News Release

Vancouver - The British Columbia Securities Commission has lowered its sanctions against two men who operated a failed money-lending business in Burns Lake after the pair won a court appeal against the commission.

Carl Glenn Anderson and Douglas Victor Montaldi now face reduced penalties of six-year bans from the securities market and must each pay $100,000 administrative penalties for acting contrary to the public interest. They must also share in paying the hearing costs of $31,134 to the commission.

In spring 2003, Anderson and Montaldi were banned from the securities market for 12 years and ordered to pay $200,000 administrative penalties after a commission panel ruled that they defrauded investors when they failed to disclose the true state of their company’s affairs in selling securities and wrongly used new investors’ funds for purposes outside of the company’s business plan.

Anderson and Montaldi appealed the commission’s decision to the B.C. Court of Appeal, and on Jan. 9, 2004, the appeal court overturned the findings of fraud and misrepresentation, set aside the penalty decision, and sent the matter back to the commission for reconsideration of the issue of sanctions for acting contrary to the public interest. The Court also dismissed BCSC staff’s subsequent application for leave to appeal this decision.

The two men were the directors and sole shareholders of 439288 B.C. Ltd., a company that made loans to individuals and small businesses primarily in the Burns Lake area. The company raised the money it loaned to people by selling promissory notes to investors. The company’s operations ended when the B.C. Financial Institutions Commission froze its bank accounts and ordered it to cease carrying on business at the end of April 2002. By then, the company had raised $41-million from about 450 investors, nearly all of them residents of the Burns Lake area.

The commission noted even without the findings of fraud and misrepresentation, the registration and prospectus requirements that Anderson and Montaldi admitted to breaching “are the foundation investor protection provisions of the [Securities] Act.”

The commission found in February 2003 that Anderson and Montaldi acted contrary to the public interest by failing to keep adequate records to allow 439288 to keep track of payments due to it by borrowers, and by failing to adequately supervise the collection of loans. These and other failures meant that they were unable to monitor the performance of the business and its profitability, a major contributor to the investors’ losses.

“Had Anderson and Montaldi complied with the registration and prospectus requirements, the investors’ losses in all likelihood would have been averted,” said the panel.

Anderson and Montaldi are also prohibited from becoming or acting as directors or officers of any company for six years each. (They can continue as directors and officers of a limited slate of companies and Anderson can continue as a director and officer of 439288 and Area Finance, the successor to 439288’s business.) They must also not engage in any investor relations activities for six years.

The B.C. Securities Commission is an independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website www.bcsc.bc.ca by typing in the search box, Carl Glenn Anderson and/or Douglas Victor Montaldi or 2004 BCSECCOM 699. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.