News Release

Released: 04/29/99 Contact: Michael Bernard
899-6500 or
(BC only) 1-800-373-6393


Vancouver -- The British Columbia Securities Commission has found that Gary Stanhiser was the mastermind of an investment scheme designed to raise money from the public for the purchase of shares in contravention of the Securities Act.

In a decision issued today, the commission also made findings against Excel Asset Management Inc., Excell Asset Management Inc., Excel Funding Inc., Excel International Investment Corp., Diomondmark Investments Limited, The Loma Trust, Del Knowlton and Linda Knowlton in connection with the investment scheme.

The commission will hear further submissions before issuing any penalties stemming from the findings.

Stanhiser set up a group of offshore companies and trusts that were ultimately controlled by him. Through his company, Excel Asset Management Inc., Stanhiser then hired a number of "client representatives" in Vancouver, Kelowna and California. Their job was to contact their family and friends and encourage them to purchase shares in companies doing private placements through Excel.

Del and Linda Knowlton worked out of the Vancouver office and were representatives for over 200 of Excel’s more than 300 clients.

"Client representatives would raise money from clients, which would be pooled in the Canaccord account of one of the Excel companies, Stanhiser or Knowlton," the panel said in describing the investment scheme.

"In only a handful of cases would a single client actually invest $97,000 or more. Once sufficient funds had accumulated, one of the Excel companies, the Loma Trust [one of the offshore trusts] or Stanhiser would purchase the shares of a company pursuant to a previously negotiated private placement. The shares would then be allocated to the clients, as indicated in the Excel portfolio summaries. In some cases, the clients actually took delivery of the shares.

Between 1995 and 1997, Excel orchestrated at least 22 private placements in amounts totalling over $9 million. These private placements ostensibly were made under exemptions from the registration and prospectus requirements of the Act that required each purchaser to invest at least $97,000.

"The commission takes the position that it is abusive for a company to pool funds of individuals to purchase shares under these exemptions unless each individual invests $97,000. On the basis of this, the commission found that the exemptions were unavailable for the distribution of shares to the Excel clients.

The commission found that Stanhiser, Del and Linda Knowlton and the Excel companies all acted to advance these distributions and therefore contravened the registration and prospectus requirements of the Act.

The commission also found that Stanhiser engaged in a scheme that perpetrated a fraud on people in British Columbia.

"There can be no doubt that Stanhiser’s orchestration of the Excel investment scheme was dishonest. We consider his conduct to be underhanded, in that he consistently remained behind the scenes. He ensured that others acted as directors and officers of the three offshore Excel companies and that others had ostensible authority over those companies’ accounts at Canaccord (Capital Corp.)

"Yet, as protector of the trusts that owned the three companies, Stanhiser had ultimate control over their activities. Stanhiser also hid behind the client representatives, whose job it was to bring in clients and raise money. We are of the view that Stanhiser, in this underhanded manner, designed and carried out the Excel investment scheme to raise money from the public for the purchase of shares in contravention of the Act.

"Once again, there can be no doubt that the clients of Excel Asset have been deprived by Stanhiser. We have already determined that Stanhiser had ultimate control over the Excel companies. Therefore, he had the ability to order the payment of money and the distribution of shares to the Excel clients. Between 1995 and 1997, Excel Asset raised a net amount of approximately $13.5 million from its clients.

"Approximately $9 million of that was used to purchase shares. However, shares valued at only $1.5 to $2.4 million (based on their purchase price) were actually distributed to clients. This means that the clients of Excel Asset are currently owed money or shares in an amount between $11.1 and $12 million, which represents a very significant economic loss."

Copies of the full written decision in this case are available on the commission's Web site (www.bcsc.bc.ca) or by contacting Communications Manager Michael Bernard. The British Columbia Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province.