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Full House For UFCW Pension Trustees

Written by Wanda Pasz Thursday, 27 April 2006

What do you call it when you take a bankrupt hotel and sell it - back to yourself? Bernie Christophe and Eugene Fraser, both tops dogs at the Canadian Commercial Workers Industry Pension Plan ought to know.

uncharted.ca has learned that Christophe, a CCWIPP trustee and spokesperson for the troubled pension plan and Fraser, Executive Vice President of the pension plan's management company, are the proud owners of a Niagara Falls hotel that went deadbeat on about $10 million worth of loans from the pension plan a couple of years ago.

How'd that deal go down?

It all started around 1998 when Bernie and his pals on the CCWIPP Board of Trustees loaned $10 million through I.F. Propco Holdings 36 to three Niagara Falls businessmen to finish building a hotel that had been mothballed part way through its initial construction more than a decade earlier. The three amigos - Cosmo Dilollo, Tony Felice and Joe Vanderwayden - had high hopes for the place despite the fact that it would open in a hotel-saturated market.

Part of the $10 mill would go towards the construction of a nifty "peaked" roof - to get away from the ho-hum flat roofs that are typical of hotels. Some further CCWIPP moolah would finance an East Side Mario's Restaurant that Cosmo opened at the hotel. Hey, bada boom bada bing!

By 2000, the CCWIPP boys had just over $13 million sunk into Cosmo and Tony's place. In 2002, the year that the Financial Services Commission of Ontario began its "review" of the pension plan, the trustees dragged Cosmo into bankruptcy court. A year later the receiver approved a sale of the assets of Cosmo's hotel biz to a company called Full House Hospitality. But Cosmo wasn't going quietly away. After litigating for a few years he applied to amend his Statement of Claim to include some references to "misrepresentation"by the Propco representatives. The Propco boys, which include Eugene Fraser who is a Director of Propco 36, fought the amendments. Eventually they won a few and lost a few. They were also ordered to make Cliff Evans (the granddaddy of CCWIPP) available for an examination for discovery by the end of May 2006.

A paragraph included in the decision sheds some light on the sweet deal that landed the hotel in the hands of Full House Hospitality:

On August 28, 2003 Justice Blair made a vesting order approving the sale of the assets held by the receiver to Full House Hospitality Inc. No money was paid on closing and the vendor took back a mortgage together with a pledge of shares of Full House Hospitality. Those shares were assigned to the plaintiff. Having received no money pursuant to the mortgage obligations, the plaintiff took the shares of Full House Hospitality having the effect that the plaintiff is currently in possession of the property, having paid nothing for it. The defendant did not attend the hearing of the motion on August 28, 2003.

Ontario corporate records confirm that the officers of Full House Hospitality are none other than Bernard Christophe and Eugene Fraser.

Meanwhile back at the Financial Services Commission of Ontario,sources close to the CCWIPP action confirm that the regulatory agency has not taken any action at all against the pension trustees despite its damning report, released almost one year ago which found multiple breaches of pension legislation and confirmed tha millions of dollars had been poured into high risk investments and financially troubled hotels.

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