LONDON, ONT.

Nearly $8 million raised for hungry school kids and to fight HIV/AIDs went into the pockets of London Mayor Joe Fontana and fellow directors of his charity, the tax man says.

A government audit found with so much money going to benefit its directors and their businesses, and many more millions spent on fundraising and sunk into tax shelters, Trinity Global Support Foundation had strayed from its charitable purpose, court documents filed by the Canada Revenue Agency show.

Fontana, a former cabinet minister in the Paul Martin Liberal government, for instance, was paid $41,000 in “consulting fees” in 2009 and 2010 for the foundation he chaired, the documents reviewed by QMI Agency say.

The CRA sought to lift the charitable registration Trinity relied on to issue an eye-popping $152 million in charitable receipts to donors in its last fiscal year.

Issuing that amount in tax receipts to Canadians anxious to reduce their taxes saw Trinity become the top-ranked private foundation in the country, with the total value issued at three times more than the second-ranked one.

The tax agency didn’t mince words about what it thought about Trinity.

“The evidence,” the 2012 audit concluded, “demonstrates a preponderance of effort and resources devoted to non-charitable purposes.”

The audit and CRA letter yanking Trinity’s registration appear in documents filed with the federal court of appeal in Toronto, where Trinity fought the move to strip its charitable status, but lost.

The agency found Trinity invested and lost $7 million in an investment fund operated by Fontana’s boyhood chum Vince Ciccone, who founded Trinity in 2007.

“The organization was also found to have improperly paid over $865,000 to individuals and corporations related to the organization’s directors,” the CRA said in its Feb. 1, 2013 letter revoking Trinity’s charitable status.

The $865,000 was paid to its volunteer directors between 2008 and 2010 without proof such payments were legitimate, the agency said.

Fontana didn’t respond to a request for comment, referring questions to Trinity lawyer Duane Milot, who said he’d already responded to the CRA’s “unproven allegations” in court.

Fontana became a Trinity board member in 2008, when Ciccone asked him to join, and chairperson after Ciccone left in 2010 amidst securities charges related to his Ciccone Group.

Fontana and Ciccone were pals as youngsters in Timmins, Ont., and later became partners in Advance Property Management in London.

Fontana stepped down as Trinity chairperson late last year, but remains a board member.

The payments also included $325,000 apiece to Ciccone and board member Carmine Domenicucci for arranging a $7-million investment in Ciccone’s numbered company, 990509 Ontario Inc., and into GEMS Partnership, in which Ciccone and Domenicucci were shareholders.

Ciccone was paid another $25,625 for “management fees.”

Other payments included nearly $38,000 to Ciccone’s wife, Karen Thompson-Ciccone, for “consulting fees,” to Trinity vice-president Patrick Holmes $47,500 for “financial services” and to Fontana’s son, Ugo Joseph Fontana, $62,730 for “services as president.”

“Our audit has also revealed insufficient separation between the organization’s operations and the personal business and financial interests of those responsible for its operation,” said the letter outlining reasons for withdrawing Trinity’s charitable status.

Too much was spent on fundraising and plowed into tax shelters whose purpose is to help Canadians avoid paying taxes, the agency said. Neither is a charitable activity, the CRA ruled, and left too little for Trinity to pursue its stated goals of feeding hungry school kids through lunch and snack programs in Canada and to provide pharmaceuticals to fight HIV/AIDS in Africa and the Caribbean.

The money to directors was paid to firms owned by them, such as Joe Fontana’s 719382 Ontario Ltd., noted Sherry Head, an auditor in the CRA’s charities directorate.

“There is no evidence provided during the audit to support any of the services allegedly provided by these corporations were provided to the organization,” Head reported April 10, 2012 to Trinity.

She noted the $7 million invested in Ciccone’s firm was lost when it went bankrupt, as the Ontario Securities Commission (OSC) charged him with fraud and with misleading investors and securities regulators relating to $19 million.

The fateful decisions to invest with Ciccone were made at meetings of the Trinity board in December 2008 and January 2009, when Ciccone declared an interest and stepped aside to have Fontana chair the meetings and call the votes to do so.

In its defence, Trinity lawyer Milot argued in court the foundation had felt it “prudent” to invest with Ciccone because the return promised “would have allowed the foundation to properly fund its other programs.”

“Any suggestion that Ciccone Group Inc. and the foundation were working together in this alleged (OSC) fraud is completely unfounded,” Milot wrote.

In fact, he said, Trinity has helped the RCMP, which has investigated Ciccone and Ciccone Group and will continue to do so.