Fon 10 Abeta Rules of Cou ald 2.26 COURT FILE NUMBER 1813 00500 COURT COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE FORT MCMURRAY | PLAINTIFFS SAMANTHA WHALEN DEFENDANTS. BRADLEY CALLIHOO, 2050787 ALBERTA LTD., RONALD ALFRED KREUTZER, RONALD ALLEN KREUTZER, and BYRON BATES DOCUMENT STATEMENT OF CLAIM PARLEE McLAWS LLP ADDRESS FOR SERVICE _ Barristers & Solicitors AND CONTACT Patent & Trade-Mark Agents INFORMATION OF PARTY 1700, 10175 — 101 Street FILING THIS DOCUMENT — Edmonton, AB_T5J 0H3 Attention: — Edward H. Molstad Q.C. Telephone: (780) 423-8506 Facsimile: (780) 423-2870 File No. 77249-1/EHM NOTICE TO DEFENDANT: You are being sued. You are a defendant. Go to the end of this document to see what you can do and when you must do it. Note: State below only facts and not evidence (Rule 13.6) Statement of facts relied on: ‘The Parties: 1, The matters at issue in this claim relate to the Fort McMurray #468 First Nation (FMFN’), The FMFN is a band as defined in the Indian Act, RSC 1985 ¢. I-5. The FMFN is governed by a Chief and Council consisting of two Councilors and one Chief. 2. The Plaintiff, Samantha Whalen, is ordinarily resident in Anzac, in the Regional Municipality of Wood Buffalo, in the Province of Alberta. The Plaintiff is a member of the FMFN and is an elected Councilor of the FMEN, having been elected to a 4-year term commencing on June 8, 2018. (€7870220.D0CX, 1}3. The Defendant, Bradley Callihoo (‘Callinoo"), is ordinarily resident in Anzac, in the Regional Municipality of Wood Buffalo, in the Province of Alberta. Callihoo is the Chief Executive Officer of the FMFN. 4. The Defendant, 2050787 Alberta Ltd. is a corporation, duly incorporated pursuant to the laws of the Province of Alberta. Callihoo is the sole shareholder and director of 2050787 Alberta Ltd. For its registered office, 2050787 Alberta Ltd. utilizes a PO Box on the Gregoire Lake 176 Indian Reserve assigned to the FMFN. 5. The Defendant, Ronald Alfred Kreutzer (‘Chief Kreutzer’), is ordinarily resident on the Gregoire Lake 176 Indian Reserve, in the Regional Municipality of Wood Buffalo, in the Province of Alberta. Chief Kreutzer is the elected Chief of the FMFN, having been elected for a 4-year term on June 8, 2018. Chief Kreutzer was also Chief of the FMFN for the previous 4 year term, from 2014 to 2018, 6. _ The Defendant, Ronald Allen Kreutzer (‘Councilor Kreutzer’), is ordinarily resident on the Gregoire Lake 176 Indian Reserve, in the Regional Municipality of Wood Buffalo, in the Province of Alberta. Councilor Kreutzer is an elected Councilor of the FMFN, having been elected for a 4-year term in 2016 7. The Defendant, Byron Bates ("Bates"), is ordinarily resident on the Gregoire Lake 176 Indian Reserve, in the Regional Municipality of Wood Buffalo, in the Province of Alberta. Bates was formerly an elected Councilor of the FMFN, his elected office having expired in June, 2018 Bates was unsuccessful in his bid for election to the office of Chief in the June 8, 2018 FMFN. election. Fiduciary Duties of Parties: 8. Chief Kreutzer, Councillor Kreutzer, and Bates owed fiduciary duties to the FMFN and to all the members of the FMFN in their role as members of Chief and Council. Callihoo is a senior employee of the FMFN and, accordingly, he also owes a fiduciary duty to the FMFN and to all the members of the FMFN. The fiduciary duties owed by these Defendants included the following obligations: (@) To act with the utmost good faith, honesty, and loyalty towards the FMFN and its members in respect of their management of FMFN assets. (b) Avoid any conflicts of interest between their own interests and the interests of the FMFN and its members; (0) To ensure that FMFN members had full disclosure of relevant issues in respect of the management of the assets of the FMFN. (d) To not personally benefit from their positions, unless that benefit is expressly disclosed and approved by the members of the FMFN. 9, The Plaintiff is a member of the FMFN and is a beneficiary of the fiduciary duties owed above. In that capacity, the Plaintiff brings the within action against the Defendants to seek a remedy for the breaches of fiduciary duty described herein. tE7870M20 D0CX; 1}10. The Plaintiff also brings this action in her capacity as an elected Councilor of FMEN to enforce her right to disclosure of financial records and other information of FMFN in order to carry out her own fiduciary duties and other responsibilities. ‘The Agricultural Benefits Settlement: 11, _ In 1998, the FMEN filed a specific claim with the federal government in relation to the Crown's failure to provide certain agricultural benefits that were promised under Treaty 8. On February 2, 2017, the Crown made a settlement offer to the FMFN of $34,852,071 minus negotiation costs, in full and final settlement of the claim. After deducting the negotiation loan funding, the total settlement amount was $34,765,701 (the “Settlement Funds’). 12. The amount of the Settlement Funds was determined based on the understanding by both parties that the FMFN had 805 members or potential members. The Crown applied a formula to determine the amount of compensation in the above referenced settlement offer. 13. The Plaintiff states that the fiduciary duties outlined above applied to the use and management of the Settlement Funds by Chief Kreutzer, Councillor Kreutzer, Bates (‘FMFN Council") and Callihoo (collectively “FMFN Leadership") 14. In order to accept the settlement, the members of the FMFN were required to hold a ratification vote whereby a majority of the members approve the settlement. The ratification vote took place on June 16 and 17, 2017 ("Ratification Vote”), 15. In advance of the Ratification Vote, FMFN Leadership conducted consultations with the FMFN membership. During these consultations, FMFN Leadership represented to the members that the Settlement Funds would be spent in the best interests of the nation and that they would be spent as follows: (a) $15,600,000.00 for a per-capita distribution to members of the FMFN on the basis that each member would receive a per-capita distribution payment of $20,000.00 each; (b) $800,000.00 for legal, negotiation, ratification and implementation costs; (c) $8,000,000.00 would be placed in the Fort McMurray #468 First Nation Community Trust; and (d) The remaining settlement funds of approximately $10,400,000.00 would be placed into a settlement trust (the “Settlement Trust’) (Hereinafter referred to as the “Spending Representations") 16. The Spending Representations were made in writing to the members, as well as during consultation meetings with the members. At no time during the consultations, did the FMFN Leadership advise the members that they would use $600,000.00 of the settlement funds to pay a commission or any other type of payment to 2050787 Alberta Ltd. or Callihoo. 17. In advance of the Ratification Vote, the FMFN Leadership advised the members that they were recommending the members approve the settlement. The FMFN Leadership held a number of meetings with an internal committee and with the FMFN membership. The Spending {87870220,D0CX; 1)Representations were repeated and affirmed on a number of occasions by the FMFN Leadership. 18, _ At the meetings with the FMFN members, various members raised concerns about ensuring that current or future leaders of the FMFN would not be able to take the Settlement Funds and utilize them for their own benefit. The FMFN Leadership assured the members that this was not possible due to the trust agreements that would be in piace and due to the clear plan laid out in the Spending Representations. 19. On June 16 and 17, 2017, the ratification vote took place and the FMFN members approved the proposed settlement. The Plaintif states that herself, as well as other members of the FMFN, relied on the Spending Representations in informing her decision to vote in favour of accepting the settlement. The Plaintiff, as well as other members of the FMFN, relied on the fact that the FMFN Leadership represented to them that none of the FMFN Leadership was taking any type of commission payment out of the Settlement Funds. 20. On June 27, 2017, the FMFN Council executed the Settlement Agreement with the Crown on behalf of the FMFN and its members (the “Settlement Agreement’). The Settlement ‘Agreement contained the following representations and warranties on behalf of the FMFN: (a) It intends to use the Settlement Funds for the long-term use and benefit of the FMFN; and (b) Its legal counsel had fully explained to the members the purpose, terms, conditions, and legal effect of the Settlement Agreement and the trust agreement. 21. _ The Settlement Agreement made no reference to a $600,000.00 commission or any other type of payment to 2050787 Alberta Ltd., Callihoo, or any member of FMFN Council. 22. On June 27, 2017, the FMFN Council executed a band council resolution directing the Crown to pay the Settlement Funds as follows: (a) $15,772,701.00 to the FMFN; (b) $593,000.00 to legal counsel for the FMFN; (c) $8,000,000.00 to the FMFN Community Trust; and (d) $10,400,000.00 to the FMFN Agricultural Benefits Settlement Trust. 23. Shortly after the direction to pay was provided to the Crown, the Settlement Funds were provided to the FMFN in the manner set out in the preceding paragraph. 24, Of the $15,772,701 that was paid to the FIMEN, the funds were disbursed as follows: (a) 11,288,578.00 was paid out as a per capita distribution to FMFN members. (b) $3,080,000.00 was placed into a trust for FMFN minors that will be held until they tum 18 years old; (c) $1,404,123.00 was ‘left over’ because not all 805 FMFN members entitled to a per capita distribution were immediately identifiable (the “Unidentified Members’). However, (e7470220.DOCX; 1)the FMFN was required to hold these funds in trust for the Unidentified Members. Despite this requirement, the FMFN Leadership took no steps to treat these funds as trust funds so that they could be protected for the Unidentified Members. ‘The Misappropriation of Funds to Callihoo and 2050787 Alberta Ltd. 25, On June 15, 2017, Callihoo caused the Defendant, 2050787 Alberta Ltd. to be incorporated. Callihoo is the sole director and shareholder of 2050787 Alberta Ltd. and is the controlling mind of 2050787 Alberta Ltd. 26. _ On or around November 20, 2017, Callihoo delivered an invoice to FMFN Council for $600,000.00 (the “Invoice"). The Invoice requested payment by the FMFN to 2050787 Alberta Ltd. and provided a description in support of the requested payment as follows: “Treaty Land Entitlement Negotiations - Agricultural Benefits Settlement’. No further particulars were provided in the Invoice. 27. _ On or around November 20, 2017, Chief Kreutzer, Councillor Kreutzer, and Bates gave an informal approval of the $600,000.00 to 2050787 Alberta Ltd. The payment was not approved by a band council resolution at a duly convened meeting of the FMFN Council, in accordance with the requirements of the Indian Act, RSC 1985, c. I-5. It was also not in accordance with the FMFN Council Accountability and Procedures By-Law. This provided limited scrutiny from the FMFN members. This also meant there was no formal approval by the FMFN 28. _ A cheque with serial number 13489 and dated November 20, 2017 in the amount of ‘$600,000.00 was delivered to Callihoo and was deposited into the bank account of 2050787 Alberta Ltd. (the “$600,000.00 Payment”). 29. The $600,000.00 Payment was taken from the $15,772,701.00 portion of the Settlement Funds that was paid to the FMFN. More specifically, this was part of the $1,404,123.00 ‘left ‘over’ as described in paragraph 24(c), above, that was meant to be held jin trust for the Unidentified Members. The $600,000.00 Payment reduced the ‘left over’ amount to $804,123.00, described in paragraph 24(c), above, and came directly from potential future per capita distribution payments to the Unidentified Members. The Plaintiff states that these ‘left ‘over’ funds were to be held in trust and that the $600,000.00 Payment was made in breach of trust, in addition to being made in breach of fiduciary duty. 30. The Plaintiff further states that the Unidentified Members represent a particularly vulnerable class of members. They would include members that were adopted out of the FMFN or who are living off reserve or with no fixed address. Accordingly, the FMFN Leadership had a special obligation to protect the funds belonging to the Unidentified Members. 31. Neither Callinoo nor 2050787 Alberta Ltd. did any work in relation to the $600,000.00 Payment. Callihoo receives a substantial annual salary from the FMFN for his role as CEO and his employment contract contains no provision for a bonus, commission or other type of payment in the nature of the $600,000.00 Payment. 32. Following receipt of the $600,000.00 Payment, Callihoo and 2050787 Alberta Ltd shared the $600,000.00 Payment with the other Defendants by paying them a portion of these funds after they were received. In the alternative, Callihoo and 2050787 Alberta Ltd. retained the funds and utilized them for their own benefit. In either case, the $600,000.00 Payment was (e7a70220.00CX; 1)not used for the benefit of the FMFN and its members, in contravention of the representations made to the FMFN members, the representations made to the Crown, and in contravention of the fiduciary duties of Chief Kreutzer, Councillor Kreutzer, Bates, and Callihoo. 33. Despite having lost his role on Council, Bates was given a job as a “Project Manager” with a substantial salary from the FMFN. The job given to Bates was not advertised to other FMFN members and was not advertised in an open competition. The decision to give Bates the job was made by Callihoo, Chief Kreutzer, and Councillor Kreutzer and the Plaintiff was not consulted and only learned about the hiring after it was complete. The decision was made without a band council resolution and without formal approval by Chief and Council. The Plaintiff states that this constitutes a further breach of fiduciary duty by Callihoo, Chief Kreutzer, and Councillor Kreutzer. Obstruction of PI 's Role of Councillor: 34. Since the Plaintiff became aware of the $600,000.00 Payment and began to question the legitimacy of the transaction, the Defendants have gone to great lengths to prevent her from obtaining any further information about the financial workings of the FMFN. The Plaintiff states that this has obstructed her and prevented her from discharging her duties as an elected Councillor of the FMEN. 35, The Plaintiff was elected a Councillor of the FMFN on June 8, 2018 when she replaced Bates as Councillor and joined Chief Kreutzer and Councillor Kreutzer to make up the current Council of the FMFN. 36. Between June 8, 2018 and June 20, 2018, the Plaintiff began her work as a Councilor. During this period, she began to receive access to the financial information of the FMFN. 37. On or around June 20, 2018, the Plaintiff became aware of the $600,000 Payment and began requesting information from Calinoo, Chief Kreutzer, Councillor Kreutzer, and the Chief Financial Officer of the FMFN ("CFO"). These parties have failed to provide any reasonable explanation for the $600,000 Payment. 38. When the Plaintiff questioned Chief Kreutzer about the $600,000.00 Payment on or around June 25, 2018, Chief Kreutzer advised her: “Shut up and stop digging around trying to cause trouble’. The Plaintiff advised Chief Kreutzer that the funds should be repaid because they belonged the FMFN. 39. During the period that the Plaintiff had access to the financial information of the FMEN, the Plaintiff identified various other irregularities with the financial management of the FMFN. Particulars include the following: (a) Chief Kreutzer had misappropriated funds of the FMFN to purchase himself a new vehicle valued at approximately $76,000.00. (b) Chief Kreutzer and Councillor Kreutzer had made FMFN spending decisions that favoured their immediate family members, in contravention of the FMFN Council Accountability and Procedures By-Law and in contravention of their fiduciary duties. (c) For the 2017 fiscal year, Callihoo had incurred approximately $500,000.00 of credit card charges on his personal credit card that was entirely paid by the FMFN. The Plaintiff {£7870220.DOCX; 1)states that these included personal expenses and Callihoo also personally received rewards/loyalty program credits in relation to this spending (¢) The Plaintiff was unable to identify any protections for the further $804,123.00 that was meant to be held in trust for further per capita distribution payments to the Unidentified Members. 40. As the Plaintiff began to question these financial / governance issues, Callihoo, Chief Kreutzer, and Councillor Kreutzer began to obstruct her from doing her job as a Councillor and limit her access to information. After June 25, 2018, they took the following measures to obstruct the Plaintiff's role: (a) The Plaintiff was initially given ‘view only’ access privileges to the FMFN accounting software, which provided access to financial documentation of the nation. This was withdrawn after the Plaintiff began to question the $600,000.00 Payment; (b) The Defendants directed the CFO, Kevin George, to refuse any information requests from the Plaintiff unless she had "quorum", which practically meant she needed the consent of either Councillor Kreutzer or Chief Kreutzer, (c) The Defendants directed the employees of the FMFN to refuse any information requests from the Plaintiff unless she had ‘quorum’, which again practically meant that she needed the consent of either Councillor Kreutzer or Chief Kreutzer; (d) The Defendants have refused to add the Plaintiff to payroll and, as a result, she does not receive her annual salary for her role as Councillor, (e) The Defendants have refused to follow the procedures in the FMFN Council Accountability and Procedures By-Law for calling duly convened meetings and passing band council resolutions for decisions made by the Council. They have also scheduled Council meetings without notice to the Plaintiff. This has neutralized the Plaintif's ability to participate in the decision making of the FMFN. 41. Pursuant to her own fiduciary duty and pursuant to the FMFN Council Accountability and Procedures By-Law, the Plaintiff has the following obligations associated with her elected office as Couneillor: (a) “Ensure that [she is] fully informed about the financial responsibilities and resources of the First Nation", (b) “Ensure the financial affairs of the First Nation are conducted in a prudent, responsible, and careful manner at all times keeping in mind the best long term interests of the First Nation”, (0) “Oversee their senior managers and ensure that senior managers operate within program budgets and service delivery standards and by taking remedial steps, if necessary’; (d) Ensure the financial assets of the FMFN are managed in the best interests of the members of the FMFN; {(6770220,D0CX; 1)42. The Plaintiff has repeatedly demanded that she be permitted to discharge the above duties. On June 28, 2018 and July 10, 2018, the Plaintiff sent written notice to the FMFN, to the attention of Callihoo, demanding that he cease his conduct of deliberately interfering with the Plaintiff's access to the financial information of FMFN and that she be provided with access to FMEN financial records. Callihoo, Chief Kreutzer, and Councillor Kreutzer have neglected or refused to comply with these requests. 43. The Plaintiff states that Callihoo, Chief Kreutzer, and Councillor Kreutzer are preventing her from discharging the duties of her office, including but not limited to the duties outlined in paragraph 41, above. They are doing this in breach of their fiduciary duties to the FMFN, with the intention of causing economic harm to the Plaintiff, and with the intention of punishing her for questioning the $600,000.00 Payment Claims Against the Defendants: 44, The Plaintiff states that Callinoo, Chief Kreutzer, Councillor Kreutzer, and Bates were required to manage the Settlement Funds in accordance with their fiduciary duties. Their conduct in relation to the $600,000.00 Payment was in breach of these fiduciary duties. Particulars of this breach include: {a) Personally benefiting from their positions of trust and authority with the FMEN in breach of the ‘no profit’ rule of fiduciaries; (b) Making the Spending Representations when they knew or ought to have known they were false, in contravention of their duty of full disclosure to the membership; {c) Failing to disclose the $600,000.00 Payment to the members prior to the Ratification Vote or after the Ratification Vote; (d) Avoiding the formal approval process of a band council resolution for the $600,000.00 Payment; (e) Such further and other particulars as will be proven at the trial ofthis action. 45. The Plaintiff further states that the Defendant, 2050787 Alberta Ltd., engaged in a conspiracy with the Defendants, or any one of them, to receive the $600,000.00 Payment in breach of the fiduciary duties of the remaining Defendants as particularized above. More specifically (a) There was an express or implied agreement between 2050787 Alberta Ltd. and the Defendants, or any one of them, whereby the $600,000.00 Payment would be misappropriated from the FMFN in breach of trust and in breach of fiduciary duty; (b) There was concerted action by 2050787 Alberta Ltd. and the other Defendants, or any one of them, whereby 2050787 Alberta Ltd. would receive the $600,000.00 and process the funds through its bank account; (©) The conspirators used unlawful means in that the funds were taken in breach of trust and breach of fiduciary duty; (e7870220,D0CX; 1}(a) Damages were suffered in that $600,000.00 was diverted from the FMFN and from all the beneficiaries for whom the funds are held. 46, __ In the alternative, the Plaintiff claims that 2050787 Alberta Ltd. was unjustly enriched in respect of the $600,000.00 Payment. 47. _ The Plaintiff seeks an order that the $600,000.00 Payment be returned to the FMFN. The Plaintiff is not seeking any damages payable to herself personally in respect of these funds but only seeks to ensure that the FMFN is not deprived of these funds in the manner set out above. 48. The Plaintiff further claims that Chief Kreutzer breached his fiduciary duties to the FMFN in respect of the $76,000.00 truck and the spending decisions that benefited his immediate family members. The Plaintiff seeks an order that Chief Kreutzer be required to personally pay for the truck and for him to make a full accounting to the FMEN for the spending decisions made in conflict of interest. 49. The Plaintiff further claims that Callihoo, Chief Kreutzer, and Councillor Kreutzer are liable pursuant to the tort of unlawful interference with economic relations for their intentional obstruction of the Plaintif’s ability to discharge her duties as a Councillor. Specifically, the ‘conduct of Callihoo, Chief Kreutzer, and Councillor Kreutzer particularized above was contrary to their fiduciary duties to the FMFN and contrary to the FMFN Council Accountability and Procedures By-Law. This conduct was intentional and was done with the intention to harm the Plaintiff and the Plaintiff has suffered damages as a result. REMEDY SOUGHT: 50. The Plaintiff claims, as against the Defendants, jointly and severally: (a) A declaration that the FMFN Leadership breached their fiduciary duties and an order for disgorgement / repayment of the $600,000.00 Payment by any one of the Defendants. In the alternative, damages of $600,000.00 payable to the FMFN: (b) Disgorgement / repayment of all further amounts that were wrongfully diverted from the FMEN, including but not limited to the $76,000.00 vehicle in the possession of Chief Kreutzer, the improper spending on the Kreutzer family members, and the $500,000.00 in credit card charges by Callihoo; (©) Disgorgement of all salary paid to Bates since his unauthorized hiring by Callihoo, Chief Kreutzer, and Councillor Kreutzer; (4) A full accounting of spending decisions made by Chief Kreutzer that personally benefitted his family members and were made in conflict of interest; (e) A full accounting of the $804,123.00 in the ‘left over’ account that is to be held in trust by the FMFN; (f) _Injunctive relief ordering the Defendants to immediately cease their interference with the Plaintiff's ability to discharge her duties as a Councilor of the FMFN; (E7870220,D0CX; 1}10 (g) Damages for the unlawful interference with the Plaintif's economic relations in an amount to be proven at the trial of this action, with such damages payable to the FMFN; (nh) Aggravated and/or punitive damages in the amount of $100,000.00 payable to the FMFN; (i) Interest pursuant to the Judgment interest Act, R.S.A 2000, c. J-1; () Costs on a solicitor and own client basis; and (k) such further and other relief as this Honourable Court may award. NOTICE TO THE DEFENDANT You only have a short time to do something to defend yourself against this claim: 20 days if you are served in Alberta 1 month if you are served outside Alberta but in Canada 2 months if you are served outside Canada You can respond by filing a statement of defence or a demand for notice in the office of the clerk of the Court of Queen's Bench at Fort McMurray, Alberta, AND serving your statement of defence or a demand for notice on the plaintiff's address for service. WARNING Ifyou do not fle and serve a statement of defence or a demand for notice within your time period, you risk losing the law suit automatically. If you do not file, or do not serve, or are late in doing either of these things, a court may give a judgment to the plaintiff against you. {187870220 DOCK; 1