Notices of Hearing & Temporary Orders

TRI-WEST INVESTMENT CLUB, et. al. [Amended Sec. 161]

BCSECCOM #:
2001 BCSECCOM 793
Document Type:
Amended Sec. 161
Published Date:
2001-07-31
Effective Date:
2001-07-18
Details:


2001 BCSECCOM 793


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

AND

IN THE MATTER OF TRI-WEST INVESTMENT CLUB, TRIWESTINVEST.COM, ^, AND
HAARLEM UNIVERSAL CORPORATION

AND

IN THE MATTER OF JASON KINGSLEY, MARK GOLDMAN, ALAN RICHARDS,
ALEX HAARLEM, ^, AND JOHN BYRON

(ALL COLLECTIVELY REFERRED TO AS “THE RESPONDENTS”)


Amended Temporary Order and Notice of Hearing Under Section 161

[para 1]
1. TAKE NOTICE that a hearing (the “Hearing”) will be held to give the Respondents an opportunity to be heard before the British Columbia Securities Commission (the “Commission”) determines whether it is in the public interest to make the following orders:

1.1 under section 161(1)(b) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”), that all persons cease trading in, or be prohibited from purchasing, the securities of Tri-West Investment Club (“Tri-West”);

1.2 under section 161(1)(c) of the Act, that any or all of the exemptions described in sections 44-47, 74, 75, 98 or 99, do not apply to the Respondents;

1.3 under section 161(1)(d) of the Act, that Jason Kingsley (“Kingsley”), Mark Goldman (“Goldman”), Alan Richards (“Richards”), Alex Haarlem (“Haarlem”), ^, and John Byron (“Byron”) resign any position they each may hold as a director or officer of any issuer, and that they each be prohibited from becoming or acting as a director or officer of any issuer;

1.4 under section 161(1)(d) of the Act, that the Respondents each be prohibited from engaging in investor relations activities;

1.5 under section 162 of the Act, that the Respondents, jointly and severally, pay an administrative penalty;

1.6 under section 174 of the Act, that the Respondents, jointly and severally, pay prescribed fees or charges for the costs of or related to the hearing; and,

1.7 such further and other relief that the Commission considers appropriate in the circumstances.
[para 2]


The Commission will be asked to consider the following facts and allegations:

Overview:

2.1 This matter involves an Internet-based investment club that purports to offer a high-yield, no-risk investment program to residents of British Columbia and elsewhere. A member referral program is also offered that appears to operate as a Pyramid scheme.

The Respondents:

2.2 Tri-West, an Internet-based investment club, is believed to be an unincorporated entity, having a corporate mailing address in Belize and telephone contact numbers in the United Kingdom and the United States. Tri-West is the registered owner of TriWestinvest.com, the domain name for Tri-West’s Internet-based website (the “Tri-West Website”). The Tri-West Website has contact addresses in California and Florida. Tri-West is not registered in any capacity under the Act.

2.3 Haarlem Universal Corporation (“Haarlem Universal”) appears to be an affiliate or associate of Tri-West. Haarlem Universal is purported to be a Panamanian Investment Company founded in 1969 by Haarlem. At all material times, it appears that Haarlem was the sole principal of Haarlem Universal. Haarlem is not believed to be a resident of British Columbia. Neither Haarlem nor Haarlem Universal is registered in any capacity under the Act.

2.5 Byron is a resident of British Columbia. He has never been registered in any capacity under the Act.

2.6 At all material times, the principals of Tri-West included Kingsley, Goldman and Richards (the “Tri-West Principals”). None of the Tri-West Principals are believed to be residents of British Columbia and they are not registered in any capacity under the Act.

2.7 Tri-West is not a reporting issuer under the Act.

Summary of Activities:

2.8 Tri-West, by way of the Tri-West Website, purports to offer a high-yield investment program (the “Tri-West Program”) to residents of BC and elsewhere. Tri-West represents that the Tri-West Program pays a guaranteed return of 10% per month for a term of 1 year on a minimum investment of U.S. $1,000. Tri-West also represents that after the 1-year term, the principal may be reinvested at a new rate of return, or it is returned to the investor.

2.9 Originally, Investors in the Tri-West Program were required to send their remittances by bank draft or wire transfer to Haarlem Universal. The Tri-West Website represents that the bank used by Haarlem Universal is located in Riga, Latvia. Currently, investors are required to send remittances by money order or cashiers’ cheques to Haarlem Universal, directed to the Tri-West address in Belize.

2.10 The Tri-West Website describes the Tri-West Program as a “Bank Debenture Trading Program” in which the “principal is fully secured by a Bank Endorsed Guarantee” and is “managed and invested to give a guaranteed high return to the investor on a periodic basis”.

2.11 Tri-West, by way of the Tri-West Website, represents that the bank debentures in the “Bank Debenture Trading Program” include:
2.11.1 “Fully negotiable Bank Instruments”;

2.11.2 “Debt obligations of the top 100 World Banks or Prime Banks”;

2.11.3 “Medium term bank debentures”;

2.11.4 “Bank Purchase Orders”;

2.11.5 “Prime Bank Instruments” that include “Promissory Bank Notes, Zero Coupon Books, and Letter’s [sic] of Credit issued under the International Chamber of Commerce (ICC 400) guideline requirements for banking”; and

2.11.6 “World Prime Bank medium term, Interest bearing notes, which are backed by the IMF”.

2.12 Tri-West, by way of the Tri-West Website, represents that the “Trading Program” involves:

2.12.1 “A secured asset management program, commonly used by the very wealthy where the principal investment is fully secured by a Bank Endorsed Guarantee. The principal is managed and invested to give a guaranteed high return to the investor on a periodic basis”;

2.12.2 “A rather complicated investment vehicle, normally only available to large investors, in which the investor can purchase large bond offerings and sell the purchases in 24 to 48 hours, showing a small percentage return but high dollar return due to the value of the leveraged purchase and sale”;

2.12.3 the “purchase and sale of Bank Debentures within the International Market in controlled trading programs”; and

2.12.4 the “lease of U.S. Treasury Bills, at 3% of their face value, and using those T-Bills as collateral for the purchase and resale of bank instruments. The total dollar profits generated from the difference in the purchase price and the resale price are greatly increased through the use of leased assets”.

2.13 Tri-West, by way of the Tri-West Website, also offers a referral program (the “Referral Program”) to investors. The Referral Program pays to the referring member a bonus of 15% of the funds invested by referred investors, plus 15% of all income earned by those referred investors. An additional bonus of U.S. $1,000 is paid to the referring member for each additional accumulated referred investment of U.S. $50,000. The bonus is invested in the referring member’s own Tri-West Program for one year at the then current rate of return.

2.14 It appears that persons in British Columbia have solicited investment in the Tri-West Program from residents in British Columbia and elsewhere. It appears that the investments by investors in British Columbia and elsewhere in the Tri-West Program may exceed U.S. $11,000,000.

2.15 On or about May 11, 2000, Byron solicited a resident of BC to invest in the Tri-West Program.


Other Enforcement Action:

2.17 Securities Regulators in Illinois, Texas, West Virginia, Pennsylvania and Ohio have issued Cease and Desist Orders against Tri-West, its officers, directors, employees, agents, affiliates, successors and assigns. The Illinois and West Virginia Orders prohibit Tri-West from offering or selling securities in those states, and the Texas Order prohibits Tri-West from publishing, disseminating, or using advertisements or sales materials that are misleading or likely to deceive the public in connection with the offer for sale or sale of securities in Texas. Securities Regulators in Illinois, West Virginia and Texas found that Tri-West was offering for sale or sold securities in their respective states, and that the securities offered by Tri-West were not registered in accordance with the provisions of the respective securities legislation. The Saskatchewan Securities Commission has issued a Temporary Order cease trading the securities of Tri-West.

2.18 The International Chamber of Commerce (the “ICC”), the Securities and Exchange Commission of the United States (the ”SEC”), the Federal Reserve of the United States and the World Bank have issued warning circulars stating that programs involving Prime Bank Instruments are fraudulent. Additionally, the ICC has stated that “Bank Debenture Trading Programs” are false, misleading and that such programs do not exist. The ICC further indicates that solicitations involving these programs have claimed “tens of millions of dollars from victims worldwide.” The International Monetary Fund and the World Bank have issued warning circulars stating that “Bank Debenture Trading Programs” and prime bank instrument schemes are falsely stating that the IMF backs such programs and instruments.


Breaches of the Act:

2.19 It appears that the Respondents violated the following sections of the Act:

2.19.1 All of the Respondents traded in the securities of Tri-West without registration and without an applicable exemption from the registration requirements of the Act, contrary to section 34(1)(a) of the Act.

2.19.2 ^, Byron advised persons to invest in the securities of Tri-West without being registered and without an applicable exemption from the registration requirements of the Act, contrary to section 34(1)(c) of the Act.

2.19.3 Tri-West distributed its own securities to residents of British Columbia without a prospectus having been filed and a receipt obtained from the Executive Director or without an exemption from the prospectus requirements, contrary to section 61 of the Act.

2.19.4 The Respondents perpetrated a fraud on residents in British Columbia and elsewhere in breach of section 57 and section 57.1 of the Act.

[para 3]
3. The Executive Director considers that the length of time to hold a hearing could be prejudicial to the public interest.

[para 4]
4. The Executive Director, considering that it would be in the public interest to do so, ordered, pursuant to section 161(2) of the Act (the “Temporary Orders”), that for a period ending May 4, 2001:

4.1 all persons cease trading in the securities of Tri-West.

4.2 any or all of the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the Act do not apply to the Respondents;

4.3 Kingsley, Goldman, Richards, Haarlem, ^, and Byron resign any position that they hold as a director and officer of any issuer and are prohibited from becoming or acting as a director or officer of any issuer;

4.4 the Respondents be prohibited from engaging in investor relations activities; and

4.5 the Respondents be prohibited from disseminating to the public, or authorizing the dissemination to the public, any advertisements and sales materials that are materially misleading or otherwise likely to deceive the public, including, but not limited to, those materials that relate to the referenced offers for sale of the securities of Tri-West.

[para 5]
5. On May 4, 2001, the Commission heard an application by the Executive Director to extend the Temporary Orders and to set a date for a hearing. At the conclusion of the application, the Commission considered it to be necessary and in the public interest to extend the Temporary Orders until the hearing is held and a decision is rendered.

[para 6]
6. TAKE NOTICE that a hearing will be commenced before the Commission, in the 12th Floor Hearing Room, 701 West Georgia Street, Vancouver, British Columbia, on August 15, 2001 at 10:00 a.m. (the “Hearing”).

[para 7]
7. AND TAKE NOTICE that the Respondents may be represented by counsel at the Hearing, and make representations and lead evidence. The Respondents are each requested to advise the Commission of their intention to attend the Hearing by contacting the Secretary to the Commission at P.O. Box 10142, Pacific Centre, 9th Floor, 701 West Georgia Street, Vancouver, British Columbia, V7Y 1L2, telephone: (604) 899-6500.

[para 8]
8. AND TAKE NOTICE that determinations may be made in this matter if the Respondents or their counsel do not appear at the Hearing.

[para 9]
DATED at Vancouver, British Columbia, on July 18, 2001.





Steve Wilson
Executive Director