Settlements

JAMES RONALD OMELUS [Sec. 161 & Agreed Stmt.]

BCSECCOM #:
Document Type:
Sec. 161 & Agreed Stmt.
Published Date:
1999-12-03
Effective Date:
1999-11-24
Details:


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

AND

IN THE MATTER OF JAMES RONALD OMELUS

Order Under Section 161


1. Whereas an Agreed Statement of Facts and Undertaking was executed by James Ronald Omelus (“Omelus”) 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)(f) of the Act, Omelus is prohibited from registering under the Act either for a period of five years from the date of the Agreement, or the date on which his indebtedness to the investor described in paragraph 2.5.2 in Schedule “A” is repaid, whichever is the longer; and

      2.2. under section 161(1)(c) of the Act, the exemptions described in sections 44, 45, 46 [with the exception of section 46 (a)], 47, 74, 75, 98 and 99 of the Act do not apply to him for the period set out in paragraph 2.1 above.

DATED at Vancouver, British Columbia, on November 24, 1999.

              Stephen J. Wilson
Executive Director



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

AND

IN THE MATTER OF JAMES RONALD OMELUS



Agreed Statement of Facts and Undertaking


The following agreement has been reached between James Ronald Omelus (“Omelus”) and the Executive Director:

1. Omelus acknowledges the following facts as correct:
      1.1. Omelus became registered as a mutual fund salesperson during 1982 under the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) and from 1982 until June 1, 1998, was continuously so registered, with various employers.

      1.2. Omelus was employed as registered representative, restricted to mutual fund sales, with Independent Wealth Management Inc. (“IWM”) for the period January 22, 1997 to June 1, 1998.

      1.3. Omelus had an established client base and in the course of his employment at IWM, was required to service and advise these clients in relation to mutual funds, but could not advise with respect to other types of securities.

      1.4. While in the employ of IWM, Omelus was shareholder, sole director and owner of ISE Capital Corporation, (“ISE”), a company incorporated in British Columbia.

      1.5. Omelus was shareholder of :
          1.5.1. Canadian Legal Shield Corporation (“CLS”) a non-reporting company incorporated in British Columbia. The business of CLS has failed and, it is likely that investments and loans made to CLS will be lost to investors; and

          1.5.2. Westrend Natural Gas inc., (“Westrend”), a reporting issuer, incorporated in British Columbia.

2. Omelus conducted the accounts of the following persons, who were clients of his during the period of his employment by IWM, in the following manner:
      2.1. Client One (“Ms. L”):
          2.1.1. On the recommendation of Omelus, Ms. L purchased shares to the value of $19,500.00 in Paxton Pacific Resource Products Inc., (“Paxton”), a company that Omelus believed had potential for growth. Paxton is a reporting issuer, incorporated in British Columbia, having continued out to the Province of Alberta on September 24, 1994.
      2.2. Client Two (“Mr. K”):
          2.2.1. On the recommendation of Omelus, purchased for himself and his wife, debentures to the value of $25,000 each in Paxton;

          2.2.2. On the recommendation of Omelus, purchased debentures in Enertech to the value of $25,000. Omelus structured the investment as a loan to ISE, with ISE purchasing the debentures on the Mr. K’s behalf. Debentures were purchased and delivered to Mr. K; and

          2.2.3. Omelus obtained a personal loan in the amount of $50,000 from Mr. K for his personal use. That loan has now been repaid.

          2.2.4. Omelus obtained a loan in the amount of $50,000 from Mr. K for use by ISE. That loan has now been repaid.

          2.2.5. On the recommendation of Omelus, Mr. K loaned the sum of $100,000 to Brookside Foods Ltd, a non-reporting company, incorporated in British Columbia (“Brookside”). This loan was structured as a loan to ISE, which sum ISE was obliged to loan to Brookside on Mr. K’s behalf. ISE duly invested only $80,000 with Brookside on Mr. K’s behalf. Omelus failed to disclose to the client that he had not invested the full sum of $100,000 in Brookside in accordance with Mr. K’s instruction. Omelus subsequently repaid $20,000 to Mr. K on Mr. K’s demand.

          2.2.6. On the recommendation of Omelus, Mr. K invested in Westrend in the amount of $25,000, which investment was structured as a loan to ISE and which sum ISE subsequently loaned to Westrend on behalf of Mr. K.
      2.3. Client Three (“Mr. M”):
          2.3.1. On the recommendation of Omelus, Mr. M purchased $5,000 in Paxton shares and $25,000 in Paxton debentures.
      2.4. Client Four (“Mr. P”):
          2.4.1. On the recommendation of Omelus, Mr. P purchased $50,000 in Paxton shares.

          2.4.2. On the recommendation of Omelus, Mr. P invested the sum of $25,000 in Enertech, which loan was structured by way of a loan to ISE by Mr. P. ISE subsequently placed the funds with Enertech on the behalf of Mr. P .

          2.4.3. On the recommendation of Omelus, Mr. P invested the sum of $25,000 in CLS debentures.

          2.4.4. On the recommendation of Omelus, Mr. P invested the sum of $5,000 in Westrend.
      2.5. Client Five (“Mr. H”):
          2.5.1. At the request of Omelus, Mr. H advanced a personal loan in the amount of $13,000 to Omelus, which loan is now repaid.

          2.5.2. Advanced a loan in the amount of $50,000 to ISE, which loan is in default and unpaid.

          2.5.3. On the recommendation of Omelus, Mr. H loaned the sum of $20,000 to British Columbia Hemp Company, a non-reporting company incorporated in British Columbia, on the security of a promissory note.

          2.5.4. On the recommendation of Omelus, Mr. H invested in Westrend in the amount of $30,000, which investment was structured as a loan to ISE and which sum ISE subsequently loaned to Westrend.

          2.5.5. On the recommendation of Omelus, Mr. H invested the sum of $25,000 in CLS debentures.

          2.5.6. On the recommendation of Omelus, Mr. H purchased $62,981 in Paxton shares.
3. Omelus agrees that:
      3.1. his conduct in recommending to the individuals the investments in the various companies referred to in paragraph 2 above, constitutes “advising” and that because his registration was restricted to mutual fund sales at all times, he was not registered to sell or advise on any of the securities in paragraph 2 above. He was therefore in breach of section 34 of the Act; and

      3.2. his recommendation to the parties referred to in paragraph 2 above, that they invest in the debentures of CLS, did not meet the standard required by Rule 14, made under the provisions of the of the Act; and

      3.3. his soliciting of loans for his personal use or for use by ISE in the circumstances constitutes improper conduct within the meaning of Rule 14, made under the provisions of the of the Act.
4. Omelus has undertaken directly to Mr. H to repay his remaining obligation to him.

5. Omelus agrees to an order of the Executive Director as follows:
      5.1. under section 161(1)(f) of the Act, he is prohibited from registering under the Act either for a period of five years from the date of this Agreement, or the date on which his indebtedness to Mr. H is repaid, whichever is the longer; and

      5.2. under section 161(1)(c) of the Act, the exemptions described in sections 44, 45, 46 [with the exception of section 46 (a)], 47, 74, 75, 98 and 99 of the Act do not apply to him for the period set out in paragraph 5.1 above.

6. Omelus undertakes and agrees to pay to the British Columbia Securities Commission the sum of $20,000, $4,000 of which represents the costs of the investigation and the remainder, a penalty that will be paid into the Industry Education Fund.

7. Omelus 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.


DATED at Vancouver, British Columbia, on November 15, 1999.


Marg Omelus___________________ )
Witness Signature )
)
Marg Omelus___________________ )
Witness Name (please print) ) _______________________
) James Ronald Omelus
DeHavilland Crt, Abbotsford, BC___ )
Address )
)
Homemaker____________________ )
Occupation


      DATED at Vancouver, British Columbia, on November 24th, 1999.



                          Stephen J. Wilson
                          Executive Director
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