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THE ERON LENDER COMMITTEE

Eron Lenders Committee Newsletter: January 5, 1999

Judicial Trustee & Receiver: Capital Recovery-- Realization,Distibution,Litigation

1. Taxation of Truteeship & Receivership bills

* PWC's bill---David Craig, ex oficio member of the ELC, will assist the reconciliation &/ arbitration of any outstanding issues between the Projects and PWC respecting billing Otherwise, as explained in the last newsletter, an interim settlement of the PWC bills to September30/98 has been ordered by Judge Tysoe.

* Ladner Downs' bill - As requested, PWC has provided to the Court and to A. Jasich an affidavit signed by Craig Bushell evaluating the benefits to Eron lenders of the work performed in 1997-98 by the ELC, with reference also to the ELC's legal counsel, Ladner Downs. Included as part of the affidavit are two lengthy exhibits, which are detailed statements from I. Wragge and D. Craig quantifying the work performed and the accomplishments and savings therefrom for the periods November 15/97-February 15/98, and from February 15/98- November15/98. Jasich has replied with an affidavit to the Court , questioning the amount of Ladner Downs bill charged during January,'98 when the ELC first applied to Court for validation, recognition, professional advisors' fees payments, and honorarium. A Hearing date before Judge Tysoe will be set in January to conclude this process.


2. Distribution Issues

* On February 4 & 5 '/98 the Distribution arguments will be heard by Judge Tysoe.

* The projects that are now confirmed by PWC as realized are the following:ABC Boat Charters, Homer Street, Morewood, Desert Springs, Gaetz Crossing, Balak, Davie, Crampton, Gallie, Proctor, Wallace, and Ravenswood, Fairways at Arrowhead. A number of other projects are nearing realization.

* Judge Tysoe's dates for Sitting in Vancouver are:
Jan.4-15. 25-29; Feb.4-5, 8-12; Mar. 1-5, ...aside from May 24, Justice Tysoe is available in the Lower Mainland into June.


3. Litigation -- Class Action

* On March 29/99 the Cooper vs. Hobart lawsuit will be brought before a Supreme Court judge for determination as to whether or not the case warrants class-action certification. Camp Church has set up an information telephone line: 1 (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 procedures will be forthcoming. Currently, Judge Tysoe has been assigned by the Supreme Court as the Case Manager for this certification process. If and when the action is certified, general updates on the litigation process will be available at the websites: www.eron-pwl.com and www.geocities.com/WallStreet/6380 , which websites are linked.

* The B.C. government on Dec.15/98 issued a Third Party Notice to a number of individuals and companies involved in the Eron matter. The government alleges the parties are liable for the losses suffered by Eron lenders. David Church will address this and other developments when he speaks to the Project Leaders at the Joint ELC & Projects meeting on Jan.5/99. A list of the named parties is available from S. Ripley (222-1646)-the list has also been provided to the Project Leaders.


4. Civil Litigation

* Civil lawsuits -PWC filed its first lawsuit on December 24/98: Douglas Jackie is alleged by PWC to have breached his duty of care in the Sushwap Falls Development Ltd. project. Other projects for which Jackie was to have acted on behalf of Eron (Eron being the lenders' bare trustee) will also be reviewed by PWC. PWC seeks unspecified damages for breach of the retainer agreement, negligence, breach of fiduciary duty and breach of trust.

* PWC continues to investigate the possibility of lawsuits against various individuals associated with the Eron fiasco, including principals, officers, retained professionals and insiders.


5. Criminal Litigation

* Inspector Ard , RCMP Commercial Crime Division, has full-time staff members working on the Eron file. The RCMP has now begun their review of information held in PWC files pertinent to their criminal investigations. 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.

* The RCMP in BC will soon obtain somewhat increased funding from the Federal Government, to offset the effects of budget cuts since 1996. The importance of this to commercial crime investigations is documented in P. Palango's book The Last Guardians: The Crisis in the RCMP-& in Canada. See the Charlie Smith ("Geogia Strait", Dec.29/98) article-given to project leaders at the January 5/99 meeting.


5. Brian Slobogian-- Investigations continue towards civil & criminal lawsuits.


6. Onalee Slobogian - No further news to report at this time.


7. Frank Biller -- Investigations continue towards civil & criminal lawsuits.


8. Frank Biller Bankrupcy -- On December 18/98 the creditors' Inspectors (including Ripley and Jasich of the ELC) met with the Bankruptcy Trustee (MacKay & Company Ltd.) to discuss new developments regarding Biller's current bankruptcy, discharge hearings for which may come to the Court in March, 1999. At the meeting Jervis Rodrigues resigned as an Inspector, and Rick Pallen (PWC) was voted in to replace him. Certain details of the meeting are confidential. The Inspectors discussed issues that included the implications of the matter mentioned below-see "M. Biller". Ripley raised a number of questions on behalf of lenders regarding Billers current lifesyle and expenditures, which the Trustee has undertaken to investigate.


9. Michelle Biller-- Mrs. Biller has offered to PWC and F.Biller's Bankruptcy Trustee a proposal for a combined settlement respecting entitlement to assets of Biller Holdings and any related transactions involving the Biller Family Trust. On behalf of lenders PWC will pursue this matter by negotiation or litigation.


10. Other Investigations -- James Tindle is working to investigate other information that may prove useful to all Eron lenders in our attempts to recover our $capital. *Important*: contact James with any information you think might further these efforts: tel #438-0915 or fax #438-2795. See also below.

* *Note to all Lenders : Please send to James Tindle or Steve Ripley any articles or other source of information you come across pertaining to the sentences received by individuals in Canada convicted of commercial crime ('white-collar crime').An example would be : N. Skalbania, after an appeal process, was sentenced to one year in jail for illegally misdirecting an investor's funds ($100,000.,which had subsequently been repaid). After a further appeal to the Court regarding the jail provision he was permitted to serve his time from his home under electronic surveillance.


11. Revenue Canada --

* After lengthy and detailed negotiations with Revenue Canada Craig Bushell of PWC has received a set of administrative solutions under the Fair Treatment section of the Canadian Tax Act re. tax problems pertaining to Eron lenders. Bushell will discuss these at the Joint ELC Project Leaders Meeting Jan.5/99, and a letter will be sent later in January by PWC to all lenders about these provisions.

* RIFholders: The deemed value of the Eron assets will be zero for 1998, effectively allowing the RIF transfer to be postponed until the minimum amounts due can be paid out from realized Eron asets- if such realization occurs in 1999 or later.. Re-application for this allowance may occur at the end of 1999, if it is required.

* RRSP: A zero valuation may be deemed for Eron assets for 1998 if RRSP holders wish to remove assets from their accounts, provided that the taxpayer agrees that when and if Eron monies are received then the sums will be calculated as income, not capital, and as a result will be subject to the normal taxation requirements.

* Treatment of Cash Losses: Interest and bonuses received, or reported as received, from Eron will automatically be viewed by Revenue Canada as a return of capital, resulting in a reduction of the cost basis of the investment. Tax paid on these amounts under a prior income calculation will be adjusted for the relevant fiscal years .If later a capital loss is claimed, then it will be reported with respect to the new, adjusted base.

* Crystallization" of Eron lenders' losses: Crystallization does not occur until monies are paid -out from an asset's liquidation, as distinguished from the date at which an asset is sold. No monies will have been paid-out from PWC to Eron lenders in 1998.


12. Negotiations with the B.C. Government --

* No further news to report at this time. The ELC will deliberate on the pursuit of 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. Hobart's office has issued two documents relevant to Eron lenders. The first is a set of "Questions and Answers" discussing the roles, responsibilities, and duties of the administrators of the Mortgage Brokers Act (MBA). The second document states amendments to the MBA that may become effective in 1999. Both documents can be read in their entirety on our website.


13. Laurentian Bank --Lenders are being billed for both trustee and transaction services in their RRSP accounts for 1998, despite the fact that no activity has occurred in 1998. Contact Chris Jensen, tel; 691-8800


14. Canadian Western Trust --The company is once again offering to take transfers of RRSP accounts from Laurentian Bank, at special rates. Contact George Mihalopulos: tel:685-2081.All lenders were sent a letter from CWT in December, 1998.


15. B.C. Securities Commission -- A new questionnaire is being sent to Eron lenders by the BCSC. The ELC has been assured in a letter to James Tindle that the BCSC will use the information in a proscribed manner, thus the ELC believes the answers to the questionnaire will not compromise Eron lenders' interests.


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


17. Media -- James Tindle coordinates media relations for Eron lenders. Regular "Sun" and "Georgia Strait" articles have appeared documenting the ongoing history of litigation and related matters, and CKNW also is following the story with timely radio items.


18. Letter-Writing Campaign --We have had a good start to the letter-writing campaign. We continue to encourage those who have not yet done so to take pen in hand and write.


19. Funding -- There has been a generous response to the latest appeal to lenders. The ELC, on behalf of all lenders, gratefully thanks those individuals who have contributed various amounts up to $100. We appreciate the financial sacrifices that Eron lenders are making when they so donate. For those lenders who are able to contribute, and who have not yet done so, may we ask your participation. Please recall it has been through the sacrifices of other lenders who have already contributed that the work of your committee this past year has been aided. Send your cheque to:

Eron Lenders Committee
c/o Steve Ripley "in trust",
#308- 3875 W. 4 Ave.
Vancouver, B.C., Canada
V6R 4H8


20. ELC Financials --David Craig reported the first year financials at the November 15th Annual General Meeting. A copy of the report may be obtained from S. Ripley, tel.222-1646, fax 222-1641.


21. Honorarium-- Please see above, item #1, Ladner Downs' bill. Judge Tysoe has ordered a process to settle several undecided items of the Ladner Downs & Honorarium Applicaion of Nov.13/98 This will be concluded in January, 1999.



ELC Communications: Lenders, Projects, Volunteers


22 ELC Update: Donald Smith has resigned from the ELC due to time commitments elsewhere. The ELC invites any lender who wishes to serve on the committee to contact James Tindle or Steve Ripley to discuss the work of the Committee and the ways the individual wishes to offer help as a member.


23. Project Leaders -* Important* Please remember to distribute to your project members as completely as your committee can the essential information in the newsletter. This is one of your commitments and responsibilities as a leader! This saves all Eron lenders significant $money by informing individuals of a wide range of information that otherwise they may believe they can only obtain by phoning PWC directly--at considerable hourly rate cost to all lenders.

* Information provided to Project Leaders at the Jan.5/99 ELC-Projects Meeting: the leaders were given the "Agenda", "Newsletter" of Jan.5/99, "Minutes" of the Dec.1/98 Meeting, Tindle letter to the Attorney General, Charlie Smith article re. the RCMP, List of ELC& Volunteer Leaders' telephone numbers, Third Party Notice list (class-action lawsuit ),ELC tel., fax & email addresses, and a Website Archives review detailing the constituents of the Eron website directories.

* 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 Eron website,: www.eron-pwl.com

* Project leaders: updated information re Eron lenders addresses, telephone numbers, fax and email should be sent to our database manager, John Hall, tel #876-9081.,or fax #876-9082.


24. 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, at a public library, or at a cybercafe.

* A 'link' has been made from the PWC/ELC website to the geocities website for updates on the class action lawsuit, saving lenders some future $costs, for which help Eron lenders once again have lender Mark Hoffman in Calgary to thank for his already very considerable volunteer effort in 1997-98.

* An attempt will be made to post on the website in a timely manner some Orders from the Court when they are available in email format. For those lenders using the internet please recall that you can access written decisions via the B.C. Supreme Court documents website at: www.gov.bc.ca


25. Database -John Hall develops and operates the database, tel #876-9081 or fax #876-9082. Please see item # 23 above re. information updates.


26. Volunteers: Wendy Menghi is our Volunteers Coordinator tel: 929-6003, fax 924-0629 Contact Wendy with your questions about how you can get involved with the specific, manageable volunteer tasks that will help your fellow lenders, your ELC committee, and yourself!


27. Election Results and ELC Structure-- See the Dec.1/98 Newsletter.


28. Annual General Meeting-- See the Dec.1/98 Newsletter. Minutes of the meeting may be obtained from your Project Leader or from Steve Ripley, tel:222-1646, fax: 222-1641


29. Postal Communication -- An all-lenders mailing is planned by PWC for January with information about tax issues, Judge Tysoe's requirement that no lenders' messages may be sent to him regarding the Distribution Hearings other than through written affidavits, and other matters.


30. Calendar/Schedule -- A 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


31. Newsletter-- This newsletter is the production of the ELC. 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 newsletter is invited to contact Steve Ripley.


32. Minutes -- Minutes of the monthly ELC-Project Leaders meetings are available to all Eron lenders.To suggest amendations or corrections , please contact S. Ripley. For a copy by fax please contact Steve Ripley, tel: 222-1646, fax:222-1541, or else find them posted on the website.


33. Next Meeting February 2,1999, Tuesday, at 7pm -- ELC-Project Leaders Meeting, Legion Hall, 4356 East Hastings St., Burnaby. For further information regarding Project Leaders' Meetings, contact volunteer, Martje Hartman, tel #538-6601.




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