Settlements

RALPH A. SIVERTSON, et. al. [Sec. 161 & Agreed Stmt.]

BCSECCOM #:
Document Type:
Sec. 161 & Agreed Stmt.
Published Date:
2000-01-28
Effective Date:
2000-01-25
Details:


IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418, as am. S.B.C. 1998. C. 42, s. 47; 1999, c. 20

AND

IN THE MATTER OF RALPH A. SIVERTSON

and

IN THE MATTER OF WAVERLY VENTURES LTD., WAVERLY U.S. EQUITIES LTD., WAVERLY U.S. LIMITED PARTNERSHIP, BUCKINGHAM SQUARE APARTMENTS-OKLAHOMA LIMITED PARTNERSHIP, BELLE ISLE TERRACE APARTMENTS LIMITED PARTNERSHIP, CHURCHILL SQUARE APARTMENTS LIMITED PARTNERSHIP, HUNTER’S GLEN APARTMENTS LIMITED PARTNERSHIP, WESTON ARMS LIMITED PARTNERSHIP, APPLE PLACE LIMITED PARTNERSHIP, WALNUT CREEK APARTMENTS LIMITED PARTNERSHIP, SUMMERWOOD PROPERTIES LIMITED PARTNERSHIP, LAKESIDE VILLAGE PROPERTIES LIMITED PARTNERSHIP, WALNUT CREEK EQUITIES LTD., SUMMERWOOD EQUITIES LTD. AND LAKESIDE VILLAGE EQUITIES LTD. (COLLECTIVELY, THE “WAVERLY GROUP”)

Order Under Section 161

1. WHEREAS an Agreed Statement of Facts and Undertaking was executed by Ralph A. Sivertson (“Sivertson”) and the Executive Director, a copy of which is attached hereto as Schedule “A” (the “Agreement”);

2. NOW THEREFORE the Executive Director, considering that it would be in the public interest to do so, orders, BY CONSENT, that:

      2.1 under section 161(1)(c) of the Act that any or all of the exemptions described in sections 44 to 47 [except 45(1)(7)], 74, 75, 98 or 99 of the Act do not apply to Sivertson for a period of 15 years from the date of this Order;

      2.2 under section 161(1)(d) of the Act that Sivertson is prohibited from becoming or acting as a director or officer of any issuer for a period of 15 years from the date of this Order; and

      2.3 under section 161(1)(d) of the Act that Sivertson is prohibited from engaging in investor relations activities for a period of 15 years from the date of this Order;


DATED at Vancouver, British Columbia, on January 25, 2000.



Wayne Redwick
A/Executive Director


SCHEDULE “A”
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418, as am. S.B.C. 1998. C. 42, s. 47; 1999, c. 20

AND

IN THE MATTER OF RALPH A. SIVERTSON

and

IN THE MATTER OF WAVERLY VENTURES LTD., WAVERLY U.S. EQUITIES LTD., WAVERLY U.S. LIMITED PARTNERSHIP, BUCKINGHAM SQUARE APARTMENTS-OKLAHOMA LIMITED PARTNERSHIP, BELLE ISLE TERRACE APARTMENTS LIMITED PARTNERSHIP, CHURCHILL SQUARE APARTMENTS LIMITED PARTNERSHIP, HUNTER’S GLEN APARTMENTS LIMITED PARTNERSHIP, WESTON ARMS LIMITED PARTNERSHIP, APPLE PLACE LIMITED PARTNERSHIP, WALNUT CREEK APARTMENTS LIMITED PARTNERSHIP, SUMMERWOOD PROPERTIES LIMITED PARTNERSHIP, LAKESIDE VILLAGE PROPERTIES LIMITED PARTNERSHIP, WALNUT CREEK EQUITIES LTD., SUMMERWOOD EQUITIES LTD. AND LAKESIDE VILLAGE EQUITIES LTD. (COLLECTIVELY, THE “WAVERLY GROUP”)

Agreed Statement of Facts and Undertaking

The following agreement has been reached between Ralph A. Sivertson ("Sivertson") and the Executive Director:

1. As the basis for the orders and undertakings referred to below, Sivertson acknowledges the following facts to be correct:
      1.1 Sivertson resides in Coquitlam, British Columbia. He is an architect by profession and was at all material times, until June 1995, the president and a director of each of the corporate entities in the Waverly Group. Douglas W. Robinson ("Robinson") was, since April 1993, the only other director of each of the corporate entities in the Waverly Group. Both Sivertson and Robinson resigned as directors and officers of all these entities in May 1995 at the insistence of PlanVest Financial Corporation.

      1.2 The Waverly Group was, at all material times, comprised of British Columbia limited partnerships and British Columbia incorporated non-reporting issuers. Each of the limited partnerships in the Waverly Group had one of the corporate entities in the Waverly Group as its general partner.
      1.3 Waverly Ventures Ltd., with registered offices in Vancouver, was the main operating company of the Waverly Group and managed the day-to-day operations of each of the limited partnerships. Each of the general partners in the Waverly Group was a wholly owned subsidiary of Waverly Ventures Ltd. The Respondents controlled Waverly Ventures Ltd.

      1.4 Each of the Waverly Group limited partnerships was, at all material times, in the real estate business and, in particular, in the business of acquiring, renovating and operating rental apartment properties located in the State of Oklahoma, U.S.A.

      1.5 From August 1991 until June 1995, the Waverly Group, under the authority of Sivertson, distributed limited partnership units in the Waverly Group limited partnerships to investors in British Columbia and elsewhere in Canada for total proceeds of approximately US $34 million. The total proceeds of the distributions of the limited partnership units included cash raised from investors as well as the assumption by investors of liability under various mortgages. Limited partnership units were distributed in the following 10 limited partnerships:

Limited PartnershipTotal Proceeds
      Waverly U.S. L P (“WUSLP”) US$2,117,500
      Buckingham Square Apartments - Oklahoma L P US$864,000
Belle Isle Terrace Apartments L P US$780,000
      Churchill Square Apartments L P US$626,040
      Hunter’s Glen Apartments L P US$856,550
      Weston Arms L P US$465,600
      Apple Place L P US$3,841,000
      Walnut Creek Apartments L P (“Walnut Creek”) US$4,328,000
      Summerwood Properties L P (“Summerwood”) US$9,282,000
      Lakeside Village Properties L P (“Lakeside”) US$11,033,457.

      1.6 The Waverly Group limited partnerships were formed along the following time frame:

WUSLP August 1991
      Buckingham Square Apartments - Oklahoma L P October 1991
      Belle Isle Terrace Apartments L P March 1992
      Churchill Square Apartments L P May 1992
      Hunter’s Glen Apartments L P November 1992
      Weston Arms L P May 1993
      Apple Place L P August 1993
      Walnut Creek December 1993
      Summerwood June 1994
      Lakeside October 1994.

      1.7 The Waverly Group limited partnerships suffered the following net losses:
      1992 US$ 188,368
      1993 US$ 1,581,840
      1994 US$ 4,766,271
      1995 US$11,065,519
      Accumulated Net Loss US$17,601,998.
      1.8 WULSP was formed in 1991, with Waverly U.S. Equities Ltd. as general partner, to provide short term financing to other limited partnerships in the Waverly Group.

      1.9 According to the audited financial statements for the years ended December 31, 1993 and December 31, 1994, the operations of the Buckingham Square, Belle Isle Terrace and Churchill Square limited partnerships were dependent on continued funding from WUSLP. The three limited partnerships reported total losses of US $923,858 for 1993 and US $1,592,191 for 1994.

      1.10 WUSLP reported a net loss of US $178,904 for 1994 and a net loss of US $4,022,775 (unaudited) for 1995.

      1.11 Sivertson represents that the losses referred to above were projected losses because substantial capital expenses were anticipated before the various ventures could become profitable.

UNAUTHORIZED LOANS - WALNUT CREEK
      1.12 Walnut Creek was formed under the laws of British Columbia on December 17, 1993, with Walnut Creek Equities Ltd., a British Columbia non-reporting issuer, as general partner. Units were distributed, under the guidance of Sivertson, in the limited partnership investors in British Columbia and Alberta under an offering memorandum dated January 31, 1994 (the “Walnut Creek OM”).
      1.13 A total of approximately US $4.3 million was raised from investors, with approximately US $2.2 million raised in cash and the balance raised by way of a pro rata assumption by the investors of the liability under a first mortgage. According to the Walnut Creek OM, the offering closed on December 31, 1994.

      1.14 According to the Walnut Creek OM, the distribution proceeds were to be used to cover offering costs and to cover costs incurred in connection with the acquisition, refurbishment and operation of certain rental properties. The Walnut Creek OM did not disclose, as part of the use of proceeds, that any of the proceeds would be lent to WUSLP.

      1.15 Walnut Creek made an unsecured loan in the amount of approximately US $160,000 to WUSLP in early 1995. WUSLP used the amount lent to it by Walnut Creek to fund shortfalls in other limited partnerships in the Waverly Group. This was done under the authority of Sivertson.

      1.16 The loan was unauthorised and not disclosed as part of the use of proceeds in the Walnut Creek OM. Sivertson breached his duties to the Walnut Creek investors and caused the general partner of Walnut Creek to act contrary to its duties to the limited partners and as a result acted contrary to the public interest.
      1.17 In 1995, after Sivertson resigned, Walnut Creek wrote off the entire amount (US $171,609) due from WUSLP because of its uncertain collectibility.
      1.18 Walnut Creek reported a net loss of US $422,458 for 1994 and a net loss of US $453,584 for 1995. According to Walnut Creek’s financial statements for the year ended December 1995, the operation of the limited partnership would be dependent on the continued financial support of lenders and limited partners.

UNAUTHORIZED LOANS - SUMMERWOOD
      1.19 Summerwood was formed under the laws of British Columbia on June 20, 1994, with Summerwood Equities Ltd., a British Columbia non-reporting corporation, as general partner. Units were distributed, under the authority of Sivertson, in the limited partnership to investors in British Columbia and Alberta under an offering memorandum dated June 23, 1994 (the “Summerwood OM”).
      1.20 A total of approximately US $9.3 million was raised from investors, with approximately US $5.6 million raised in cash and the balance raised by way of a pro rata assumption by the investors of the liability under two first mortgages. According to the Summerwood OM, the offering closed on February 28, 1995.
      1.21 According to the Summerwood OM, the distribution proceeds were to be used to cover offering costs and to cover costs incurred in connection with the acquisition, refurbishment and operation of certain rental properties.
      1.22 Summerwood made an unsecured loan of approximately US $1.2 million to WUSLP in 1994. WUSLP used the funds advanced to it by Summerwood to fund shortfalls in other limited partnership in the Waverly Group. This was done under the authority of Sivertson.

      1.23 The loan was unauthorised and not disclosed as part of the use of proceeds in the Summerwood OM. Sivertson breached his duties to the Summerwood investors and caused the general partner of Summerwood to act contrary to its duties to the limited partners and as a result acted contrary to the public interest.

      1.24 In 1995, after Sivertson resigned, WUSLP repaid some of the amount due to Summerwood, and Summerwood wrote off the balance of the amount due (US $918,066) because of its uncertain collectibility.
      1.25 Summerwood reported a net loss of US $761,634 for 1994 and a net loss of US $1,995,131 for 1995. According to Summerwood’s audited financial statements for the year ended December 1995, the continuation of the limited partnership would be dependent on financial support from lenders and limited partners.

THE SUMMERWOOD OM
      1.26 The units in Summerwood, being securities as defined in section 1 of the Act, were distributed pursuant to the exemptions contained in sections 76(b) and 117(b) of the Securities Regulation, B.C. Reg. 27/86 (the “Former Regulation”) [now sections 89(b) and 128(b) of the Rules].
      1.27 The Summerwood OM failed to disclose, as part of the use of proceeds, that approximately US $1.2 million of the proceeds would be lent to WUSLP. Consequently, the Summerwood OM was not in the required form, and the exemptions relied upon for the distribution of the units in Summerwood were not available to Sivertson. Sivertson traded in the securities without being registered and without an available exemption, contrary to section 20(1) of the Former Act (now section 34(1) of the Act), and distributed the securities without filing a prospectus and without an available exemption, contrary to section 42(1) of the Former Act (now section 61(1) of the Act).


UNDISCLOSED LOANS – LAKESIDE
      1.28 Lakeside was formed under the laws of British Columbia on August 12, 1994, with Lakeside Village Equities Ltd., a British Columbia non-reporting issuer, as general partner. Units were distributed, under the authority of Sivertson, in the limited partnership to investors in British Columbia and Alberta under an offering memorandum dated October 5, 1994 (the “Lakeside OM”).
      1.29 A total of approximately US $11 million from investors, with approximately US $5.1 million raised in cash, and the balance raised by way of a pro rata assumption by the investors of the liability under two first mortgages. According to the Lakeside OM, the offering closed on May 31, 1995.
      1.30 According to the Lakeside OM, the distribution proceeds were to be used to cover offering costs and to cover costs incurred in connection with the acquisition, refurbishment and operation of certain rental properties.
      1.31 Lakeside made an unsecured loan of US $431,886 to WUSLP in 1994 and a further unsecured loan of approximately US$1.2 million to WUSLP in early 1995. WUSLP used the funds advanced to it by Lakeside to fund shortfalls in other limited partnership in the Waverly Group. This was done under the authority of Sivertson.

      1.32 The loan was not disclosed as part of the use of proceeds in the Lakeside OM. Sivertson breached his duties to the Summerwood investors and caused the general partner of Summerwood to act contrary to its duties to the limited partners and as a result acted contrary to the public interest.

      1.33 In 1995, after Sivertson resigned, Lakeside wrote off the entire amount (US $1,768,034) due from WUSLP because of its uncertain collectibility.
      1.34 Lakeside reported a net loss of US$523,317 in 1994 and a net loss of US $2,585,490 (unaudited) in 1995. According to Lakeside’s financial statements for the year ended December 31, 1995, the continuation of the limited partnership was dependent on financial support from lenders and limited partners.

THE LAKESIDE OM
      1.35 The units in Lakeside, being securities as defined in section 1 of the Act, were distributed pursuant to the exemptions contained in sections 76(b) and 117(b) of the Former Regulation [now sections 89(b) and 128(b) of the Rules].

      1.36 The Lakeside OM failed to disclose, as part of the use of proceeds, that in excess of US $1.6 million of the proceeds would be lent to WUSLP. Consequently, the Lakeside OM was not in the required form, and the exemptions relied upon for the distribution of the units in Lakeside were not available to Sivertson. Sivertson traded in the securities without being registered and without an available exemption, contrary to section 20(1) of the Former Act (now section 34(1) of the Act), and distributed the securities without filing a prospectus and without an available exemption, contrary to section 42(1) of the Former Act (now section 61(1) of the Act).

MISCELLANEOUS:
      1.37 Sivertson represents that, apart from legitimate remuneration, he derived no financial benefit from the Waverly Group investments.

      1.38 Sivertson further represents that he relied on the advice of various experts during the operations of the Waverly Group and at all times believed he was acting properly.

      1.39 Sivertson has fully cooperated with staff of the British Columbia Securities Commission (the "Commission") during the investigation of these matters.

2. Sivertson consents to an order of the Executive Director (the "Order"):

      2.1 under section 161(1)(c) of the Act that any or all of the exemptions described in sections 44 to 47 [except 45(1)(7)], 74, 75, 98 or 99 of the Act do not apply to Sivertson for a period of 15 years from the date of this Order;

      2.2 under section 161(1)(d) of the Act that Sivertson is prohibited from becoming or acting as a director or officer of any issuer for a period of 15 years from the date of this Order; and

      2.3 under section 161(1)(d) of the Act that Sivertson is prohibited from engaging in investor relations activities for a period of 15 years from the date of this Order;

3. Sivertson agrees to pay $15,000 to the Commission, $9,000 as a penalty and $6,000 towards the costs of the investigation incurred by the Commission.

4. Sivertson waives any right he may have, under the Act or otherwise, to a hearing, hearing and review, judicial review, or appeal, related to, in connection with, or incidental to this agreement and Order.


DATED at Vancouver, British Columbia, on January 21, 2000.

“P. Couper” )
Witness Signature )
)
Paula Couper )
Witness Name (please print) ) “Ralph A. Sivertson”
200 – 865 Hornby Street )
Address )
Vancouver, B.C. )
Legal Secretary )
Occupation )


DATED at Vancouver, British Columbia, on January 25, 2000.



Wayne Redwick
A/Executive Director
©2024 British Columbia Securities Commission