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petitioner’s asserted high-pressure fundraising tactics and
sweepstakes contests.
Petitioner’s directors were divided concerning the course of
action petitioner should pursue as a result of the above adverse
publicity petitioner experienced. Some directors wanted
petitioner to discontinue its direct mail fundraising campaign
entirely. However, a majority of the directors decided that
petitioner’s direct mail fundraising campaign should be continued
and that the adverse publicity was a problem which could be
managed. Financial considerations were a controlling factor in
the majority’s decision to continue the direct mail campaign.
The fundraising arrangement with W&H accounted for substantially
all of petitioner’s operating funds. Additionally, at this time,
petitioner was fully liable on a recourse basis to W&H for the
excess draws petitioner had obtained from the Escrow Account.
Although petitioner had tried, at various times, to develop other
sources of funds, these efforts were not successful and
petitioner remained heavily financially dependent on its direct
mail fundraising campaign revenues throughout the term of the
Contract.
In early 1987, NCIB issued a report on petitioner that,
among other things, concluded petitioner’s fundraising expenses
for 1985 equaled about 97.7 percent of the related contributions
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