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The Canadian Organization for International Philanthropy (“COIP”) was the head promoter of a major Canadian pharmaceutical donation tax shelter program, also known as a registered profitable gifting arrangement (“RPGA”). COIP’s RPGA was registered in 2006 with Revenue Quebec and with the Canada Revenue Agency (“CRA”), under the name “the Canadian Aid Program”.

Over four years of promoting, COIP sold about $200 Million Dollars of essential AIDS medicine to thousands of Canadian donors. All of the medicine was sold on credit (by a loan that covered the entire purchase price), and the only money people paid to COIP was in the form of “prepaid interest” or “PPI”, leaving $200 Million of collectively unpaid debt that needs to be settled. COIP used a second related company, named PanAggregate Financial Corporation (“PFC”) to “refinance” the first COIP loan. PFC then took over the unaccrued PPI monies from COIP, as well as the loan relationship with the donor/debtors.

The key factor behind this loan agreement with PFC was that donors had to return identical pharmaceuticals to PFC in order to settle the debt.  This meant that the donors would actually have to source, purchase, and deliver “identical pharmaceuticals” to the ones originally purchased on credit, in terms of their type, quality and quantity. This extremely difficult—if not impossible—requirement, however, did not seem to deter any of the donors. Why? Because of COIP’s nationally promoted promise and the clear understanding of all the sales agents at the time of the sale that COIP/PFC would, sometime in the future, assist all donors in sourcing an independent international pharmaceutical vendor, and the hope was that the price would be far less than was originally paid, and that remaining PPI after three years might even suffice to purchase these pharmaceuticals without the need for going out of pocket any more.

All of this medicine was immediately donated to one of several charities, such as the All Saints Greek Orthodox Church (“ASGOC”), or the Orion Foundation. These charities, in turn, delivered all the medicine to third world countries.  Donors received official donation receipts for these donations, which were remitted for full credit and refund by the tax authorities, despite the fact that eventually the CRA went on to deregister both of these charities (i.e. they had their charitable status revoked for cause, for functioning “primarily in the private interests of the promoters and not for charitable purposes”).

Shortly after donors received their refunds, CRA’s “Au-R-Ob-A Protocols” began. That is, the CRA began the standard process of denying all donation tax shelter benefits after initially recognizing all of them, through the Audit, Reassessment, Objection, and Appeal processes. In the Notices of Reassessment, the CRA slammed the COIP Program because it was not an “arms-length” arrangement, alleging that the companies and their off-shore pharmaceutical suppliers are owned and controlled by the same people, which is a clear tax violation. COIP and PFC denied but never disproved the allegation. Instead COIP and PFC decided to renege on their long-time promise to help source pharmaceuticals, leaving the donors on their own to source the identical pharmaceuticals. COIP and PFC suggested that by not keeping their promise to help source pharma, it would actually help donors by eliminating any CRA claims that the donors were settling their debts non-compliantly with non-arm’s-length companies, like SunRx (PFC’s supplier). Aside from being reassessed by the CRA, and being left on their own to source identical pharmaceuticals to settle their debt, COIP/PFC started sending out demands for more interest “in order that donors maintain their loans in good standing for tax purposes”.

When COIP/PFC were informed of the existence of the Justice Pharma Debt Settlement Program, and that it would now be possible for donors to meet their tax and loan obligations through the purchase and delivery of identical pharmaceuticals, they once again reversed their position, and decided they were, after all, going to source some vendor, and even conducted a public Request for Proposals (“RFP”). Yet the RFP produced no such vendor. Instead, PFC suddenly let the donors know that they had assigned all their rights to the donors’ debts to their offshore (non-arm’s-length) pharma vendor, SunRx, who is now attempting to collect interest and trying to snag donors into “settling” with them in non-complaint, illegal ways.

We can now confirm that we have delivered pharmaceuticals to SunRx in satisfaction of COIP/PFC debt settlement, and we strongly encourage you to settle your COIP Program debt immediately to stop further interest collection, and to establish a compliant settlement for tax purposes.