ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

MINUTES OF MEETING - NOVEMBER 3, 1998

Joint Eron Lenders Committee - Project Leaders
Royal Canadian Legion Hall - Burnaby, B.C.
Minutes recorded and typed by D'Ann Madsen, edited by Steve Ripley


1. The meeting was called to order at 7:00pm by David Craig. Handouts included: Agenda, the ELC Newsletter of November 3, 1998, the Minutes of the October 3, 1998 ELC Meeting, the ELC Termination Criteria, the ELC Calendar for Fall and Winter of 1998, and the Summary of ELC Questionnaire on Honourariums (Oct. 27, `98).


2. David Craig introduced Andrew Pearson and David Church of Camp Church & Associates. David Church provided an update on the action filed against R. Hobart and the Government of British Columbia in the name of Eron lender Penny Cooper. The Government defense has been received, and Camp Church & Associates has requested documents from the Government, which request the Government refused. Therefore, Camp Church sought and won a court decision requiring the Government to issue the documents to them. David Church announced that Judge Tysoe has been appointed to be the Case Manager for this interim stage towards certification. The certification hearing date will be possibly in early January of 1999. The class includes those Eron lenders living within British Columbia during the period of August 26, 1996, and forward to October 3rd of 1997. David Church stated that he feels we have a good case against Hobart, the Registrar of Mortgage Brokers, and the Government of British Columbia for breach of statutory duty. Regarding the fees paid to Camp Church & Associates, when a class is certified, statutory requirements determine a fair and reasonable fee. Legal costs are generally not awarded to either party in a class action decision. David Church predicts that this action would go to court within 24 months of certification.


3. Regarding the PricewaterhouseCoopers bills, David Craig has succeeded in negotiating a discount on fees to August 31, 1998. Craig's discussions with PWC have resulted in a savings of nearly $600,000 on bills totaling about $7million. This was achieved by negotiating about 9% off the Judicial Trustee's overall bill (with the exception of disbursements).This is composed of the following: 5% off the bills of Campney Murphy and Russell & DuMoulin for the first 4 months, and 7.5% thereafter For PWC, the reduction is 5% for the first 4 months, and 10% from February to July. After July'98 the reduction is 5% on the rates of some individuals and 7.5% on others.

The terms of this agreement provide for savings from future bills as a result of the rate structure negotiated by David Craig. David Craig recommends acceptance of this discount; if the ELC were to proceed with taxation in court, we would forfeit the $600,000 plus pay for both sides of the process of taxation, which would cost several hundred thousand. In a phone survey to most project leaders, it appears no project leader would contest the settlement of this discount. A show of hands was requested: 31 of the 32 project leaders present voted in favor of the settlement. One project leader, Erika Inacio, wishes to review the billings specific to P.G. Woods before making a decision. Affidavits for presenting the Settlement to Court are being drawn up by PWC and would be signed by PWC and the ELC. David Craig stated that for the past year PWC has been billing at the rate of $200 to $350/hr and making withdrawals from the Eron Trust account and a line-of-credit granted to PWC by a bank.

David Craig stated that he is willing to continue as arbitrator regarding PWC bills even after his retirement from the ELC on November 15, 1998. Craig received a round of applause in appreciation for his efforts negotiating the discount. PWC has made available the direct costs billed to each project from March through August of 1998. This packet of information was distributed to each project leader.


4. David Craig offered responses to some of the questions put to Craig Bushell of PricewaterhouseCoopers at the October 6, 1998, Project Leaders' meeting.

- Regarding the Rolex watch purchased out of Maxim Funds for approximately $35,000, Craig suggested it would not be worth the costs required for PWC to attempt recovery. A project leader stated he felt the watch has already been sold in an auction.

- Brian Slobogian was issued an order to cooperate and has been questioned by PWC.

- PWC has confirmed that on behalf of Eron lenders, a duplicate certificate of title is being held to the Slobogian condominium at 2250 Folkstone Way, West Vancouver. The assessed value of the property presently is $300,000. Project leader, Anthony Jasich, stated that duplicate certificate of title prevents transfer of the property, but does not prevent liens and charges from being placed on it. He also suggested PWC be questioned as to why the property was allowed to be put into a numbered company rather than Slobogian's name.

- David Craig stated that PWC will pursue the assets of Michelle Biller and that some lawsuits are `just around the corner'. PWC, as judicial trustees and receivers, is not responsible for forensic accounting, only recovery and distribution of assets. Forensic accounting is being done by Inspector Malone and the RCMP, who are now working in the PWC offices. The RCMP has dedicated seven investigators to the Eron project. David Craig stated that records do not with certainty show Slobogian placed money off-shore.

- PWC has unpaid invoices for their work done for Eron Mortgage Corporation in the weeks before the October 3, 1997, collapse.

- Regarding the Laurentian Bank's liability, Russell & Dumoulin has written an opinion. PWC has 6 years to pursue litigation.

- David Craig stated that Jamie Engen of Price Waterhouse had brought a project on Grandview to Eron Mortgage Corporation for possible financing. It is not necessarily considered a conflict of interest for an accounting firm to take business to someone for whom they are working. If the deal had been arranged, the finders fee would have gone to PW, not Jamie Engen.

- Regarding the issue of whether Price Waterhouse (who was hired by Slobogian to consult on specific projects starting in February of 1997) was aware of overfunding and co-mingling, David Craig stated that Engen advised him that Slobogian did not allow PW to see the complete picture. PW were not auditors, but were brought in to placate FICOM after investigations had started.

- David Craig stated that PWC had created a list of individuals who may have recived "preferred payments" in the period before the collapse.

- David Craig stated that no documentation has been found in Eron records regarding any expenses paid for favors to FICOM officials.

Regarding the issue of distribution, Judge Tysoe has asked for arguments from the lawyers, Fredricksen and Hobbs, for which a first Hearing date may occur at the end of November. Initial decisions about distribution matters may come from Judge Tysoe in December.

Business journalist, David Baines, has received the Jack Webster award for his coverage of the Eron matter.


5. David Craig has consulted with Camp Church and Associates regarding his negotiating a settlement with the government so that he would in no way be prejudicing the activities of Camp Church in their bid for a class action. David Craig offered to continue with this negotiation even after retiring from the ELC on November 15th, should he be given this mandate from the new ELC.


6. In addition to the ELC letter-writing campaign, David Craig will initiate a petition at the Annual General Meeting on November 15, 1998.


7. In response to the mailout, we have a larger list of volunteers. David Craig referred to the `Summary of ELC Questionnaire on Honourariums, October 27, 1998", which shows the breakdown of 165 responses.


8. Steve Ripley noted that lenders may send their point of view regarding distribution to the lawyers, David Fredricksen (arguing non-pooling) and D. Hobbs (arguing pooling). PWC has indicated to Ripley that additional projects are near realization.

Steve Ripley noted that the correct address for the Annual General Meeting on Sunday, November 15, 1998, is: 2550 West 10th Avenue,at the Kitsilano High School in Vancouver. The meeting starts at 12 noon. Ripley asked project leaders to inform any lenders they can of the correct address.


9. Regarding the election of a new Eron Lenders Committee, ballots were mailed to all Eron lenders at the end of October. These ballots are to be returned to David Craig by mail or brought to the AGM. Under special circumstances ballots may be issued at the AGM to individuals who never received them in the mail.


The meeting concluded at 9:15pm with applause expressing appreciation to David Craig for his year of leadership on the ELC.




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