News Release

Vancouver – The B.C. Securities Commission has banned the two Burns Lake company directors who defrauded investors from the securities market for 12 years and ordered each of them to pay $200,000 penalties.

In a Feb. 14, 2003 decision, the commission ruled that Carl Glenn Anderson and Douglas Victor Montaldi defrauded investors when they failed to disclose the true state of their company’s affairs and wrongly used new investors’ funds for purposes outside of the company’s business plan.

Anderson and Montaldi 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 capital necessary for its lending activities by selling promissory notes to investors.

In its sanctions decision released today, the panel reiterated the significance of the pair’s misrepresentations to investors by not telling new investors that their money may be used to pay interest and capital due to existing investors.

The panel had concluded that the pair perpetrated a fraud on investors when they did not disclose the true risks of investing in the company and used investors’ funds for purposes outside of the company’s business plan.

The pair were also found to have 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 failures, along with others, meant that they were unable to monitor the performance of the business and its profitability, a major contributor to the investors’ losses.

In its sanctions decision, the panel commented on whether the pair should be allowed to continue to be involved in the business of Area Finance Inc. (Area Finance is the business unit that was set up as part of a company proposal that creditors accepted to reorganize the business of 439288 into two units with Area Finance holding the performing loans portfolio.)

“Given their conduct, we do not think that Anderson and Montaldi are fit to be directors or officers of an issuer raising money from the public, and that there would be considerable risk to investors and British Columbia’s capital markets by allowing them to do so,” said the panel.

“However, it appears to be the will of the current 439 and Area Finance investors to have Anderson, at least, remain involved. He is regarded as essential if Area Finance and 439 are to maximize collections under their current loans. Under these unusual circumstances, we believe that it is in the interests of the current investors that we permit Anderson to remain involved with Area Finance and 439 to deal with the current loan portfolios, as long as no new investors are brought into these companies.”

Aside from Anderson’s participation in Area Finance and that the pair can continue to be officers and directors of a limited slate of privately-held companies, both Anderson and Montaldi are prohibited from becoming or acting as directors or officers of any company for 12 years each. They must also not engage in any investor relations activities for 12 years.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province. Copies of the decision can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Andrew Poon, Media Relations, 604-899-6880.