In November of last year, the Ontario Securities and Exchange Commission held a hearing to determine penalties for Gordon Driver, Steven Taylor and Reynold Mainse for their involvement in the ponzi scheme which affected 252 investors in Canada and the US, through a company set up by Gordon Driver called Axcess Automation/Axcess Funds.
I’ve written about Axcess Automation/Axcess Funds extensively (follow the hyperlinked categories on the bottom of the post) because of who was targeted in Canada, and because of the involvement of Ron and Reynold Mainse, sons of the founders of Crossroads Christian Communications Inc. founder, David Mainse. The Canadian charity known for its flagship show 100 Huntley Street and for Crossroads Television System (CTS), yanked Ron and Reynold off air as hosts of 100 Huntley Street for a few months in 2009 when news of this investment scam surfaced in US and Canadian media.
Crossroads scrambled to clear their name, ordering a forensic audit and releasing a statement that no Crossroads money had been used to fund Axcess Automation/Axcess Funds. Crossroads asked the Canadian Council of Christian Charities to release a clean bill of health statement about the decisions of the Board of Directors. By September, the Crossroads board issued a statement giving their support to Ron and Reynold Mainse and their wives as “they process the issues around the current circumstances and are actively engaged in their own personal and spiritual journeys, before renewing their public ministries.”
As well the board stated its objective to“ preserve and protect the legacy of Crossroads as founded by David Mainse, which includes the integrity of the programming, finances, mission projects, reputation, and the interest of the donors.”
It was clear that people directly and indirectly involved with Crossroads Christian Communications Inc. had been targeted in what was a ponzi scheme. Gordon Driver, a Canadian citizen living in the US was a former employee of Crossroads. David Rutledge, a cousin of the Mainse family, was also employed at Crossroads. Investors were targeted by their own.
The CFTC and SEC in the US continued investigating alongside the OSC here in Canada.
In August of 2009, Reynold Mainse send out an email to family and friends painting himself as a victim of fraud and betrayal, stating he had only pulled in a few people. “There were five relatives and ten Friends that I am sad to say I first introduced into this opportunity.” The Mainse brothers, cast as victims, uniformed philanthropists, financial babes in the wood would remain the dominant Crossroads message.
Ron Mainse and his wife appeared on 100 Huntley Street in October 2009 for a softball interview, and to continue the ‘we were victims too’ theme, followed by bellicose and aggressive posturing by then 100 Huntley Street host Jim Cantelon toward anyone who ‘cast stones’ at Crossroads and the Mainse brothers. God was invoked a lot, there were statements of ignorance about investing, remorse, etc. The timing of the Ron and Ann Mainse 100 Huntley Street re-introduction interview was perfect – a week before the membership drive.
By November 2009 Ron and Ann Mainse returned to their on-air positions, and Ron was eventually bumped up to Spiritual Director of the Crossroads Family of Ministries and Executive Producer of 100 Huntley Street. The board was shuffled around, the CEO resigned and a new CEO was quietly put in place.
In August 2010, Ron Mainse and David Rutledge faced the music with the Ontario Securities Commission. They settled, and while the OSC determined that Mainse was not party to fraud, he had been a ‘finder’ in the ponzi scheme. His lawyer handed over a restitution cheque for 138 thousand dollars and a cheque covering 10 thousand dollars in penalties. David Rutledge, who was heavily involved in Axcess Funds was ordered to pay 263 thousand and 35 thousand in penalties. Both are ordained ministers, neither were licensed to trade. David Rutledge had no one to bail him out, and in October 2012 he asked the OSC to extend his payment schedule.
Things went from bad to worse for Gordon Driver south of the border, but here in Canada, no determination had yet been made about Reynold Mainse, Gordon Driver or Steven Taylor. Reynold Mainse appeared briefly on 100 Huntley Street after the Haiti quake for the missions arm of Crossroads, his wife showed up on 100 Huntley for the missions arm of Crossroads, but it was apparent someone had determined only one brother would carry on the Mainse broadcast legacy.
I mentioned above that a hearing was held in November 2012 for Gordon Driver, Steven Taylor and Reynold Mainse. The OSC posted the decision this week, let’s get to it.
Understandably, things have not gone well for Reynold Mainse, and a careful reading of the hearing decision sheds light on why. Like Ron Mainse, Reynold Mainse was found not to be party to the fraud, was named as a finder and was found to have acted contrary to the public interest.
I have been very clear that while the brothers were victims in the ponzi scheme, they were also victimizers. Reynold Mainse engaged in unregistered trading and illegal distribution. His investor group took in over 2.8 million, and the OSC states that, “Reynold was found to have received $210,219.50 through an account in his name and another account in the name of WCC.”
We recognize that a number of mitigating factors may apply in determining the appropriate sanctions with respect to Reynold. Although Reynold may have been insensitive to obvious flaws in the Axcess Investments and to the highly improbable rates of return that were promised by Driver, he eventually ceased to solicit funds from new investors although he did continue to accept new funds from existing investors.
Was Reynold Mainse warned about what he was doing with Axcess Funds?
There is no reason to believe that he wasn’t, Ron Mainse told the OSC he had been warned, it is difficult to believe Ron didn’t speak to his brother. It is also difficult to believe others would not have warned Reynold Mainse. What isn’t difficult to believe is that he didn’t pay attention.
There are troubling concerns raised in this OSC Reasons and Decision on Sanctions and Cost.
Reynold Mainse pointed out his co-operation with the OSC and asked that sanctions not be imposed because he doesn’t have the money. I strongly suspect his assets would have been transferred out of his name while he was waiting for this decision. His family moved out of their upscale Grimsby home, and his company World Class Communications was dissolved in 2008 for failure to comply with the Corporations Tax Act. After an investigation by Open Bible Faith Fellowship the Rev. Reynold Mainse had his ministerial credentials suspended.
 Reynold submitted that he does not have the financial means to pay monetary sanctions and provided copies of his income tax returns and other financial information in support of his submission. Although the documents submitted by Reynold did reflect limited financial means, they did not appear to fully reflect all amounts received by him and WCC in connection with the Axcess Investments and, accordingly, it was not possible to develop an entirely clear picture of his financial circumstances.
 As discussed in paragraph  above, Reynold made submissions and provided evidence that he does not have ability to disgorge the amounts that he received. He submitted that he
would have settled with the Commission if he had the ability to pay and that he personally invested in the Axcess Investments and it was unclear to him whether the funds he received were commissions or returns on the investment, the latter of which should not be subject to a disgorgement order. He submitted that the commissions or returns on his personal investment were used for his Christian ministry and not personally and that he did not gain or benefit personally from the Axcess Investments. He took the position that he had no knowledge of wrongdoing and did not receive the funds illegally or unethically but, rather that the funds were given to him illegally and unethically.
The bolding is mine.
Reynold Mainse has been ordered to pay 35 thousand dollars in sanctions, 25 hundred dollars in costs, and $210,219.50 in restitution. Total owing: $247,719.51.
The OSC won’t be recovering all it’s administrative costs. Investors won’t be recovering much either, approximately $4,812,456 has not been returned to investors, with the exchange rate on the dollar between 2006-2009 their loss works out to $5,303,326.51.
While no Crossroads Christian Communications Inc. donor money was found to have been used to finance the scam, money raised by Reynold Mainse in and from the scam has gone to charities. Reynold Mainse made a statement to that effect in an email in 2009, “The monies I did take out, I gave to charities and others in need.” Let’s look at the numbers:
Approximately US$4,131,400.96 was raised from the investor group administered by Reynold and comprised of 23 investors, all of whom were members of Reynold’s family and friends (the “Reynold Group);
(b) Approximately US$2,875,054.87 was received by the Reynold Group;
Reynold was found to have received $210,219.50 through an account in his name and another account in the name of WCC.
…members of the Reynold Group collectively lost US$1,256,346.09
What Canadian charities did Reynold Mainse donate this money to? Are these charities aware this donation money came from a scam? Did Reynold Mainse donate some of this money to Crossroads?
The OSC is well aware Reynold and Kathy Mainse state they gave money to charity:
In addition, although the financial and other personal commitments made by Reynold and his wife to a number of charitable undertakings, including foreign missionary work, appears to have been undertaken at great personal sacrifice and is laudable, the fact remains that a significant portion of the funds that were used by them for these purposes were investor funds, and many investors lost a substantial portion of their investments.
I’d call that robbing Peter to pay Paul. I wonder what the Canada Revenue Agency Charities Division says about donations obtained by fraudulent means going to charities?
Tax receipt were issued by these unnamed charities to Mainse and his wife on what are ill-gotten gains. What reputable charity wants even inadvertent involvement in this kind of fraud? Was this his money to give?
Family and friends of Ron and Reynold Mainse in the closed community of Crossroads were soft targets, this ruling by the OSC may bring some emotional closure for investors, and provide hope that the long road to recovery (even when only pennies on the dollar) is a little shorter. This violation of trust by nationally known religious tv hosts will remain a blight on the Canadian charity landscape for a long time. It is my hope that the work of the OSC, and hopefully an investigation by Canada Revenue Agency will send a strong message of deterrence to religious leaders in Canada who want to make a quick buck for God and in God’s name and who draw in those who look up to and trust them.
Reynold Mainse now owns his own photography business and takes pictures around the world for his father David Mainse, who is writing a blog connected with Crossroads. Kathy Mainse was on 100 Huntley Street a few months ago talking about a missions trip she took to Africa. The investors? They wait.