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, as amended (the"Act") respecting Arthur Krick ("Krick") and others;

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

ANDWHEREAS Krick entered into a Settlement Agreement inwhich he agreed to a proposed settlement of 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 Krick 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 executed February 27 and 28,2002 is approved;

2.pursuant to subsection 127(1), paragraph 2, trading in any securitiesby Krick cease for 90 days commencing on the date of this Order;

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

4.the Temporary Order as against Krick no longer has any forceor 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

ANDARTHUR KRICK

 

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 ArthurKrick ("Krick") 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 Krick initiated by the Notice ofHearing in accordance with the terms and conditions set out below.Krick consents to the making of an order against him in the formattached as Schedule "A" based on the facts set out in Part IIIof 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 Krick agreewith the facts set out in paragraphs 4 through 14 of this SettlementAgreement.

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.

TheSaxton 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. Saxtonand the Offering Corporations represented to the public that theywere investing in businesses in Cuba and other Caribbean companies.

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 $37 millionfrom investors. All funds invested in the Offering Corporationshad been transferred to Saxton. At that time, KPMG held the viewthat the value of the Saxton assets, at its highest (as reportedby related companies), was approximately $5.5 million.

7.During the material time, Krick was a life insurance agent. Krickhas never been registered with the Commission under the Act totrade in securities.

8.Between February 11, 1997 and August 13, 1998, Krick sold to Ontarioinvestors securities of one or more of the Offering Corporations(the "Saxton Securities"). Krick sold the Saxton Securities toseventeen Ontario investors for a total amount sold of approximately$292,000.

9.All of the Offering Corporations were incorporated pursuant tothe laws of Ontario. Krick's sales of the Saxton Securities constitutedtrades in securities of an issuer that had not been previouslyissued.

10.None of the Offering Corporations filed a prospectus with theCommission. By selling the Saxton Securities, Krick traded insecurities, 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, Krick traded in securitieswithout being registered with the Commission and with no exemptionfrom the registration requirements being available to him.

12.Krick advised his clients that the purchase of Saxton Securitieswas a speculative investment. In most cases, Krick placed onlya small percentage of a client's portfolio in such Securities.

13.Krick received commissions of approximately $4250 on the salesdescribed in paragraph 8 above.

14.Krick co-operated with Staff in its investigation of this matter.

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

IV.TERMS OF SETTLEMENT

16.Krick agrees to the following terms of settlement:

(a)the making of an order:

(i)approving this settlement;

(ii)that trading in any securities by Krick cease for 90 days;

(iii)reprimanding Krick; and

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

V.STAFF COMMITMENT

17.If this settlement is approved by the Commission, Staff will notinitiate any other proceeding under the Act against Krick in relationto the facts set out in Part III of this Settlement Agreement.

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 by Staffand Krick (the "Settlement Hearing").

19.Counsel for Staff or Krick may refer to any part, or all, of thisSettlement Agreement at the Settlement Hearing. Staff and Krickagree that this Settlement Agreement will constitute the entiretyof the evidence to be submitted at the Settlement Hearing.

20.If this settlement is approved by the Commission, Krick agreesto waive his rights to a full hearing, judicial review or appealof the matter under the Act.

21.Staff and Krick agree that if this settlement is approved by theCommission, 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 Krick leading up to its presentationat the Settlement Hearing, shall be without prejudice to Staffand Krick;

(b)Staff and Krick 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 referred toin any subsequent proceeding, or disclosed to any person, exceptwith the written consent of Staff and Krick or as may be requiredby law; and

(d)Krick agrees that he will not, in any proceeding, refer to orrely 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 other remediesor 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 Krick until approved by the Commission, and forever, if forany reason whatsoever this settlement is not approved by the Commission,except with the consent of Staff and Krick, or as may be requiredby 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.

February27, 2002.

"Witness""Arthur Krick"

February28, 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 Arthur Krick ("Krick") and others;

ANDWHEREAS on September 24, 1998, the Commission made aTemporary Order as against Krick and others, such Temporary Orderwhich was extended by Commission Orders dated October 9, 1998and February 5, 1999 (the "Temporary Order");

ANDWHEREAS Krick entered into a Settlement Agreement inwhich he agreed to a proposed settlement of the proceedings, subjectto the approval of the Commission;

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

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

ITIS ORDERED THAT:

1.the attached Settlement Agreement executed February 27 and 28,2002 is approved;

2.pursuant to subsection 127(1), paragraph 2, trading in any securitiesby Krick cease for 90 days commencing on the date of this Order;

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

4.the Temporary Order as against Krick no longer has any force oreffect.



DATEDat Toronto this day of March, 2002



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