News Release

Vancouver – B.C. Securities Commission staff has issued a notice of hearing and imposed a temporary order against two directors of a Burns Lake company for making misrepresentations in selling securities.

The order was issued against Carl Glenn Anderson and Douglas Victor Montaldi, directors of numbered company 439288 B.C. Ltd. The order prohibits the pair from participating in the capital markets.

The numbered company’s prime business was to lend money to borrowers at interest rates between 16- and 18- per cent per year while it took in money by offering investors higher than prevailing rates of interest (generally between 10- and 12- per cent per year) offered by financial institutions. Investors were issued one-year promissory notes.

Commission staff’s main purpose in issuing the order is to prevent Anderson and Montaldi from operating a similar business until the pair can face allegations that their conduct of the business was illegal and abusive to the investors.

In particular, commission staff allege that from Jan. 1, 1996, the pair did not disclose to investors that they used incoming investors’ funds to pay interest and capital due to existing investors.

Staff’s allegations include breaches of section 57(b) of the Securities Act when Anderson and Montaldi:
· Concealed from investors the true risk of investing in the company;
· Gave personal guarantees to investors to encourage them to invest when the aggregate value of the guarantees exceeded the pair’s combined net worth; and
· Did not disclose to investors that they were using investors’ funds for their own purposes.
(Section 57(b) prohibits transactions relating to trading in B.C. that perpetrate a fraud on any person in the province.)

The two men also face allegations of unregistered trading in securities and distributing securities without a prospectus.

Staff allege that the men’s conduct was contrary to the public interest. As part of the temporary order, Anderson and Montaldi must resign any positions that they hold as directors or officers of any company. They are also prohibited from becoming or acting as directors or officers of any company or engaging in any investor relations activities.

The temporary order is in effect for a maximum of 15 days at which time commission staff will seek to extend the order until a commission hearing is held in early 2003 and a decision rendered.

On April 30, 2002, the Financial Institutions Commission (FICOM), obtained a financial freeze order and issued a cease-and-desist order against the numbered company which effectively banned any further conduct of the company’s business.

FICOM subsequently investigated allegations that the company operated as an unregulated deposit-taking institution and owed $41-million to creditors. PricewaterhouseCoopers Inc. was appointed trustee after the company acknowledged on May 9, 2002 that it was insolvent. The trustee’s report revealed the company had about $33-million in assets and about $41-million in liabilities for a shortfall of $8-million.

The FICOM freeze order was lifted upon the appointment of the trustee. Since then, creditors have accepted a company proposal to reorganize its operations into two units including the numbered company.

The BCSC and FICOM investigations are continuing.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province. Copies of the order and notice of hearing can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Andrew Poon, Media Relations, 604-899-6880.