Company accuses former CEO of embezzling funds in lawsuit

A co-founder of a multimillion-dollar Winnipeg business that organizes online raffles is being sued by the company for allegedly siphoning off funds being held in trust for charities and other organizations.

Nicholas Tenszen, who was the chief executive officer and president of Funding Change until July 8, 2024, is being sued for unspecified damages, including punitive damages, according to a statement of claim filed last week in Manitoba Court of King’s Bench.

The company alleges Tenszen, “who had complete access and control over Funding Change’s finances and operations, including over the trust funds and payroll,” began taking money out of company accounts to pay his wages without the consent or knowledge of its board of directors, from Aug. 2022 to July 2024.

The firm also claims Tenszen also used money from the trust fund to “pay operational expenses of Funding Change, thereby breaching Funding Change’s trust obligations and the terms and conditions of the licence.”

As a result, the court papers say, Funding Change has been unable to pay charities raffle proceeds in a timely manner, or at all.

Tenszen could not be reached for comment.

The company’s lawyer, Aaron Challis, said his client has no comment on the matter.

A Winnipeg police spokesman confirmed no criminal investigation is ongoing.

In a 2017 profile by the Free Press, Funding Change’s three founders detailed how the firm could be used by organizations — like local hockey teams, other non-profits, and businesses — to help raise cash online.

“Every coach is meeting and saying what will we do to pay for ice time, and that’s when parents look at their feet and no one wants to volunteer,” co-founder Ian Smith said at the time.

“We’re super excited… there’s no other program like this in Canada. Raffle and hockey kind of seem to go hand in hand.”

The court papers say when Funding Change discovered the irregularities, it noted the alleged behaviour to the Liquor, Gaming and Cannabis Authority of Manitoba and deposited “emergency financing in order to maintain the integrity of its obligations to charities and liquidity of its operations.”

The company claims Tenszen’s actions put its licence with the authority in jeopardy.

“(Tenszen’s) foregoing conduct was malicious, deliberate, in bad faith, for improper purposes, and was in wanton disregard of (Funding Change’s) rights and ought to offend the community’s sense of fair play,” the company says in the court document.

Lisa Hansen, a Liquor, Gaming and Cannabis authority spokeswoman, confirmed it issued a compliance order on Funding Change on July 12, 2024.

Hansen said this order “imposed actions and measures that restricted Funding Change’s operations while an investigation was conducted.”

She said the probe was completed in November 2024 and the compliance order was ended.

“(Tenszen’s) foregoing conduct was malicious, deliberate, in bad faith, for improper purposes, and was in wanton disregard of (Funding Change’s) rights and ought to offend the community’s sense of fair play.”– court document

“At that time, Funding Change was issued a one-year licence renewal with special terms and conditions that create greater oversight by the LGCA,” Hansen said.

“No further compliance orders have been issued since that time.”

Hockey parents weren’t the only ones using the technology, as the Manitoba government got on board during the COVID-19 pandemic.

Fourteen Manitobans received $100,000 cheques from the Vax to Win lottery, set up in Aug. 2021, to encourage people to get vaccinated against the disease. The lottery also saw 20 youth, aged 12 to 17, receive $25,000 scholarships for getting their first doses.

Manitoba Health transferred encrypted files to Funding Change, and not the personal health information of Manitobans, to pick winners.

“The process seems to have worked quite well… when we did it live,” Tenszen said at the time.

Funding Change’s website says other organizations that have used their online raffles include CancerCare Manitoba, the United Way and the Winnipeg Police Service.

In its lawsuit, the firm also claims Tenszen did not withhold or remit the necessary source deductions, including those payable to the Canada Revenue Agency.

The company alleges any money taken by Tenszen as a loan was “never authorized or approved by the board of directors.”

According to Tenszen’s LinkedIn profile, he joined Funding Change as interim chief financial officer in July 2015, became managing director in Dec. 2017, and was made CEO in June 2021.

His profile does not include a current job but lists him as a member of the board of directors of the Conservative Party of Canada’s St. Boniface-St. Vital electoral district association.

Funding Change said that while Tenszen has resigned from the company and its board of directors, he remains a shareholder.

No statement of defence has been filed and the allegations have not been proven in court.

kevin.rollason@freepress.mb.ca