ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

MINUTES OF MEETING - MAY, 1998

Joint Eron Lenders Committee - Project Leaders Meeting
Royal Canadian Legion Hall - North Burnaby, B.C.
Recorded and written by D'Ann Madsen, ( editing by S. Ripley)

The meeting was called to order by David Craig at 7:00 pm.

1. Craig's introductory comments were directed at recent letters from I. Wragge to the E.L.C., responses to which had been written by S. Ripley. Craig discussed the priorities of the E.L.C. Considering that the E.L.C. is presently comprised of only two members and has a variety of responsibilities, it has been necessary to increasingly focus on managing those decisions that will most beneficially affect the long-term capital recovery of all Eron lenders. Understandably, there may be differing opinions about relative priorities. On balance, Craig and Ripley believe their present focus must be management of the accounting and legal bills taxation process, establishing the various litigation processes, and creating an efficient communication system to support reciprocal information flow between the E.L.C., Eron lenders and their Project Committees, PW, and Judge Tysoe. Craig asked for a show of hands as to support of this direction, and there was unanimous agreement.

A project leader, T. McGuiness, after asking several questions about monetary contributions and about information available from the former E.L.C. members -and upon receiving Craig's replies- expressed his confidence in the efforts and direction of the current ELC. This received a round of applause. A brief clarification between W. Menghi and R. Jennings ensued regarding computerized information held by I. Wragge.

2. The second agenda item was the Honorarium poll results. At the April 7th ELC meeting, a poll was taken to determine the opinions of 53 project leaders regarding honorariums for work done from November 14, 1997, to February 15, 1998, by the five members of the ELC. David Craig's hand-out showed that averaging the votes would result in the following payments:

Janet McDermott $6853
Ian Wragge $6823
Bob Dominick $2502
David Craig $3260
Steve Ripley $2672

In an attempt to not spend any more time on this issue, David Craig stated that it would make sense to use this average, and as a next step confirm the result by a sampling of Eron lenders. A proposal would then be made to Judge Tysoe for remuneration from Eron assets. This was agreed upon.

David Craig and Steve Ripley were asked about their commitment to continue their work at the same rate of payment. Although Ripley did not comment, Craig stated that it was not sufficient for him. However, he is committed to carrying through with the important work presently in progress independently of worrying about remuneration. He stated that he is not currently spending an inordinate amount of time on Eron. But, if for personal reasons, he cannot carry on, he will allow for continuity by asking for replacement candidates to come forward.

3. The third item on the agenda was the process of taxing Price Waterhouse bills. The PW bill for the four months of October 1997 to January 31, 1998, totaled $3.5 million. Project leaders have reviewed bills for direct costs and ascertained that is difficult to know if the amount charged is appropriate without considerable more detail from Price Waterhouse. Craig stated that a 10% to 15% reduction in the PW bill would be appropriate. His proposal is to ask Price Waterhouse for a 7 1/2% reduction in their bill and, additionally, go to Judge Tysoe asking for another 7 1/2% reduction, resulting in a 15% reduction. The dollar savings would amount to $525,000. As a result, Price Waterhouse and Russell & DuMoulin would not be required to respond in a formal hearing to the billing questions put forward by project leaders, which also would allow for a further savings of thousands of dollars by avoiding the formal taxation process.. However, some common challenges of PW billing from the projects should be used to question future billing. The ELC would require as much as $10,000 of lenders' general funds to take this proposed settlement to Judge Tysoe. Project leaders are asked to sign the "ELC Mandate to Negotiate with Price Waterhouse" form and return it to David Craig.

Jack Rockendal of the Volunteer Legal Committee stated his opinion that some legal bills should be assigned to specific projects rather than to indirect, general costs.


4. The fourth item on the agenda was "Negotiation with the B.C. Government." David Craig stated that because Eron lenders have been defrauded, and regulatory authorities may be partly responsible, the ELC is organizing legal action. Ladner Downs and PW each have some evidence, which will be brought together. The ELC would be cooperating with PW in working-up the case. David Craig proposed distributing "The ELC Mandate to Negotiate with the Provincial Government of British Columbia" to every lender to authorize the ELC to allow for this possible avenue of strategy. The mandate is not legally binding if an individual wishes to pursue his/her own legal action. It is an authorization form to start the process of Eron lenders working as one group on the matter. The ELC proposal is to negotiate a settlement in exchange for a binding sign-off of FICOM's responsibilities. The regulators have assumed no responsibility to date. When asked what is a fair assessment of a settlement, Craig stated a minimum of $10 million.

5. The fifth agenda item dealt with the Frank Biller's bankruptcy. Eron lenders were originally asked by the trutees to file complaints individually. When David Craig objected to this, Biller's trustees changed the procedure. Price Waterhouse is now the representative for individual claims of Eron lenders. There are still future issues with regard to Michelle Biller's assets. Jamie Engen of Price Waterhouse stated that PW has filed on behalf of individual lenders.

6. The sixth item on the agenda was the issue of taxes paid on Eron interest and lender bonuses. David Craig is working with PW pursuing the idea that interest paid is a return of capital because of the magnitude of the fraudulent scheme (interest payments were not being made by borrowers but were made from the infusion of new investments). Jack Rockendal remarked about differing accounting approaches to this year's T1 Return.

7. Agenda item 7 dealt with litigation issues. Jamie Engen agreed that Eron Mortgage Corporation was a giant fraud and payments made to Eron creditors in the form of lender bonuses or interest could be construed as just the return of capital. Of the 72 loans he has reviewed, only 3 or 4 projects were being paid interest by the borrower. All of the others were non-performing loans. For him this presents a possible controversy in that those who invested last were paying interest to those in earlier, and perhaps they should therefore receive their capital back first.

Engen stated that Brian Slobogian had previously been hiding behind his lawyers and had moved to California. At the request of PW, the courts in California gave Slobogian an order to cooperate or be thrown in jail. Slobogian has been ordered when required by PW to return to Vancouver to answer questions. He is the only one who knows some crucial information regarding certain projects, such as Nexus. Engen also stated that the RCMP cannot use the evidence Price Waterhouse gets from Slobogian. They are required to undertake their own investigation.

Regarding the Billers, Engen stated that a law suit may be commenced against Michelle Biller. The Price Waterhouse argument is that moneys paid to Biller Holdings was flipped into a family trust in the spring of 1997. Also, moneys were transferred from Biller Holdings to Michelle Biller. The Billers may not have submitted to the Trustee a complete list of assets. Engen also stated that Frank Biller had no set salary or rate of commission from Eron Mortgage Corporation, but was simply given money by Slobogian. Engen stated that Frank Biller had to have known of the illegal scheme, especially with his close involvement in Shushwap Falls. Lawyers for Michelle Biller appear to want to settle with Price Waterhouse. Engen has the impression from some lenders that they wish to pursue legal action against the Billers, even if the cost is $25,000 to Eron assets.

Price Waterhouse is also pursuing legal proceedings against some of Eron's professional advisors who would carry liability insurance, e.g. Alexander Holburn and Douglas Jackie. Eron Mortgage Corporation was a private company, so financial statements were not publicly available to lenders, but were submitted to FICOM. Eron's auditor was Douglas Reid. At present, Russell & DuMoulin does not find any liability attachable to Laurentian Bank.

8. Agenda item 8 concerned litigation registration. The Database volunteer, John Hall, and Steve Ripley, have created a preliminary draft version of a "Class Action Registration Form", which was distributed. It includes 8 types of claims and 9 potential defendants. After further refinements a registration form will be sent to all Eron lenders.

9. Ripley stated that the ELC is working with Price Waterhouse to see if there is a way to protect project committee members from potential liability while pursuing their volunteer work.

10. At agenda item 10 Ripley first directed the attention of the assembly to the April 23rd ELC Newsletter, page 3, item no.1,which noted an apology for the confusion from the last Joint Meeting regarding website expenses relating to Mark Hoffmann. Ripley repeated his regret verbally and reminded the audience of Mark's volunteer accomplishments on behalf of all Eron lenders.

The Communications Committee is updating the post and email addresses, and phone and fax numbers, of approximately 3500 Eron lenders, and creating communication trees with which to increase its efficiency in reaching Eron lenders.

11. At agenda item 11 Ripley expressed appreciation for the hours of effort contributed by communications committee volunteers Erika Inacio, Martje Hartman and Wendy Menghi. Also thanked by Ripley were John Hall for his computer creativity, and D'Ann Madsen for the executive assistance she has provided to him.

Ripley also showed the project leaders articles from the front page of the April 29 "Globe and Mail" re. the Hepatitus C and Leaky Condos class action groups, and noted an article also on the page about "Use of the Internet for Grassroots Political Organizations". Ripley encouraged the project leaders and committee members who are not currently using the Internet to experiment by going to their public library or to a friend to explore the Eron website: www.eron-pwl.com

The meeting was concluded at 9:15 pm. The next ELC - Project Leaders Meeting will be on June 2, 1998, at 7 pm at the North Burnaby Legion Hall.




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