ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

Eron Lenders Committee Newsletter: October 5, 1999

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

1. Realization
* The projects that are now confirmed by PWC as realized or near realization are: ABC Boat Charters, Balak, Capital Place, Castlegar, Crampton, Davie, Desert Springs, Discovery Ridge, Enterprise Park, Fairways at Arrowhead, Gaetz Crossing, Gallie, Grande Prairie Airport, Homer Street, Leewood Village, Morewood, Proctor, Ravenswood, Rusin, Wallace. Please note that although a project has been realized that does not necessarily mean that the project will result in a net positive $ return to lenders in that project. See item #2, below.


2. Distribution Issues
* On September 23 / 99 Justice Tysoe issued his written decisions on the remaining thirty-four distribution questions. A copy of his Reasons for Judgment is available to any Eron lender and can be obtained by request from Catherine Palmer at PWC, telephone 806-7000, ext. 4632, or else by going to the website at www.eron-pwl.com. In general terms, Tyson's rulings largely follow the recommendations of the judicial trustee, with certain exceptions. For example, one exception pertains to clarifying criteria about determining a lender's beneficial interest in a project [Trust Declarations & EMC'S computer lists ranking ahead of signed Term Sheets and unsigned Term Sheets, with qualifications]. Tysoe also agrees with PWC and Revenue Canada in permitting the interpretation of Eron operations as a `sham', and allows for the treatment of interest payments and lenders fees as a return of capital. Additionally, Tysoe recognizes advances made from EIC, EFS, and CPI as establishing a beneficial interest in the projects for lenders who advanced funds to EIC, EFS and CPI. With respect to question #34, concerning overfunding issues, Tysoe distinguishes several corollary issues and gives decisions based on the particular problems of each. Regarding the holdback of monies to pay PWC for indirect cost when the distribution begins, Tysoe has directed that a separate hearing be held, which is tentatively scheduled for November 8 / 99.

* A mandatory 30-day appeal period follows the date of Tyson's decisions. Depending upon how complex the legal challenges are to any of his rulings, the eventual pay out of individual lenders for specific projects will be delayed by the length of time of that appeal process. It is conceivable PWC will be in a position to begin issuing payments to some lenders by December 1999. Distribution payments to lenders will be net of trusteeship costs (direct and indirect), and any holdback for estimated future Trusteeship and legal expenses for the period November / 99 to the eventual conclusion of the Trustee's engagement.

* The currently estimated zero-return or near-zero return projects are: Cloverdale, Columbia Street, Commonwealth, EFS, Enterprise Park, Everbrite, Maxim, Gail Taylor, Goodrich, M. Graye 1st & 2nd & 3rd, Quadra, Rusin, Schiel / Emerald 3rd & 4th & 5th , Schiel / Uclulet, Shushwap, South Thompson Guest Ranch, USCAN, Vocal Point, P.G.Wood 2nd. There are other projects that may eventually be determined to be zero return, or near zero return.

* Capital Productions Inc.(CPI) has been placed into bankruptcy. This action By PWC &/ R&D offers certain legal advantages to PWC on behalf of lenders, while also preserving for CPI lenders their interest in the assets eventually receivable from CPI' s realization, which is currently estimated to be positive.

* See item # 3, below.


3. Revenue Canada Refiling
* The week of September 7 /99 PWC began sending to Eron lenders the first round of Revenue Canada refiling forms. The projects to be managed first are the zero-recovery and near zero-recovery ones. See # 2, above. To date, forms have been sent to the lenders in the following four projects: Cloverdale, Commonwealth, Rusin, and Uclulet. Lenders' questions about the refiling should be directed to David Craig, Tel. 713-6680, Fax 713-6696.


4. PWC Civil Litigation / Insurance Claims
* On Feb.2 / 99 a Statement of Claim was filed by PWC/R&D against the Slobogians jointly and severally for funds owing to EFS, in the amount of $1.2M. Neither of the Slobogians have filed a Statement of Defense in response. PWC/R&D has subsequently, on May11, served on Brian Slobogian - through substitution on his lawyer - a Petition for Receiving Order and an Affidavit of Truth in Bankruptcy Petitition. A date will be set in October or November for the Court to hear PWC's B.Slobogian Bankruptcy Petition. See the Apr.6/99 ELC-Projects "Minutes", #5. PWC has received from the Slobogians' lawyers a `Proposal' under the B.I.A. (Bankruptcy and Insolvency Act) that would result in the affairs of both parties being settled with respect to Eron. The ELC has examined this Proposal and has offered its response to PWC. See item # 5, point 2, below.

* PWC continues to investigate the possibility of civil lawsuits against other individuals related to the Eron failure.

* PWC is pursuing on behalf of Eron lenders an insurance settlement from the lawyer D. Jackie, who worked for Eron Mortgage Corporation. The B.C. Law Society's insurer is in negotiations with PWC and other parties who have made claims against Jackie.


5. PWC Administration
* Project leaders and lenders with concerns about specific matters relating to PWC and R&D's Trusteeship costs (project direct costs, indirect costs, allocation of costs) are requested to send them in writing to any member of the ELC or to David Craig. Concerns about a project's direct costs, in particular, should be addressed to D. Craig (tel.713-6680, fax 713-6696). The ELC will be responsible for overseeing the taxation process of PWC's indirect costs.

* The ELC has been notified by PWC that the Trustee will file an Application to Justice Tysoe seeking a clarification of the judge's original intention for the role of the ELC in relation to the work of the Trustee. Communication between the two parties has become ineffective in resolving various issues important between them. The ELC will respond to that Application once the document is available. The Application has not yet been received by the ELC, and therefore no hearing date has yet been set.

* The costs to date of the Trusteeship and of legal fees are approximately $9.8M, to include all direct and indirect charges, and all discounts to which heretofore there has been agreement.


6. VPD / RCMP / FBI Criminal Investigations / lawsuits
* The RCMP continues its review of information held in PWC files pertinent to their criminal investigations; as well, it closely followed the evidence presented at the BCSC hearings. Once cases are suitably defined, 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.

* According to information Tindle has received, the RCMP now has given priority to its work on the Eron case.

* Tindle and Ripley attended on September 29 a presentation by Detective Bob Meanley, Head of the Vancouver Police Department's Financial Crime Unit. His topic was "Fraud in Contemporary Society". It has become a "growth industry", enhanced by modern electronic methods. There are means by which citizens can preventively protect themselves; the VPD publishes many brochures to assist citizens with knowledge by which to arm themselves. Phone the VPD for these information pamphlets, and see also the `Talking Yellow Pages' in the respective commerce sections of the yellow pages of your telephone book, as well as visit the VPD website: www.city.vancouver.bc.ca/police. See, too, the brochures published by the BCSC, which are obtainable at their 865 Hornby office, 2nd floor. Ripley and Tindle asked questions during the Q&A, and Tindle stressed the importance of the VPD and Attorney General's Office (RCMP) being more alert to, and more vigorous in pursuit of, financial institution crimes, such as those occurring in B.C. in recent years - as exemplified by the Eron disaster!


7. Brian Slobogian Bankruptcy (2nd)
* See item # 4 & 6, above.


8. Onalee Slobogian
* See item # 4, above.


9. Frank Biller
* On May 10 PWC filed an Amended Statement of Claim against F.Biller, M. Biller, Biller Holdings Ltd., and A. & H.Biller Enterprises Ltd., which alleges breach of fiduciary duty, breach of trust, misrepresentation, and the charging of criminal or usurious interest rates. The result of these alleged acts was "wrongful profits" in the amount of $6.5M. On behalf of Eron lenders PWC claims a judgment against the Defendants " for the amount and interest found due upon the accounting, a charge against their lands or other assets, and an interim injunction prohibiting the transferal, assignment, conveyance, encumbrance or other dealing with any of the assets pending a trial of the matters". The Billers have yet to file a defense, and no date has yet been set for this trial.

* See item # 6, above.


10. Frank Biller Bankruptcy (2nd)
* No news to report.


11. Michelle Biller
* See item #9, above.

* Hester Creek Winery has been sold, in which M. Biller had an interest. These assets (reputedly $400,000., plus shares in the winery) will flow to Biller Holdings, the family trust. PWC and Mckay and Co. continue in negotiations with the lawyer for Mrs.Biller (F. Shandro) to settle her involvement in her husband's Eron affairs.


12. Other Investigations -

* The ELC is working to investigate other information that may prove useful to all Eron lenders in the attempts to recover our capital. Contact James Tindle or any other member of the ELC with information you think might further this efforts-tel 438-0915 or fax 438-2795


13. Laurentian Bank & Canadian Western Trust: RRSP & RIF accounts
* No news to report.


14 .BC Securities Commission
* On September 13 the summary submissions of S. Angus (for the BCSC) and M. Skwarok (F. Bller's lawyer) were heard. See the brief synopsis prepared by Ripley for the October 5 Lenders meeting. Within the next 60 days it is likely the BCSC panel will issue its findings and any fines &/ sanctions.


15. Institute of Chartered Accountants of British Columbia-No news to report



E.L.C

Communications, Projects, Volunteers, Class Action Litigation


16. Litigation: Class Action
* A pre-trial case management conference was held before Justice Tysoe on September 15, 1999 for the purpose of scheduling the trial. The trial of the class issues has been tentatively scheduled for eight weeks commencing April 25, 2000. If the trial does not proceed in April, it will likely begin in either September 2000, or in May of 2001- all these dates being, of course, dependent upon the outcome of the Appeal Court process. Examinations for Discovery have begun of Adrienne Murray, the Deputy Registrar of Mortgage Brokers, to be followed by the examinations of Robert Hobart.

* The government of B.C.has filed for an appeal of Justice Tysoe's decision certifying the Cooper lawsuit as a class action. The B.C. Appeal Court will hear the Defendants' appeal Wednesday, December 1/ 99 at 10:00AM. The ELC encourages lenders to attend this very important judicial matter.

* General updates on this litigation process are available at the websites:www.campchurch.com and www.geocities.com/WallStreet/6380


17. 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! Recall: 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 the estate assets.

* The following information was provided to Project Leaders and lenders at the October 5 / 99 ELC-Projects & Lenders Meeting:
Oct.5 Agenda, Oct.5 Newsletter, June1 / 99 Project Leaders Meeting Minutes, BCSC Summary Submissions Synopsis, and various articles on the subject of fraud.

* For project leaders who wish to use the website for postings, please telephone / fax / email your information to Catherine Palmer. Catherine Palmer's email address is: contact@eron-pwl.com, to be distinguished from PWC's Eron website: www.eron-pwl.com

* 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


18. ELC Administration
* The ELC has begun planning for the 1999 Annual General Meeting and attendant election process for the 1999-2000 ELC. Volunteers who would be willing to help with these events should contact our Volunteers' Coordinator, Wendy Menghi, tel. 929-6003. See item # 19, below.


19. Nominations and Election of the 1999-2000 ELC
* The ELC invites all project leaders to notify their lenders to nominate individuals for the third term ELC, 1999-2000. Written nominations should be forwarded to the ELC sub-committee organizing the election, attention: Anthony Jasich (986-0419) and Erika Inacio (438-0485), c/o 4725 Glenwood Ave. North Vancouver, B.C., V7R 4G6, or fax (604) 986-0499. The cut-off date for the committee receiving the nominations is October 5 / 99,10:00PM, which is also the date of the October ELC Projects and Lenders meeting at the Legion Hall. Seven (7) positions are available to be filled. Before nominating any individual please first check with the person to learn if he/she is willing to be nominated and serve on the committee, if elected.

* Depending upon the number of nominees obtained the committee will either prepare an election ballot to be sent to all Eron lenders the week of October 11, or else the committee will recommend that the set of nominees of seven or less be accepted by acclamation at the AGM. If a vote is required and ballots need to be sent to all lenders, then the committee asks lenders to return the ballots as quickly as possible, or alternatively bring them to the annual general meeting to be counted at that time.

* The Annual General Meeting of Eron lenders will be held on November 14 at 12:00 noon-2: 00 PM, at the same location as last year: the Kitsilano Secondary School auditorium, 2550 West 10th Ave. Vancouver.


20. Volunteers
* Wendy Menghi is Head of Volunteers (tel. 929-6003, fax 924-0629). Contact Wendy with your questions about how you can help with the small, specific, manageable volunteer tasks that will contribute to your fellow lenders, your ELC committee, and yourself! THANK YOU!

* Volunteers who would be willing to help with the Annual General Meeting please contact our Volunteers' Coordinator, Wendy Menghi, tel. 929-6003.


21. Letter-Writing Campaign
* Articles about the Eron financial disaster continue to be published in the newspapers. The ELC encourages you to respond to them: write to the editors, regulatory agency officials, and politicians. See #. 22, below, point #2. Use these newspaper articles as the basis of your letters! For copies, contact S. Ripley at tel.222-1646 / fax 222-1641 Thank you!


22. Media
* James Tindle coordinates media relations for the ELC.

* The Feb. 13 & 16 / 1999 "Vancouver Sun" carried important articles, the first by David Baines, the second written by the editors, both of which suggested that, given FICOM's knowledge of Eron's non-compliance record, the B.C. Government & / the Superintendent of Mortgage Brokers had been negligent in not warning Eron lenders of the risks in dealing with Eron Mortgage Corp.


23. ELC Funding
* The ELC again thanks those individuals who have contributed various amounts up to $100. For 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 is enabled. Please send your cheque to the ELC Treasurer:

Eron Lenders Committee
c/o Anthony Jasich, "in trust",
4725 Glenwood Ave.
North Vancouver, B.C.V7R 4G6


24. ELC Treasurer's Report
* The ERC-ELC Consolidated Income Statement for Oct.3/97-Nov./98 and the ELC Financials for Nov.'98-August '99 are available from the Treasurer: Tel: A. Jasich, 986-0419, fax 986-0499.


25. ELC Legal Counsel -No news to report


26. 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 try it 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 Camp Church & geocities websites for updates on the class action lawsuit. See item # 16, above.

* 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


27. Database
* John Hall is Manager of the database; tel 876-9081 or fax 876-9082. Please send John your changes re. address, telephone, fax, email, name, Eron beneficiaries, or deceased Eron lenders.


28. Postal Communication
* PWC is sending the Revenue Canada refiling election forms to members of projects, in a project by project sequence. Later in the Fall lenders in realized projects will also be receiving, concurrently, the pay out documentation from PWC.


29. 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 (tel. 222-1646, fax 222-1641).


30. Minutes
* Minutes of the monthly ELC-Project Leaders & Lenders meetings are available to all Eron lenders. For a copy by fax please contact Steve Ripley, tel: 222-1646, fax: 222-1641, or else read them as posted on the website.


31. Calendar / Schedule
* An updated calendar to December 1 / 99 is posted on the website. Please contact Steve Ripley with suggestions for items to be included: tel.222-1646, fax 222-1641, email: sripley@imag.net


32. Next Meeting
* November 2,1999, Tuesday, at 7pm -- ELC-Project Leaders and all lenders meeting, Royal Canadian Legion Hall # 148, 4356 East Hastings St., Burnaby.For further information regarding meetings, please contact our Meetings Coordinator Martje Hartman, Tel 538-6601; also, see the ELC calendar on the website.




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