Wednesday, December 7, 2011

BC Patriot Party and the Advocational Party, are they tax havens?

The BC Patriot Party has been around for 10 years but has never let anyone know what it is about and only run a minimal number of candidates in 2001 and 2005 and none in 2009.   The Adovcational Party has been around for five years and never run a candidate in an election.  So what are these parties about?   I think I might know now as I look at the financial returns of the parties.

The quick highlights:
  • Neither party has a website, facebook account or any online presence indicating what the parties are about.
  • Neither party ran candidates in 2009. 
  • The BC Patriot Party and the Advocational Party have combined assets of $3,972,703.94 as of December 31st 2010.
  • The Advocational Party were beneficiaries of a contribution of $1,675,483 from the BC Patriot Party in 2007.  In 2006 the BC Patriot Party contributed $1,838,100 to the Advocational Party in the form of shares in a company.   This amount was returned to the BC Patriot Party in 2007.
  • The two parties get almost all of their income from gains on investments.
  • Both parties carry large interest free loans from core people involved with the parties, those primarily being Andrew Hokhold or Beverly Bird or businesses they own.
  • Both parties seem to spend a lot of time investing in stocks.
2001 the financial statements looked like something I would expect from a tiny party, though the email address of the financial agent is the one for Andrew Hokhold.

Five people and one business donated the maximum amount allowed to get a tax credit for a political donations - $1150 each.
The total expenses of the party was $3947.20, of which $3816 was a loss on a capital investment.
The party had $3034.79 in assets - $2404.16 in cash and $630.63 in investments.

It looks like people were getting their maximum tax credit.  Andrew Hokhold becomes the financial agent for the party.

Five people donated the maximum of $1150 each
  • Tibor Tusnady
  • Monika Tusnady
  • Clara Hokhold
  • Ferencz Hokhold
  • Andrew Hokhold
Total income for the party in 2003 was $8677, or which $2927 was from gains on investments and $5750 from donations.
The party had assets of $11,711.34 - $232.90 in cash and $11,478.49 in investments

It still looks like a party that exists mainly to give people a tax credit, but there is growing investment asset.

Things get more complex
Four people donated, four of them $1150 and one $1251.74
Monika Tusnady, Tibor Tusnady, Clara Hokhold and Ferencz Hokhold each donated $1150
Andrew Hokhold donated via not collecting interest on a loan to the party.   He lent the party $37,088.50 in 2004

In 2004 the BC Patriot Party made $27,478.48 on increases in investments.   The party sold shares of a value of $8,167.03 in 2004.

The primary expense of the party was the interest on the loan to Andrew Hokhold.
At the end of 2004 the party had assets of $81,044.06, of which only $189.85 was cash, the rest was investments.   The party also had debts of $37,088.50

The party is beginning to look like a way to protect investments from taxes.

2005 - the party files very late, on December 1st 2006.   The party uses Clark Robinson as auditor for the first time.
In this year the party spent no money on the election.
Meanwhile the net worth of the party rose to $574,586
Donations to the party were only from Clara Hokhold, $1150 and Dr. Andrew N. Hokhold seems to have given $2800 in cash and $4901 in loan forgiveness.
In 2005 the party gained $531,381 on their investments.
The party also borrowed $305,740 from Dr. Andrew N. Hokhold Inc and repaid $37,089 to Andrew Hokhold
The party expenses were $4901 of interest owed to Dr Andrew N. Hokhold, $4044 in bank charges and $642 in accounting costs.
At the end of 2005 the party had $808,326 in assets and $305,740 in debts.

2006 - the Advocational Party is created and they use the same accountant as the BC Patriot Party
In this year the party saw a gain of $1,123,129.55 on investments.
In 2006 the donations were all, expect for $14, forgiveness of interest on loans.   Dr. Andrew N. Hokhold Inc. forgave $13,393.15 in interest.
In 2006 the party gave away $1,838,100 to the Advocational Party on December 29th 2006 in the form of 612,700 shares in KGN.  KGN is in Canada the stock ticker name for Keegan Resources, I do not know if that is what it was in 2006 but given one of the VPs gave money to the Advocational Party, it seems likely that it is
Expenses in 2006 were accounting $2415, bank charges of $9689.95, legal fees of $719.09 and $13.393.15 in interest
At the end of the year the party had assets of $165,469.07 and liabilities of $318,975.09 meaning the party was in the whole to the tune of $153,506.02

The party suddenly had a lot of that money back that it gave away.   The Advocational Party of BC was the beneficiary of the $1,838,100 contribution in 2006.   The same amount was returned by them to the Patriot Party on Dcember 4 in 2007.
Donations in 2007 were all from Andrew Hokhold ($1150 cash donation and $11,982.36 in interest waived) or Dr Andrew N. Hokhold Inc ($2200 cash donation and $13,807.07 in interest waived)
2007 saw $1908 in accounting charges, $33,526.56 (? the pdf is hard to read) in bank charges, $494.03 in subscriptions, a loss of $138,926 on investments.
In 2007 the party gave away $1,675,483 - this money was given to the Advocational Party of BC
Party assets $1539.19 in cash, $1,203,448.57 in investments, $15,000 in a loan owed to the party
Party liabilities were $1,340,845.88 in loans, all from Andrew Hokhold or Dr Andrew N. Hokhold Inc., and $37.963.13 in Margin Account Overdraft
Net worth of the party was $158,823.31

2008 - new auditor was used, Sladen Moore of Vernon
Dr Andrew N Hokhold Inc waived $13,100.22 in interest on loans
Andrew Hokhold waived $63,937.50 in interest
The party made $$10,221.24 in interest income
The party lost $887,288.28 on investments,  bank charges were $1545.13, accounting $5250
The party had expenses in new categories - $11,502.61 for convention, workshop and meeting fees, $224,35 in office supplies, $39.22 postage and courier, $208 in professional services, $158.23 in travel
The party had total assets of $251,973.59, of which $53,962.26 was a loan owed to the party by the Advocational Party
The party had liabilities of $1,319,102.08 for a net deficit of $1,088,128.47

Dr Andrew N Hokhold donated $1150 in cash and waived $12,642.96 in interest
Andrew Hokhold waived $63,937.50 in interest
The party gained $581,855.38 on investments
2009 accounting $3022, bank charges of $3008.04, professional services of $12,199 and $538.26 in other expenses.
The party  had assets of $869,003.92 of which $53,962.26 is in the form of a loan owed to the party by the Advocational party.
The party had liabilities of $1,371,494.31 and a deficit of $502,490.39

2010 - a new financial agent, Arthur Raymond Carrier
Dr Andrew N Hokhold waived $12,683.23 in interest
Andrew Hokhold waived $63,925.94 in interest
The party gained $992,833.55 on investments and made $4636.39 in interest
2010 expenses (other than the interest waived) $3591 accounting, $3776.49 in bank charges, $13,247.32 in professional services, $2173.90 in travel, $2764.87 in subscriptions, and $128.37 in newsletter and promotional materials
The party had assets of $1,759,653.58 and liabilities of $1,290,355.98 for a net surplus of $469,297.60

In 2010 the Advocational Party had assets of $4,56,829.95, of which $490,401.41 was land and buildings.   The Advocational Party had liabilities of $1,022,423.61 for a total surplus of $3,543,406.34

That is all I am going to write about this now, but it really makes me wonder what is going on and if it is all legal.


Sixth Estate said...

Maybe I'm missing something, but I'm not sure what the purpose would be. They can't really get the money back out of the party on a tax-free basis, unless I'm missing something, and the tax credit isn't as big as the actual contribution.

So maybe there's something weird going on here, but I don't really understand what. Am I missing something?

Bernard said...

There are many ways you can get money out of the party

You can pay for services from the party.

You can pay expenses.

Our you can just give it away.

I honestly can not figure out what is going on other than some how it is a way to avoid taxes. It is the only thing that makes any sense at all.

Anonymous said...

Contact Revenue Canada?