Wednesday, November 5, 2008
The Globe and Mail and the Toronto Star both report that the Canada Revenue Agency has revoked the charitable status of an organization that allegedly issued inflated receipts for hundreds of millions of dollars in donated pharmaceuticals. According to the Agency, donors to the Choson Kallah Fund would buy the drugs overseas at low prices and then receive receipts from the Fund that valued the drugs at their Canadian retail value. The Fund would then turn the drugs over to another charity, the Escarpment Biosphere Foundation, apparently sight unseen. The Fund kept about 1 percent of the total value donated as a fee. The Foundation in turn claims that the it distributed the drugs in 43 countries with the help of a third charity. The donors to the Fund were apparently recruited by a company called either World Health Initiatives Inc. or the Canadian Humanitarian Trust, which appears to have been at least initially the driving force behind the scheme.
Choson Kallah is run by Rabbi Eli Gross and until 2004 was a medium-sized charity with approximately $6 million (Canadian) in total revenues that it donated primarily to various Jewish organizations. Over the next three years, however, it collected more than $300 million in donations according to its records, primarily the pharmaceuticals involved in the alleged inflated receipts scheme. The Escarpment Biosphere Foundation similarly saw its revenues shoot up from only $74,000 in 2002 to $78 million, almost all because of the drugs transfered to it by Choson Kallah. For more details of the Canadian government's allegations, see its news release. Choson Kallah is appealing the revocation.