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THE ERON LENDER COMMITTEE

Eron Lenders Committee Newsletter: October 6, 1998

Capital Preservation, Recovery, and Distribution

1. Taxation of bills
- Pricewaterhouse Coopers, Russell & DuMoulin, Campney & Murphy, et al. David Craig continues his negotiations with Craig Bushell of PWC respecting the bills of PriceWaterhouse Coopers, and law firms from both Vancouver and the U.S.A. Craig expects to report an agreement before or at the November 15, 1998, annual general meeting.
- Ladner Downs - David Craig expects to report at the AGM an agreement with Ladner Downs on the ELC's past bills, and clarify the ELC's ongoing arrangements with Ladner Downs.

2. Distribution Issues
- On September 11, 1998, PWC filing No. A972569 "Judicial Trustee's Report re Claims Classificaition Issues" was heard by Judge Tysoe. This 44 page document outlines the issues that PWC has identified with respect to priority of the various types of lender claims. A timely resolution of these issues is very important to all lenders. Approximately 10 mortgages had been realized up to September 11, for gross proceeds of $8.3 million. Several further large mortgages were expected to be realized in October and November of this year. In this application PWC seeks the Court's directions regarding resolving the questions that arise regarding different priority claims.
- Judge Tysoe directed PWC to report on the facts and to formulate the distribution priority problem in a decision-process schema, which will elucidate the essential issues and allow the Court and lawyers to understand and argue those issues. Tysoe requested the ELC to be consulted on the appointment of lawyers for both sides of the essential questions. The ELC recommended the appointment of David Fredrickson and David Hobbs to argue the two principal viewpoints: (1) the mortgages should be distributed on an individual project by project basis, or
(2) the Eron mortgages should be pooled and distributed to all creditors on a pooled basis. It is expected by the ELC that variations within these two viewpoints will also be discussed by these two lawyers, and that possibly further appointments may be required.
- The PWC report is to be prepared for the Court and lawyers as soon as possible (October), and thereafter a date for hearing arguments will be set (October or November), after which Judge Tysoe will issue his Orders on the distribution matters (perhaps November or December). Thereupon, monies may begin to be paid out to Eron lenders.

3. Litigation -- Class Action
- On August 11, 1998, Camp Church & Associates filed an action in the B.C. Supreme Court on behalf of M. F. Cooper (an Eron lender) against R. Hobart and the Government of British Columbia. Action No. C984069 requests certification of a class action on behalf of all Eron lenders resident in B.C. and who held mortgages or other securities administered by Eron or E.I.C. as of October 3, 1997. The lawsuit alleges that Hobart did not exercise his duties properly, and the B.C. Government is vicariously liable for the actions of Hobart and employees and officials acting under Hobart's direction and/or supervision. The plaintiff claims a) damages, b) interest on any amounts awarded by the Court, c) costs, and d) such further and other relief as the Court may see just.
- The B.C. Government and Hobart's statement of defense to the abovementioned application was filed September 30, 1998, denying the allegations and disputing that the Mortgage Broker's Act required the kind of protection claimed by the Plaintiff. The matter will be brought before a Supreme Court judge for determination as to whether or not the case warrants class-action certification. It is hoped that the application will be heard prior to the end of the year.
- Camp Church & Associates has been asked to provide a general overview of the process involved in a class action at the monthly ELC-Project Leaders Meeting on October 6. Also, Camp Church has set up an information telephone line: (877) 571-2288. In brief, if the certification is granted, then Eron lenders meeting the criteria of the class will be considered to be a part of the class unless they explicitly, in writing, inform Camp Church they wish to opt out of the class. More details about the process will be forthcoming. Once the action is certified, general updates on the litigation will be available at the websites: www.eron-pwl.com and www.geocities.com/WallStreet/6380

4. Other Litigation, Civil -- PWC continues to formulate its lawsuits against various individuals associated with the Eron fiasco.
- Criminal lawsuits - Inspector Malone, RCMP Commercial Crime Division, appeared at the September 9, 1998, ELC-Project Leaders Meeting. He has 7 full-time staff members working on the Eron file. Once cases are suitably defined by the police (RCMP), the information will be presented to the B.C. Crown Counsel, and it will be the B.C. Attorney General's decision as to how to proceed.
- Class Action Registration - replies to the ELC from the August 21st mail-out to all Eron lenders continue to be returned and entered into the ELC database. They will be analysed, and a determination made as to how best to use the information. All information will be held as confidential by the ELC and database manager until used to coordinate other class action activity.

5. Brian Slobogian and Frank Biller -- No news to report presently. Investigations continue.

6. Investigations -- On behalf of the ELC, James Tindle is working to investigate other information that may prove useful to all Eron lenders in our attempts to recover our capital. Contact James with any item you think might further these efforts: tel #438-0915 or fax #738-2795.

7. Revenue Canada -- Craig Bushell of PWC has undertaken to discuss with Revenue Canada the problems pertaining to RIF holders. A determination of the status of their "frozen" assets held in RIF accounts must be made for the tax year 1998.

8. Negotiations with the B.C. Government -- David Craig and Craig Bushell have discussed the most constructive way to approach negotiations with the B.C. Government about the damages sustained by Eron lenders, and how to protect and prevent B.C. citizens from further such catastrophes. David Craig will report his results to date at the November 15th AGM.

9. B.C. Securities Commission -- In a September 16, 1998, reply to an enquiry by an Eron lender, the B.C.S.C. exempts itself from any responsibility for the Eron problems because Eron Mortgage Corporation was not registered with the B.C.S.C. No mention is made of the fact that Eron was improperly issuing securities and that the B.C.S.C. was notified of this fact.

10. Chartered Accountants Institute of British Columbia -- A complaint has been filed against Douglas Reid, an accountant for Eron.

11. Media --- David Craig has been interviewed at various times by reporters from the CBC and CKNW. David Baines and Charlie Smith continue their interest in the Eron saga and have interviewed various Eron lenders.

12. Letter-Writing Campaign -- We have had a good start to the letter-writing campaign, and may we encourage those who have not yet done so to take pen in hand and write...! See suggestions for letter-writing and "Draft Sample", obtainable from project leaders, Steve Ripley, or the website.

13. Funding -- As a result of the appeal made in the all-lenders mailing, a number of new donations have been made to the ELC. The ELC, on behalf of all lenders, emphatically thanks those individuals who have contributed various amounts up to $100. We can well imagine the financial sacrifices that Eron lenders are making these days.

- For those lenders who are able to contribute, and who have not yet done so, may we ask your participaiton. Send your cheque to:
Eron Lenders Committee
"David Craig, in trust"
Treasurer, ELC
#707 - 1112 West Pender Street
Vancouver, B.C. V6E 2S1

14. ELC Financials -- David Craig will report the first year financials at the November 15th Annual General Meeting.

15. Honorarium -- Before the end of the first term, an application will be made by the ELC to Judge Tysoe respecting honorariums and/or out-of-pocket expenses for those ELC members who worked from November 1997 to November 1998. The applicaiton will cite the opinion of the Project Leaders (April 7, 1998) and the replies to the all-lenders mailout (August 21, 1998) regarding an honorarium The amount, if any, to be finally determined by the Court. All lawyers who have been applicants to the Court in former Hearings will be sent a copy of the application. Additionally, it will be posted on the website, and may be ready for distribution to the project leaders by the November 3, 1998 ELC-Project Leaders Joint Meeting.


Communications, Projects, Volunteers

16. Project Leaders
- For project leaders who wish to use the website for postings, please telephone/fax/email Catherine Palmer your information. Preparation of your material will be assisted by our volunteer webmaster, David Jackson, tel #986-3718 or fax #986-6215 or email address www.vanlang.com Catherine Palmer's email address is: contact@eron-pwl.com, to be distinguished from PWC's website: www.eron-pwl.com
- Project leaders/members updated information re addresses, telephone numbers, fax and email should be sent to Wendy Menghi, tel #929-6003 or John Hall tel #876-9081 or fax #876-9082.

17. Website -- The Eron website www.eron-pwl.com also functions as our archives. Project leaders, please encourage your members who are unfamiliar with visiting a website to give it a try ... at a friend's home or at a public library.

18. Database-- John Halll operates the database, tel #876-9081 or fax #876-9082.

19. Volunteer-- As a result of the all-lenders mailout, a number of new volunteers have offered their help -- thank you! Our coordinators are Erika Inacio tel #438-0485, Wendy Menghi tel #929-6003, Martje Hartman tel #538-6601, and Cheryl Louis tel #263-1709.

20. Nominations and Election
- The following individuals have been nominated and have agreed to stand for election to the ELC for the 2nd term, November 1998 - November 1999.

They are:
Mike Buchanan, Erika Inacio, Anthony Jasich, Wendy Menghi, Steve Ripley, Jack Rockandel, and James Tindle.

- Seven individuals will be elected; two for the administrative ELC, and five as advisors in a consulting role and as replacements should one or more of the operating ELC members fall ill or need to resign.
- A ballot will be sent to all Eron lenders in October, to be returned by early November. For those attending the November 15th AGM, bringing the ballots to the AGM will be possible. A final count will be done by scrutineers before the end of the AGM, and the new ELC members will be announced.

21. Annual General Meeting -- The AGM will be held Sunday, November 15, 1998, at 12:00 noon at Kitsilano High School Auditorium, 2550 West 10th Avenue, Vancouver. Parking is free on the surrounding residential streets. A donation of $2 per adult will be requested at the door to cover rental of the hall.

22. Postal Communication -- The next all-lenders mailout will be around mid-October sending the ballot for ELC elections along with the AGM notice.

23. Calendar/Schedule -- An updated calendar is posted on the website. Please contact Steve Ripley with suggestions for items to be included: tel #222-2646, fax #222-1641, email: sripley@imag.net

24. Newsletter-- This newsletter is the production of the ELC and volunteer committee members. It will be posted on the website without editing by PWC or R&D, who take no responsibility for its contents. Any Eron lender who wishes to suggest ideas or contribute to the preparation of the newlette is invited to contact Steve Ripley.

25. Minutes -- Minutes of the monthly ELC-Project Leaders meetings are available to all Eron lenders. For a copy please fax Steve Ripley 222-1641 or find them posted on the website. Volunteer recorder and typist of minutes is D'Ann Madsen.

26. Meetings - November 3, 1998, Tuesday at 7pm -- ELC-Project Leaders Meeting, Legion Hall, 4356 East hastings, Burnaby. For further information regarding project leaders meetings, contact Martje Hartmann, tel #538-6601.




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