Peguis sues developer Andrew Marquess over ‘improper profit’ while working for First Nation

A Manitoba First Nation is suing Winnipeg developer Andrew Marquess, his companies and a company owned by his wife over allegations he failed to act in the best interests of the band and financially benefited from breaches of duty while he worked for First Nation.

Marquess says the lawsuit against him is “baseless, without merit and is legally defective.” 

In the statement of claim, filed Sept. 27 with Manitoba’s Court of King’s Bench, Peguis First Nation says Marquess was entrusted to provide consulting services to the band and several related entities, beginning in 2020.

His roles and responsibilities included helping the Cree and Ojibway First Nation develop a debt repayment plan, conducting a comprehensive review of Peguis’s assets and operations, using the First Nation’s treaty land entitlement funds to purchase real estate assets for Peguis, and providing consulting services related to housing shortages caused by flooding, according to the court document.

In the claim, Peguis alleges Marquess breached his fiduciary duties to the First Nation “by acting contrary to the ‘no conflict’ and ‘no profit’ rules, engaging in self-dealing without authorization” and “by acting without regard to the best interests of Peguis.”

Peguis also alleges “significant improper profit from these breaches of fiduciary duty,” noting Marquess was paid at least $4.4 million between April 2021 and April 2023, according to the court document. 

“Marquess had the ability to unilaterally exercise his power and discretion in a manner that affected Peguis’s legal, economic and practical interests. Peguis was vulnerable to and at the mercy of Marquess’s exercises of discretion and power,” reads the statement of claim.

In March 2021, Peguis’s chief and council gave Marquess’s consulting company the power to select up to $20 million in real estate investments for the band, which were to be held by the Peguis First Nation Real Estate Trust (PFNRET), an entity Marquess “directed, influenced or caused” Peguis to create, according to the court document.  

The First Nation alleges Marquess used his “influence, power and discretion to control the management and operation of PFNRET to his own profit, benefit and advantage,” according to the statement of claim. 

Directed trust to buy former golf course: suit

In early summer 2021, Marquess directed the real estate trust to purchase The Meadows at East St. Paul, a former golf course, because “it was a property that Marquess was personally interested in developing, and not because doing so was in the best interests of Peguis,” according to the statement of claim.

The plan was to turn the 73-hectare (180-acre) property into a “complete community,” with single and multi-family residential dwellings and small-scale commercial development, according to the real estate trust’s website. More than 2,000 housing units were proposed in a submission to the Municipal Board of Manitoba.  

The land cost nearly $12.3 million, of which $10 million was paid from Peguis’s treaty land entitlement trust fund, according to the statement of claim. 

Under Marquess’s direction, a company owned by his wife, Maureen Diamond, loaned $5.5 million to the real estate trust’s related company at an interest rate of 5.75 per cent, which later increased to 9.18 per cent, the court document states. 

Peguis alleges Marquess directed the real estate trust to agree to a debenture agreement which gives Diamond’s company a mortgage over the Meadows property, according to the lawsuit.

“Marquess acted contrary to the ‘no profit’ and ‘no conflict’ rules and failed to protect the interests of Peguis, and its related entities,” reads the statement of claim.

In August 2021, Marquess had the real estate trust enter into a development management agreement for the Meadows with one of his numbered companies under the following terms, according to the court document: 

• Marquess was in total control of the development, accounting and management of finances of the Meadows property.
• Peguis First Nation Real Estate Trust’s related company was to pay Marquess fees equal to five per cent of all site servicing costs, as well as five per cent of the construction costs of buildings, two per cent of the sales or leases of serviced lots, and site plan services at $495 per hour, plus accounting and reporting fees of $15,000 per quarter.

The development management agreement contains a termination clause which “purports to prevent [the real estate trust] from terminating the development management agreement with Marquess … until all loans to [Marquess’s wife’s company] are repaid in full,” according to the statement of claim.

“The terms of the development management agreement, and, in particular the termination clause, are unconscionable, unenforceable and result from a breach of Marquess’s fiduciary duties,” reads the court document.

In a statement to CBC News, Marquess disputed he had total control over the Meadows development or any aspect of Peguis First Nation’s decision-making.

“The notion that I, or anyone else for that matter, had total control of all Peguis’s financial, legal and other matters is pure fiction. The claim lacks specifics to back up their allegations as these specifics don’t exist,” Marquess wrote.

The First Nation’s chief and council made decisions on behalf of the community, including during the time period from 2021 to 2023, he added.

Wellington Crescent property flip

In 2022, the Peguis real estate trust purchased about a hectare (nearly three acres) of land on the north side of Winnipeg’s Wellington Crescent.

The province of Manitoba agreed to sell the land at 611 Wellington Cres. for $350,000 “on the condition that the property be added to reserve,” in accordance with Peguis First Nation’s treaty entitlement agreement, according to the statement of claim.

Peguis alleges Marquess had the real estate trust sell the land to an outside company for profit, a transaction that amounted to a breach of the province’s terms of the sale and the treaty land entitlement agreement, according to the statement of claim.

Marquess was paid an unspecified amount by the real estate trust to develop the property, the court document says.

Peguis says in its statement it is not yet aware of the full scope of the payments and alleged improper profits that went to Marquess. 

“Marquess has consistently misused his power and discretion as a fiduciary to enrich himself to the detriment of Peguis,” reads the court document.

None of the allegations have been proven in court and no statement of defence has been filed.

Lawsuit a distraction, Marquess says

Marquess said in a statement he will “move immediately” toward having the claims struck. 

He called the lawsuit a distraction by Peguis First Nation’s current chief and council, claiming the band’s current leaders are “obviously feeling the pressures of a lack of progress” in resolving a $172-million lawsuit filed by the receiver for defunct lender Bridging Finance Inc. and a Federal Court challenge of the 2023 Peguis election, which saw incumbent chief Glenn Hudson lose to Stan Bird, the current chief.

During a hearing in July, Hudson’s legal counsel told the court that Bird and Peguis Coun. Kelvin Wilson disrupted a March public meeting in Peguis prior to the election. Hudson’s lawyer also told the court dozens of Bird supporters prevented a box of advance ballots from leaving an advance polling station, which led to the nullification of 178 ballots.

Bird, who won the election by 440 votes, denied those allegations in court.

Marquess noted in his statement the result of this court hearing is pending.

“Bringing baseless legal claims against others is not a distraction from the legal challenges facing the current leadership group as to how they attained power and assumed the role of government,” he wrote.