First Nation's child welfare agency sues former executive director, alleging fraud of nearly $11M

A south-central Manitoba First Nation's child welfare agency is suing its former executive director, alleging he fraudulently enriched himself at the expense of the agency and left it out more than $10 million.

The statement of claim filed by Sandy Bay Child and Family Services on Tuesday alleges Richard De La Ronde conspired for years to profit from his position by diverting money from the child welfare agency to himself.

The lawsuit also names Radka, a corporation De La Ronde is the director of, as a defendant, along with Shawendasaawin, his non-profit organization, and another man the lawsuit says was a co-director of that organization with De La Ronde.

Sharon Desmarais, the agency's new executive director, said the massive loss of funds and accusations around how they were lost have had a "huge impact" on Sandy Bay First Nation in the years since De La Ronde was terminated for cause from his position in 2021 after the discovery of financial irregularities.

"Our community members are still very upset about all of this. There's a lot of rumours and a lot of talk about it still," she told CBC."They're led to believe that he's gotten away with this and that nothing has come of it."

No statements of defence have been filed and none of the allegations against De La Ronde or the other defendants have been proven in court.

Desmarais said she hopes the lawsuit will help rebuild people's trust in the child welfare agency, which has since also appointed a new board of directors. It currently manages 540 files and has 365 kids in its care, Desmarais said.

WATCH |Sandy Bay CFS head fired in 2021 after financial irregularities discovered:

Sandy Bay CFS head Richard De La Ronde fired after financial irregularities discovered

3 years ago

Duration 1:38

Richard De La Ronde, the head of Sandy Bay CFS, has been terminated after allegations of financial irregularities totaling millions.

The court filing makes a number of allegations against De La Ronde and the other defendants, including fraud, negligent misrepresentation, breach of fiduciary duty and breach of contract, asking for punitive and aggravated damages for what it says was "deliberate, high-handed, outrageous and unlawful conduct."

The agency was put under administration with the Southern First Nations Network of Care until last year, afterDe La Ronde's employment wasterminated "for approving multiple purchases without supporting documentation and suspicion of fraudulent activities," the lawsuit says. At that point, Sandy Bay CFSwasn't aware of the full extent of "the since uncovered fraudulent activities," according to the suit.

Inflated rent, money spent on snowmobiles

Results from a forensic audit received last year "identified that De La Ronde and close associates incorporated several companies which received inflated and/or fraudulent payments from Sandy Bay CFS during De La Ronde's tenure as executive director," the court filing said.

There were a number of payments from 2011 to 2021, including one formore than $718,000paid to a company incorporated by his wife and her parents, and others involving properties being bought by his Radka company, then leased back to the agency on "commercially unreasonable terms" such as inflated rent amounts, for a total of more than $6 million.

The audit found in 2017, De La Ronde bought nearly $78,000 worth of snowmobiles paid for by the agency, though the purchases had "no legitimate business purpose." The same year, he transferred a property near Swan River, Man., being used by the agency as a cultural camp to Radka for $1 and would later go on to sell it privately for a profit, the court filing alleges.

"There is no record of these funds being paid to Sandy Bay CFS from De La Ronde or Radka," the lawsuit says.

De La Ronde is also alleged to have "fraudulently and intentionally" gotten reimbursements for more than $1 million in credit card charges "that were improper and unauthorized" by the agency between 2014 and 2021.

The lawsuit said the agency has calculated De La Ronde "has been unjustly enriched" to its detriment in the amount of roughly $10.6 million.

The agency said in a news release Wednesday it will be severing its leases on properties associated with De La Ronde and his companies, and has already relocated.

Desmarais said she's uncertain how long the court process might take, and whether the agency will ever recover the money it's seeking but she hopes to see some movement on it sooner rather than later.

"Our community has been dealing with this for some time now. We feel that justice needs to be served and our community needs to know that, you know, something was done about this," she said.

"We want to ensure that we do everything in our power to ensure that we get most of that money back."