Notices of Hearing & Temporary Orders

KENNETH WALTER HRAPPSTEAD [Sec. 161]

BCSECCOM #:
Document Type:
Sec. 161
Published Date:
1998-10-02
Effective Date:
1998-09-24
Details:


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

AND

IN THE MATTER OF KENNETH WALTER HRAPPSTEAD
doing business as NORTH AMERICAN GROUPand
KENNETH WALTER HRAPPSTEAD


Notice of Hearing Under Section 161

1. TAKE NOTICE that a hearing will be held at the 7th Floor Hearing Room, 865 Hornby Street, Vancouver, British Columbia (the “Hearing”) to give the Respondent, Kenneth Walter Hrappstead (“Hrappstead”) an opportunity to be heard before the British Columbia Securities Commission (the “Commission”) considers whether it is in the public interest:
      1.1 to make an order under section 161(1)(c) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) that any or all of the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the Act do not apply to Hrappstead;

      1.2 to make an order under section 161(1)(d) of the Act that Hrappstead resign any position he holds as a director or officer of any issuer;

      1.3 to make an order under section 161(1)(d) of the Act that Hrappstead be prohibited from becoming or acting as a director or officer of an issuer;

      1.4 to make an order under section 161(1)(b) of the Act that Hrappstead is prohibited from engaging in investor relations activities;

      1.5 to make an order under section 162 of the Act that Hrappstead pay an administrative penalty;

      1.6 to make an order under section 174 of the Act that Hrappstead pay the prescribed fees or charges for costs of or related to the Hearing; and

      1.7 to make any other orders as may be appropriate under the circumstances;
2. AND TAKE NOTICE that the Commission will be asked to consider the following facts and allegations in making its determination:
      2.1 North American Group (“NAG”) is not an incorporated entity pursuant to the laws of British Columbia and is not a reporting issuer under the Act;

      2.2 Hrappstead is a resident of Victoria, British Columbia;

      2.3 Hrappstead, doing business as NAG, held information sessions with investors encouraging them to invest in “High Yield Investment Programs” which promised to pay up to 2,100% return with no risk (the “Investment Programs”);

      2.4 documentation on the letterhead of NAG and signed by Hrappstead was provided to potential investors. The documents described several variations to the Investment Program. The programs involved depositing funds into one of the world’s “Top International Banks”. The principal was purported to be guaranteed and purported to be used by a trader to trade international letters of credit;

      2.5 the Investment Programs required the investor to enter into a Joint Venture Agreement with NAG whereby the Investor would deposit the principal to a bank account in the name of the Joint Venture, which principal was then to be used as collateral to trade in the international letters of credit;

      2.6 the Investment Programs being promoted by Hrappstead did not exist and, in fact, were a “prime bank instrument” scheme through which Hrappstead would receive 50 % of the investor’s return as his fee;

      2.7 Hrappstead was not registered to trade or advise in securities in any capacity under the Act;

      2.8 the Investment Programs constituted a “security” for which no prospectus was issued and no exemption was available, contrary to section 61 of the Act;

      2.9 by soliciting investments in the Investment Programs, Hrappstead traded in securities and acted as an advisor without registration, contrary to section 34 of the Act; and

      2.10 Staff of the Commission do not believe that Hrappstead was able to raise any funds from the investing public;
3. AND TAKE NOTICE that Hrappstead may be represented by counsel at the Hearing and may make representations and lead evidence. Hrappstead is requested to advise the Commission of his intention to attend the Hearing by contacting the Secretary to the Commission, at 1200 - 865 Hornby Street, Vancouver, British Columbia, V6Z 2H4;
4. AND TAKE NOTICE that determinations may be made in this matter if Hrappstead does not appear at the Hearing;

5. AND TAKE NOTICE that Hrappstead is required to attend at the 7th Floor Hearing Room, 865 Hornby Street, Vancouver, British Columbia on November 25, 1998 at 10:00 a.m. if he wishes to be heard before the Commission to fix a date for the Hearing.

DATED at Vancouver, British Columbia, on September 24, 1998.






Michael J. Watson
A/Executive Director
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