, and because of ill-will and skepticism, may be hesitant to join a second time.

Thus, they will not benefit from membership in the association, and their support may be lost to OBAC.

And the 40-50,000 owner-operators who would have benefited from OBAC’s existence lost out because the organization is close to two years behind achieving its objectives in providing owner-operators with the business association they so desperately need.

Also victims are OBAC’s creditors, those businesses who provided goods and services in good faith, and have not been paid. Many of them are small businesses struggling to survive, and can ill-afford the loss of revenue that has resulted from this crime. OBAC has also suffered greatly from the embarrassment of debt to these businesses.

Financial Impact

The financial consequences of Leckie’s crime have been devastating to OBAC. Leckie left the organization with no files or documents, no budget information or financial books and records.

The failure to recover these vital records and budget information, which would have aided the reconstruction of the accounting profile, left OBAC unable to prove to governments, potential members and investors, and other industry stakeholders, that its efforts merited their participation.

Upon incorporation, OBAC received advances against contribution agreements with the Government of Ontario and Industry Canada of $20,000 and $173,520 respectively, to be used for start-up activities. This was the only revenue that OBAC had received up to the time of Leckie’s disappearance.

Because OBAC could not properly account for the advance payments it had received from the two governments, and because it had no resources to fulfill other terms of the agreements, it was denied access to the balance of funds in both agreements. This amounted to lost revenue of $80,000 from the Government of Ontario, and $76,480 from Industry Canada.

A forensic audit was carried out by J.G. Short, Chartered Accountant, of Aurora, Ontario, and audited financial statements were prepared for the years ending Dec. 31, 2002 and Dec. 31, 2003.

The audit revealed Unsupported Disbursements of $81,573. All of these disbursements were cheques made out to Leckie by himself. While some of these disbursements may have been legitimate, the auditors were unable to recover or obtain documents or records to substantiate them.

The audit also revealed that the theft had left OBAC with debt of $68,277 at the end of 2003. The total amount of this debt was owing to companies and individuals who had provided goods and services (legitimate expenses under the contribution agreements) leading up to OBAC’s launch, and had no
t been paid. (Since the beginning of 2004, OBAC has been able to reduce this debt by $27,000.)

Because OBAC was missing the funds that had been earmarked to hire an Executive Director and implement its strategic plans, and because of the negative publicity it received, the association was unable to attract and recruit members.

The target membership numbers for each of years one and two were 500 members, for a total of 1,000 owner-operator members by the end of year two. This was a modest estimate, from a target market of 40-50,000 owner-operators.

At membership dues of $240/year, this represented a budget figure of $120,000 in year one and $240,000 in year two, for a total of $360,000 lost revenue. This number does not include any associate members at $150/year or corporate members at $500/year. (Annual membership fees have since been reduced to $145, $95, and $495 respectively for owner-operators members, associate members and corporate members.)

In addition to loss of membership dues, OBAC lost the confidence of a number of industry suppliers who had agreed to make an investment in the organization. With no evidence of leadership, no strategic plan, and a pall of suspicion hanging over the organization, they withdrew their offers of sponsorship.

This amounted to $10,000 from one major investor alone, and smaller amounts from dozens of other suppliers.

Directors and Friends of OBAC spent thousands of dollars out of their own pockets to sustain the organization in the first two years – and many are still making personal financial contributions. These contributions range from travel expenses to Board meetings and trade shows, monthly Web site hosting, telephone and office supplies, postage and courier, rental of trade show space and equipment, trade show entry fees, printing and copying, and much more.

This does not begin to address the cost of time OBAC volunteers have put into keeping the association alive. In addition to countless “after hours” help, Directors who are self-employed owner-operators forego their wages when they take time to travel to meetings and truck shows.

In terms of time required to attain the stage of development OBAC would have achieved had this unfortunate series of events not occurred, we estimate the loss of be one and a half to two years. Now, not only must we continue to strive for our original goal, we must do it from a deficit position.

Respectfully submitted by

Joanne Ritchie

Executive Director, OBAC

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