Securities Law & Instruments

INTHE MATTER OF

THESECURITIES ACT,

R.S.O.1990, c. S.5, AS AMENDED

AND

INTHE MATTER OF

ROBERTTHOMISLAV ADZIJA, LARRY ALLEN AYRES, DAVID ARTHUR

BENDING,MARLENE BERRY, DOUGLAS CROSS, ALLAN JOSEPH DORSEY,

ALLANEIZENGA, GUY FANGEAT, RICHARD JULES FANGEAT, MICHAEL

HERSEY,GEORGE EDWARD HOLMES, TODD MICHAEL JOHNSTON, MICHAEL

THOMASPETER KENNELLY, JOHN DOUGLAS KIRBY, ERNEST KISS,

ARTHURKRICK, FRANK ALAN LATAM, BRIAN LAWRENCE, LUKE JOHN

MCGEE,RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK, NORMAND

RIOPELLE,ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

ORDER

(Subsection127(1))

WHEREASon September 24, 1998, the Ontario Securities Commission(the "Commission") issued a Notice of Hearing pursuant to section127 of the Securities Act, R.S.O. 1990, c. S.5, asamended (the "Act") respecting Ron Masschaele ("Masschaele")and others;

ANDWHEREAS on September 24, 1998, the Commission madea Temporary Order as against Masschaele and others, such TemporaryOrder which was extended by Commission Orders dated October9, 1998 and February 5, 1999 (the "Temporary Order");

ANDWHEREAS Masschaele entered into a Settlement Agreementdated February 28, 2002 in which he agreed to a proposed settlementof the proceedings, subject to the approval of the Commission;

ANDUPON reviewing the Settlement Agreement and the Statementof Allegations of Staff of the Commission and upon hearing submissionsfrom Masschaele and from Staff of the Commission;

ANDWHEREAS the Commission is of the opinion that it isin the public interest to make this Order pursuant to subsection127(1) of the Act;

ITIS ORDERED THAT:

1.the attached Settlement Agreement dated February 28, 2002 isapproved;

2.pursuant to subsection 127(1), paragraph 2, trading in any securitiesby Masschaele cease for 6 months commencing on the date of thisOrder;

3.pursuant to subsection 127(1), paragraph 6, Masschaele is reprimanded;and

4.the Temporary Order as against Masschaele is no longer of anyforce or effect.

March4, 2002.

"PaulMoore"   "R. Stephen Paddon"   "K.D. Adams"



INTHE MATTER OF

THESECURITIES ACT,

R.S.O.1990, c. S.5, AS AMENDED

AND

INTHE MATTER OF

ROBERTTHOMISLAV ADZIJA, LARRY ALLEN AYRES, DAVID ARTHUR

BENDING,MARLENE BERRY, DOUGLAS CROSS, ALLAN JOSEPH DORSEY,

ALLANEIZENGA, GUY FANGEAT, RICHARD JULES FANGEAT, MICHAEL

HERSEY,GEORGE EDWARD HOLMES, TODD MICHAEL JOHNSTON, MICHAEL

THOMASPETER KENNELLY, JOHN DOUGLAS KIRBY, ERNEST KISS,

ARTHURKRICK, FRANK ALAN LATAM, BRIAN LAWRENCE, LUKE JOHN

MCGEE,RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK, NORMAND

RIOPELLE,ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

SETTLEMENTAGREEMENT BETWEEN

STAFFOF THE ONTARIO SECURITIES COMMISSION

ANDRON MASSCHAELE

 

I.INTRODUCTION

1. ByNotice of Hearing dated September 24, 1998 (the "Notice of Hearing"),the Ontario Securities Commission (the "Commission") announcedthat it proposed to hold a hearing to consider, among other things:

(a)whether, pursuant to subsection 127(1) of the Securities Act,R.S.O. 1990, c. S.5 (the "Act"), it is in the public interestfor the Commission to make an order that the exemptions containedin Ontario securities law do not apply to the respondent Ron Masschaele("Masschaele") permanently or for such time as the Commissionmay direct; and

(b)such other orders as the Commission deems appropriate.

II.JOINT SETTLEMENT RECOMMENDATION

2.Staff of the Commission ("Staff") agrees to recommend settlementof the proceeding respecting Masschaele initiated by the Noticeof Hearing in accordance with the terms and conditions set outbelow. Masschaele consents to the making of an order against himin the form attached as Schedule "A" based on the facts set outin Part III of this Settlement Agreement.

III.STATEMENT OF FACTS

Acknowledgement

3.Solely for the purposes of this proceeding, and of any other proceedingcommenced by a securities regulatory agency, Staff and Masschaeleagree with the facts set out in paragraphs 4 through 15 of thisSettlement Agreement.

Facts

4.Saxton Investment Ltd. ("Saxton") was incorporated on January13, 1995. Alan Eizenga ("Eizenga") was Saxton's registered director.Saxton and Eizenga established numerous offering corporations,as listed below (the "Offering Corporations").

TheSaxton Trading Corp.

TheSaxton Export Corp.

TheSaxton Export (II) Corp.

TheSaxton Export (III) Corp.

TheSaxton Export (IV) Corp.

TheSaxton Export (V) Corp.

TheSaxton Export (VI) Corp.

TheSaxton Export (VII) Corp.

TheSaxton Export (VIII) Corp.

TheSaxton Export (IX) Corp.

TheSaxton Export (X) Corp.

TheSaxton Export (XI) Corp.

TheSaxton Export (XII) Corp.

TheSaxton Export (XIII) Corp.

TheSaxton Export (XIV) Corp.

TheSaxton Export (XV) Corp.

TheSaxton Export (XVI) Corp.

TheSaxton Export (XVII) Corp.

TheSaxton Export (XVIII) Corp.

TheSaxton Export (XIX) Corp.

TheSaxton Export (XX) Corp.

TheSaxton Export (XXI) Corp.

TheSaxton Export (XXII) Corp.

TheSaxton Export (XXIII) Corp.

TheSaxton Export (XXIV) Corp.

The Saxton Export (XXV) Corp.

TheSaxton Export (XXVI) Corp.

The Saxton Export (XXVII) Corp.

TheSaxton Export (XXVIII) Corp.

TheSaxton Export (XXIX) Corp.

TheSaxton Export (XXX) Corp.

TheSaxton Export (XXXI) Corp.

TheSaxton Export (XXXII) Corp.

TheSaxton Export (XXXIII) Corp.

TheSaxton Export (XXXIV) Corp.

TheSaxton Export (XXXV) Corp.

TheSaxton Export (XXXVI) Corp.

TheSaxton Export (XXXVII) Corp.

TheSaxton Export (XXXVIII) Corp.

5.Saxton and the Offering Corporations represented to the publicthat they were investing in businesses in Cuba and other Caribbeancompanies.

6.On or about October 7, 1998, the Court appointed KPMG Inc. ("KPMG")as the custodian of Saxton's assets. In early 1999, KPMG reportedthat the Offering Corporations had raised approximately $37million from investors. All funds invested in the Offering Corporationshad been transferred to Saxton. At that time, KPMG held theview that the value of the Saxton assets, at its highest (asreported by related companies), was approximately $5.5 million.

7.Masschaele is a former farmer and feed salesman. He has neverbeen registered with the Commission under the Act to trade insecurities. Masschaele was recruited by the respondent FrankAlan Latam ("Latam") to sell securities of one or more of theOffering Corporations (the "Saxton Securities"). Once recruited,Masschaele sold the Saxton Securities on a full time basis.

8.Between April 1997 and August 1998, Masschaele sold the SaxtonSecurities to 37 Ontario investors for a total amount sold ofapproximately $1,072,627. Of this amount, approximately $450,000was sold to members of Masschaele's family.

9.All of the Offering Corporations were incorporated pursuantto the laws of Ontario. Masschaele's sales of the Saxton Securitiesconstituted trades in securities of an issuer that had not beenpreviously issued.

10.None of the Offering Corporations filed a prospectus with theCommission. By selling the Saxton Securities, Masschaele tradedin securities, which trades were distributions, without a prospectusbeing filed or receipted by the Commission and with no exemptionfrom the prospectus requirements of Ontario securities law beingavailable.

11.Further, by selling the Saxton Securities, Masschaele tradedin securities without being registered with the Commission andwith no exemption from the registration requirements being availableto him.

12.Masschaele received commissions of approximately $53,000 onthe sales described in paragraph 8 above.

13.Masschaele informs Staff that in addition to the $450,000 referencedin paragraph 8, he and his family invested approximately $550,000in the Offering Corporations through Latam.

14.Masschaele co-operated with Staff in its investigation of thismatter.

15.Masschaele's conduct in selling the Saxton Securities was contraryto the public interest.

IV.TERMS OF SETTLEMENT

16.Masschaele agrees to the following terms of settlement:

(a)the making of an order:

(i)approving this settlement;

(ii)that trading in any securities by Masschaele cease for 6 months;

(iii)reprimanding Masschaele; and

(iv)that the Temporary Order of the Commission dated September 24,1998 as against Masschaele no longer has any force or effect.

V.STAFF COMMITMENT

17.If this settlement is approved by the Commission, Staff willnot initiate any other proceeding under the Act against Masschaelein relation to the facts set out in Part III of this SettlementAgreement.

VI.APPROVAL OF SETTLEMENT

18.Approval of the settlement set out in this Settlement Agreementshall be sought at the public hearing of the Commission scheduledfor March 4, 2002, or such other date as may be agreed to byStaff and Masschaele (the "Settlement Hearing").

19.Counsel for Staff or Masschaele may refer to any part, or all,of this Settlement Agreement at the Settlement Hearing. Staffand Masschaele agree that this Settlement Agreement will constitutethe entirety of the evidence to be submitted at the SettlementHearing.

20.If this settlement is approved by the Commission, Masschaeleagrees to waive his rights to a full hearing, judicial reviewor appeal of the matter under the Act.

21.Staff and Masschaele agree that if this settlement is approvedby the Commission, they will not make any public statement inconsistentwith this Settlement Agreement.

22.If, for any reason whatsoever, this settlement is not approvedby the Commission, or an order in the form attached as Schedule"A" is not made by the Commission:

(a)this Settlement Agreement and its terms, including all discussionsand negotiations between Staff and Masschaele leading up toits presentation at the Settlement Hearing, shall be withoutprejudice to Staff and Masschaele;

(b)Staff and Masschaele shall be entitled to all available proceedings,remedies and challenges, including proceeding to a hearing ofthe allegations in the Notice of Hearing and Statement of Allegationsof Staff, unaffected by this Agreement or the settlement discussions/negotiations;

(c)the terms of this Settlement Agreement will not be referredto in any subsequent proceeding, or disclosed to any person,except with the written consent of Staff and Masschaele or asmay be required by law; and

(d)Masschaele agrees that he will not, in any proceeding, referto or rely upon this Settlement Agreement, the settlement discussions/negotiationsor the process of approval of this Settlement Agreement as thebasis for any attack on the Commission's jurisdiction, allegedbias or appearance of bias, alleged unfairness or any otherremedies or challenges that may otherwise be available.

VII.DISCLOSURE OF SETTLEMENT AGREEMENT

23.Except as permitted under paragraph 19 above, this SettlementAgreement and its terms will be treated as confidential by Staffand Masschaele until approved by the Commission, and forever,if for any reason whatsoever this settlement is not approvedby the Commission, except with the consent of Staff and Masschaele,or as may be required by law.

24.Any obligations of confidentiality shall terminate upon approvalof this settlement by the Commission.

VIII.EXECUTION OF SETTLEMENT AGREEMENT

25.This Settlement Agreement may be signed in one or more counterpartswhich together shall constitute a binding agreement.

26.A facsimile copy of any signature shall be as effective as anoriginal signature.



February28, 2002.

"Witness""Ron Masschaele"



February 28, 2002.

STAFFOF THE ONTARIO

SECURITIES COMMISSION

"MichaelWatson"

 


Schedule"A"


INTHE MATTER OF

THESECURITIES ACT,

R.S.O.1990, c. S.5, AS AMENDED

AND

INTHE MATTER OF

ROBERTTHOMISLAV ADZIJA, LARRY ALLEN AYRES, DAVID ARTHUR

BENDING,MARLENE BERRY, DOUGLAS CROSS, ALLAN JOSEPH DORSEY,

ALLANEIZENGA, GUY FANGEAT, RICHARD JULES FANGEAT, MICHAEL

HERSEY,GEORGE EDWARD HOLMES, TODD MICHAEL JOHNSTON, MICHAEL

THOMASPETER KENNELLY, JOHN DOUGLAS KIRBY, ERNEST KISS,

ARTHURKRICK, FRANK ALAN LATAM, BRIAN LAWRENCE, LUKE JOHN

MCGEE,RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK, NORMAND

RIOPELLE,ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

ORDER

(Subsection127(1))

WHEREASon September 24, 1998, the Ontario Securities Commission (the"Commission") issued a Notice of Hearing pursuant to section 127of the Securities Act, R.S.O. 1990, c. S.5, as amended(the "Act") respecting Ron Masschaele ("Masschaele") and others;

ANDWHEREAS on September 24, 1998, the Commission made a TemporaryOrder as against Masschaele and others, such Temporary Order whichwas extended by Commission Orders dated October 9, 1998 and February5, 1999 (the "Temporary Order");

ANDWHEREAS Masschaele entered into a Settlement Agreement datedFebruary 28, 2002 in which he agreed to a proposed settlementof the proceedings, subject to the approval of the Commission;

ANDUPON reviewing the Settlement Agreement and the Statementof Allegations of Staff of the Commission and upon hearing submissionsfrom Masschaele and from Staff of the Commission;

ANDWHEREAS the Commission is of the opinion that it is in thepublic interest to make this Order pursuant to subsection 127(1)of the Act;

ITIS ORDERED THAT:

1. theattached Settlement Agreement dated February 28, 2002 is approved;

2.pursuant to subsection 127(1), paragraph 2, trading in any securitiesby Masschaele cease for 6 months commencing on the date of thisOrder;

3.pursuant to subsection 127(1), paragraph 6, Masschaele is reprimanded;and

4.the Temporary Order as against Masschaele is no longer of anyforce or effect.

DATEDat Toronto this day of March, 2002



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