Cancer foundation co-founder misused donor cash, judge finds
Toronto Star
By: Jacques Gallant Staff Reporter
05 December 2015

(You can read the actual court judgment—CondoMadness)

A wine aficionado, Steven Sokolowski may have plowed some donor dollars into his expensive collection.

Steven Sokolowski — consultant, entrepreneur, wine aficionado — was living large.

The 65-year-old Toronto man was doling out big bucks to at least one girlfriend, to the tune of about $31,000.

He shelled out almost $15,000 for some expensive vino — which was probably used for a private event or went straight into his wine collection.

He spent a further $21,000 to host a gathering last year at the Royal Canadian Yacht Club.

Problem is, Sokolowski was not using his own money.

The funds for the lady friend, the party and the booze were actually meant for children with cancer.

Sokolowski is one of the founders of Coast to Coast Against Cancer, a registered Toronto foundation that aims to raise money to support childhood cancer charities and hosts several cycling and other activities every year, including the Sears National Kids Cancer Ride.

After Coast to Coast sued Sokolowski, Superior Court Justice James Diamond ruled last week that he abused his “fiduciary position” by submitting phony invoices and false expense claims for his own benefit. Some money went to companies for work by his girlfriends — work the foundation never actually received.

Sokolowski denied wrongdoing in a statement of defence.

Diamond found that he had misappropriated thousands of dollars, using some of that money to pay for the expenditures listed above. The judge ordered Sokolowski to repay nearly $700,000 in damages.

Sokolowski has also been criminally charged with fraud over $5,000 and laundering proceeds of a crime. He did not respond to the Star’s requests for comment, and his criminal lawyer declined to comment.

There was a lack of oversight at Coast to Coast and Sokolowski was allowed to exercise broad discretion, which let him get away with the scheme for as long as he did, according to an affidavit from the chair of the foundation’s board, Jeff Rushton, who said he has known Sokolowski since 1992 and considered him a best friend.

The result is that Coast to Coast had to deplete its reserve fund while attempting to recover the money from Sokolowski, following an extensive internal investigation. The charity expressed concern in court documents that it may have to cease its charitable activities if it doesn’t get the money back.
Sokolowski, who founded Coast to Coast with four other people, acted as secretary of the foundation board. His main responsibilities included marketing, advertising and promotions, according to Rushton’s affidavit.

“However, two years ago, I bought a new business and had less time to devote to the foundation,” Rushton said in the 2014 affidavit. “At that time, I delegated additional authority to Steven and his role expanded so that he was basically responsible for co-ordinating the day-to-day business of the foundation.”

He said Sokolowski’s “signing authority allowed him to sign foundation cheques up to a limit of $10,000. In addition, he could unilaterally approve vendor invoices, without submitting to any vendor-approval process.”
Sokolowski also personally owes Rushton about $400,000, according to the affidavit.

The scheme was finally uncovered in August 2014, Rushton said in his affidavit. A foundation event manager, during a routine internal audit, became suspicious of some of the payments. Sokolowski was suspended the same month.

The investigation was frustrated by the fact that in many instances, there were no copies of supporting documentation for the invoice payments and expense reimbursements because the foundation’s part-time bookkeeper had allowed Sokolowski to keep the original documents.

Rushton’s signature was on many of Sokolowski’s expense reports, although Rushton states in his affidavit that he never signed them.

The foundation proactively contacted more than 250 sponsors and donors to advise them of the situation, Rushton told the Star in a statement. Major corporate sponsors listed on the foundation’s website include Sears, Longo’s and Telus.

“As the matter continues to be before the courts, public statements remain inappropriate,” Rushton said.

He said in his affidavit that he believes Sokolowski’s wine collection to be valued at $1 million and that the 2014 event hosted by Sokolowski at the yacht club was a gathering of the local chapter of the Confrérie des Chevaliers du Tastevin, a wine club to which he belongs.

Food included poached lobster and Canadian caviar for hors d’oeuvres, hot applewood smoked char as the first course and truffles for dessert, according to a menu in the court file.

Also charged criminally with fraud over $5,000 and laundering proceeds of a crime is Philippa “Pip” Herrington, who identifies herself online as a yoga instructor and who Diamond said in his ruling is Sokolowski’s current girlfriend.

Rushton said in his affidavit that he believes Herrington and Sokolowski were having an affair, writing: “Over the years, I have known Steven to have several extramarital affairs with various women.”

Sokolowski misappropriated more than $107,000 by submitting invoices from “Herrington Associates,” a company that does not actually exist, according to the judge’s ruling. Herrington denied in her statement of defence any knowledge of the invoices.

The foundation alleged the money was actually used to pay some of Sokolowski’s own debt and for Herrington’s personal use. Herrington’s criminal lawyer, Alison Craig, said Herrington maintains her innocence and will fully defend herself against the criminal allegations.

“I also wish to emphasize that Justice Diamond’s decision makes absolutely no finding of any criminal or civil liability against Ms. Herrington,” she said. “In fact, it quite clearly attributes all of the misappropriations — including those related to Herrington Associates — to Mr. Sokolowski, and Mr. Sokolowski alone.”

Former girlfriend Sherry Azim, who the judge found received unauthorized payments in the sum of $31,425, told the Star: “I have no comment. I have no idea what you’re talking about,” before hanging up the phone.

She denied the allegations against her in a statement of defence. She repaid $28,000 to the foundation, Diamond noted.

Sokolowski told Azim in a March 2014 email that he was reimbursing Coast to Coast for the cheques being sent to her, but the foundation says he did not do so.

“We’ve never had a specific conversation about money and support, and I had assumed the money you were billing was sufficient,” he says in the email from his work account, which is part of the court file.

“Obviously it is not, so I need you to tell me what you need on an ongoing basis. I know this is awkward for both of us, but important we talk about it. The whole issue will obviously go away when we are together full time, and I know you are working on getting a job . . . And by the way, I do love you. That doesn’t change.”

Other findings of misappropriation made against Sokolowski by the judge include:

•	Nearly $160,000 received by submitting phony invoices from two firms for “web services” for the foundation;
•	More than $90,000 for advertising costs in Metro News, received by submitting phony expense reports. Metro was in fact providing in-kind sponsorship at no charge to the foundation;
•	A series of postdated cheques to cover his $3,600 monthly rent for his downtown Toronto home, where the judge said he resides with Herrington. The foundation says two of the cheques cleared the bank before the scheme was uncovered;
•	$318,000 in miscellaneous expenses, including hotel receipts, electronics, meals and entertainment.

Despite the legal action, Rushton, the Coast to Coast chair, says the foundation was able to still carry out all its regular activities and is on track to distribute more than $4 million by the end of the year to childhood cancer charities.

The next Sears National Kids Cancer Ride, which goes from Vancouver to Halifax, kicks off next year on Sept. 8.

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