Santorum, Schlapp Shill For Catholic Crypto Coin Whose Founder Has Sketchy Past

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June 12, 2019 2:31 pm
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Former Sen. Rick Santorum (R-PA) and American Conservative Union chair Matt Schlapp have joined forces for a project that is so deliciously of the moment that it’s hard to believe it’s real: Cathio, a cryptocurrency for the religious right that seems to fuse grift and faith in one.

Cathio bills itself as a “turnkey solution for Catholic organizations to bring their financial transactions into alignment with their beliefs.”

According to the Financial Times, which broke the story on Tuesday, Cathio CEO Matthew Marcolini says that because platforms like Venmo and PayPal apparently back Planned Parenthood — an organization “antithetical to what the church teaches” — he founded a cryptocurrency company that offers parishioners a system for giving to churches and other religious organizations in a way that’s in accordance with sacrament.

PayPal has attracted criticism from anti-abortion advocates in part for a charitable giving program it runs that allows users to donate to Planned Parenthood chapters. Conservative groups have also criticized the payments firm, which owns Venmo, for its corporate support of the Center for Reproductive Rights. The Family Council, an anti-abortion evangelical group, lists PayPal as a corporate supporter of Planned Parenthood.

To attract members of the religious right put off by those activities, Cathio founder Marcolini enlisted his father-in-law: Santorum.

The former Pennsylvania senator has a perch on the company’s board that reportedly gives him a stake in the “benefit corporation.” So too does Schlapp, a high-profile Trump administration ally (and husband of White House Strategic Communications Director Mercedes Schlapp).

Santorum has also been “fundraising” for the project, according to the FT report, which also says that Cathio charges around a 2% transaction fee for “donations and remittances.”

According to documents reviewed by TPM, the crypto project has another figurehead helping to fulfill the holy mission of eschewing businesses that support Planned Parenthood: Cameron Chell, a Canadian citizen who co-founded and serves on the board of Cathio.

TPM found that Chell spent much of the late 1990s and 2000s fending off accusations of financial misconduct in the U.S. and Canada, thanks largely to his associations with shady characters. He has been barred from at least one stock exchange and founded a company that was delisted from the Nasdaq after a staffer engaged in fraud.

Chell first ran into trouble in 1998, when the Alberta Stock Exchange fined him $25,000 and barred him for five years for allegedly violating the exchange’s by-laws, according to Canadian court filings.

Canadian authorities reportedly charged Chell at the time with directing an assistant to forge a client’s signature to open a bank account, before a judge acquitted Chell in September 1999.

Chell’s next brush with fraud accusations (and the FBI) came three years later, after he founded a Nasdaq-listed company called Chell Group.

According to court filings and press reports, Chell Group featured in an Ontario Securities Commission complaint that describes how a broker named Mark Valentine used Chell Group shares to move millions of dollars out of different funds that he was managing as the dot-com bubble popped. The Ontario Securities Commission described Chell as a “known associate” of Valentine, and recounted in the complaint how the Canada-based broker used shares in three separate companies belonging to Chell to conduct manipulative trades.

Valentine was later arrested in an FBI securities fraud sting.

After the Ontario Securities Commission named Chell in its complaint, he was removed from the board of his eponymous firm and the company was delisted from the Nasdaq. Two of his co-directors at Chell Group also went on to face criminal charges after his July 2002 removal.

Chell never faced criminal charges during his tenure at Chell Group. Chell did not reply to TPM’s repeated requests for comment.

He has since moved into the world of crypto currency, founding a company called ICOx in 2011. According to securities filings, ICOx registered Cathio Inc. in Delaware as a subsidiary in November 2018. But there was almost no public mention of Cathio until May 31, when ICOx issued a press release announcing a contract it had signed to develop a “Payment, Donation, and Remittance Platform for the Catholic Economy.”

Another press release, issued the same day, specifies that the platform will run on blockchain — the technology that underpins cryptocurrencies. The FT reported that it will be a “stablecoin” — a digital currency that aims to be less volatile than other virtual forms of money.

The company has not explained why it chose to establish itself as a cryptocurrency, rather than a payment system like Paypal or its subsidiary Venmo. It bills itself as a cheaper alternative, but charges around a 2% transaction fee for its services.

Paypal and Venmo do not generally charge such fees as long as transactions remain within their respective platforms. (Venmo does, however, solicit a 3% charge for certain credit card-related payments, and charges merchants a 2.9% fee when the service is used for a direct transaction with a customer.)

Nicholas Weaver, a computer science professor at Berkeley who is critical of cryptocurrencies, called the fee arrangement unusual.

The whole hype around cryptocurrencies is that you’re trying to keep these costs low,” he told TPM.

Cathio users who may not appreciate a private company taking a cut of their charitable giving do have access to another platform-specific feature: the ability to bestow a rating on the church that receives their donation.

Schlapp and Santorum did not return requests for comment.

A Cathio spokeswoman told TPM that its CEO was traveling out of the country, and stopped replying after receiving a list of questions for the firm.

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