News Release

Vancouver - In a settlement with the British Columbia Securities Commission, two BC-based companies admitted to fraud in operating Ponzi schemes - spread largely through word-of-mouth advertising - that took about $570,000 from 191 investors in Canada.

As part of the settlement, Wellspring Capital Group Ltd. and Springpay Systems, two companies that had Vancouver offices, agreed to admit that about $440,000 frozen by the BCSC is the proceeds of unlawful activity in any civil proceedings initiated by the Civil Forfeiture Office (CFO). They also agreed to consent to court orders that would give the CFO custody of the money as well as consent to variations of the freeze orders as may be required for restitution to Canadian investors.

During a period of almost seven months in 2003, Wellspring offered investment programs to residents in BC and elsewhere in Canada that promised returns on people’s investments through legitimate business transactions. The programs offered involved: financing for new vehicles; a “Rent Relief” investment; payroll deductions; and, a business expense reduction program.

Canadian investors made payments for their investments through accounts managed by Springpay. In all, 38 BC residents and 153 people from other parts of Canada, invested about $570,000 in the programs.

Wellspring representatives told investors that the programs would generate investment returns through sophisticated investments, including overnight transactions with high interest rates. This was untrue. In fact, the companies made scheduled payments to the investors with subsequent investor funds, operating the programs as Ponzi schemes.

On Sept. 23, 2003, the BCSC issued orders freezing investor money held in two BC bank accounts maintained by the two companies. About $440,000 plus accrued interest remains in the frozen accounts.

In addition to the fraud admission in the settlement, the two companies further admitted to trading and distributing securities without being registered or filing a prospectus as required under the Securities Act.

Both companies are ordered to cease trading in and be prohibited from purchasing any securities in BC.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlement on our website www.bcsc.bc.ca by typing in the search box, Wellspring Capital or 2009 BCSECCOM 141. If you have questions, contact Ken Gracey, media relations, 604-899-6577.