BCSC

Settlements

WILLIAM THOMAS EDWARD KELLY [Sec. 161 & Agreed Stmt]

BCSECCOM #:	Document Type: Sec. 161 & Agreed Stmt
Published Date: 1998-11-13	Effective Date: 1998-11-10
Details:

IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF WILLIAM THOMAS EDWARD KELLY

Order Under Section 161

1. WHEREAS an Agreed Statement of Facts and Undertaking was executed by William Thomas Edward Kelly (“Kelly”) and the Executive Director, a copy of which is attached hereto as Exhibit “A”:

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

Securities Act, R.S.B.C. 1996, c. 418 (the “Act”), all of the exemptions described in sections 44 to 47, 74, 75, 98 and 99 of the Act do not apply to Kelly for a period of 20 years from the date of the Order;

2.2 under section 161(1)(d) of the

Act, Kelly will resign from any position that he holds as a director or officer of any issuer in British Columbia and is prohibited from becoming or acting as a director or officer of any issuer in British Columbia for a period of 20 years from the date of the Order; and

2.3 under section 161(1)(d) of the

Act, Kelly is prohibited from engaging in investor relations activities for a period of 20 years from the date of the Order.

DATED at Vancouver, British Columbia, on November 10, 1998.

Michael J. Watson
A/Executive Director

Exhibit “A”
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF WILLIAM THOMAS EDWARD KELLY

Agreed Statement of Facts and Undertaking

The following agreement has been reached between William Thomas Edward Kelly (“Kelly”) and the Executive Director:

1. As the basis for the order in paragraph 2 of this agreement and the undertakings referred to in paragraph 3 of this agreement, Kelly acknowledges the following facts to be true:

1.1 Tex-Can Oil & Gas Fund No.1 Inc.(“Tex-Can No.1”) was incorporated in the Province of British Columbia and is not a reporting issuer under the

Securities Act, S.B.C. 1985, c. 83 (the “Former Act”) and its successor legislation the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”);

1.2 Tex-Can Oil & Gas Fund No.2 Inc. (“Tex-Can No.2”) was incorporated in the Province of British Columbia and is not a reporting issuer under the

Former Act or the Act;

1.3 Tex-Can No.1 and Tex-Can No.2 were formed to raise funds under the sophisticated purchaser exemptions of the

Former Act in order to participate in the development and production of oil and natural gas in the United States;

1.4 Mark-Tech Insurance and Financial Products Inc. (“Mark-Tech”) is a non-reporting issuer incorporated in the Province of British Columbia on July 24, 1989;

1.5 Mark-Tech was the exclusive agent for the distribution of securities by Tex-Can No.1 and Tex-Can No.2;

1.6 Kelly had substantial and actual control over the affairs of Tex-Can No.1, Tex-Can No.2 and Mark-Tech and was the de facto director of Mark-Tech;

1.7 Kelly, together with his wife Maureen Louise Kelly (“Maureen Kelly”) directed the affairs of Tex-Can No.1, Tex-Can No. 2 and Mark-Tech;

1.8 Kelly traded in the securities of Tex-Can No.1 and Tex-Can No.2 without registration under the

Former Act, either to trade in securities or to act as an advisor, in breach of section 20 of the Former Act [now section 34 of the Act];

1.9 Kelly knew that the shares in Tex-Can No.1 and Tex-Can No.2 constituted a “security” for which no prospectus was issued and no exemption was available, in breach of section 42 of the

Former Act [now section 61 of the Act];

1.10 Kelly knew that the sophisticated purchaser exemptions did not apply to certain investors in Tex-Can No.1 and Tex-Can No.2;

1.11 by having substantial and actual control of Tex-Can No.1 and Tex-Can No.2, Kelly authorized, permitted or acquiesced in making statements to the British Columbia Securities Commission (the “Commission”) in the Form 20 Reports of Exempt Distributions that were misrepresentations, contrary to section 138(1)(b) of the

Former Act [now section 155(1)(c) of the Act]. The misrepresentations were that distributions made to certain investors in Tex-Can No.1 and Tex-Can No.2 were lawfully made under the sophisticated purchaser exemptions of the Former Act;

1.12 on February 18, 1993, a cease trade order under the

Former Act was issued and remains outstanding against the shares of Tex-Can No.1 and Tex-Can No.2 (the “Cease Trade Order”);

1.13 Kelly traded in the securities of Tex-Can No.1 and Tex-Can No.2 after the Cease Trade Order was issued in breach of section 138(1)(d) of the

Former Act [now section 155(1)(e) of the Act];

1.14 on May 23, 1997, Kelly was convicted in the British Columbia Provincial Court of the following offences:

(a) unlawfully trading in the securities of Tex-Can No.2 after the Cease Trade Order was issued, contrary to section 138(1)(d) of the Former Act [now section 155(1)(e) of the Act];

(b) late filings of Form 20 and 20(A), contrary to sections 128 and 132(1) of the Securities Regulation, B.C. Reg. 270/86 (the “Regulation”) [now sections 135 and 139(2) of the Securities Rules, B.C. Reg. 196/97 (the “Rules”)] in relation to trading in the securities of Tex-Can No.1 and Tex-Can No.2;

(c) authorizing, permitting or acquiescing in misrepresentations made to the Commission by Tex-Can No.1 and Tex-Can No.2 in Form 20 Reports of Exempt Distribution that the distributions were lawfully made pursuant to the sophisticated purchaser exemption, contrary to section 138(1)(b) of the Former Act [now section 155(1)(c) of the Act];

(d) unlawfully trading in the securities of Tex-Can No.1 and Tex-Can No.2 without registration, contrary to section 20 of the Former Act [now section 34 of the Act]; and

(e) unlawfully distributing securities of Tex-Can No.1 and Tex-Can No.2 without a prospectus having been filed, contrary to section 42 of the Former Act [now section 61 of the Act]; and

1.15 on September 24, 1997, Kelly was sentenced to imprisonment for twelve months and six months on all of the charges, to be served concurrently.

2. Kelly consents to an order (the “Order”) by the Executive Director that:

2.1 under section 161(1)(c) of the

Act, all of the exemptions described in sections 44 to 47, 74, 75, 98 and 99 of the Act do not apply to Kelly for a period of 20 years from the date of the Order;

2.2 under section 161(1)(d) of the

2.3 under section 161(1)(d) of the

Act, Kelly is prohibited from engaging in investor relations activities for a period of 20 years from the date of the Order.

3. Kelly undertakes to:

3.1 comply with the provisions of the

Act and the Rules from the date of this agreement; and

3.2 pay to the Commission the sum of $10,000 representing a portion of the costs of the investigation. The payment shall be made in accordance with the following schedule:

3.2.1 $500 on the 1st day of every month commencing on December 1, 1998 for a period of 20 months until July 1, 2000; and

3.2.2 on the terms set out in a Promissory Note executed by Kelly in favour of the Commission.

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

DATED at Vancouver, British Columbia, on November 6, 1998.

“David Schwartz”____________	)
Witness Signature	)
David A. Schwartz___________	)
Witness Name	)	“William Thomas Edward Kelly”
304 - 700 W. Pender St.______	)
Vancouver, BC V6C 1G8_____	)
Address	)
Barrister & Solicitor__________	)
Occupation	)

DATED at Vancouver, British Columbia, on November 10, 1998.

Michael J. Watson
A/Executive Director