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 section 127of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act")respecting Ernest Kiss ("Kiss") and others;

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

ANDWHEREAS Kiss entered into a Settlement Agreement in whichhe 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 Kiss 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 28 and March1, 2002 is approved;

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

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

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

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

ANDERNEST KISS


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 ErnestKiss ("Kiss") permanently or for such time as the Commission maydirect; 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 Kiss initiated by the Notice of Hearingin accordance with the terms and conditions set out below. Kissconsents to the making of an order against him in the form attachedas Schedule "A" based on the facts set out in Part III of thisSettlement 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 Kiss 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.Kiss has never been registered with the Commission under the Actto trade in securities.

8.Between 1996 and 1998, Kiss sold to Ontario investors securitiesof one or more of the Offering Corporations (the "Saxton Securities").Kiss sold the Saxton Securities to three Ontario investors, eachof whom he knew personally, for a total sold of approximately$100,000.00.

9.All of the Offering Corporations were incorporated pursuant tothe laws of Ontario. Kiss' 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, Kiss traded in securities,which trades were distributions, without a prospectus being filedor receipted by the Commission and with no exemption from theprospectus requirements of Ontario securities law being available.

11.Further, by selling the Saxton Securities, Kiss traded in securitieswithout being registered with the Commission and with no exemptionfrom the registration requirements being available to him.

12.Kiss received commissions of approximately $5000.00 on the salesdescribed in paragraph 8 above.

13.Kiss co-operated with Staff in its investigation of this matter.

14.Kiss' conduct in selling the Saxton Securities was contrary tothe public interest.

IV.TERMS OF SETTLEMENT

15.Kiss agrees to the following terms of settlement:

(a)the making of an order:

(i)approving this settlement;

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

(iii)reprimanding Kiss; and

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

V.STAFF COMMITMENT

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

VI.APPROVAL OF SETTLEMENT

17.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 Kiss (the "Settlement Hearing").

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

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

20.Staff and Kiss agree that if this settlement is approved by theCommission, they will not make any public statement inconsistentwith this Settlement Agreement.

21.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 Kiss leading up to its presentationat the Settlement Hearing, shall be without prejudice to Staffand Kiss;

(b)Staff and Kiss 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 Kiss or as may be requiredby law; and

(d)Kiss agrees that he will not, in any proceeding, refer to or relyupon 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

22.Except as permitted under paragraph 18 above, this SettlementAgreement and its terms will be treated as confidential by Staffand Kiss 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 Kiss, or as may be requiredby law.

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

VIII.EXECUTION OF SETTLEMENT AGREEMENT

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

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

February28, 2002.

"Witness""Ernest Kiss"

_____________________________________________________

WITNESS ERNEST KISS



March1, 2002. STAFF OF THE ONTARIO

SECURITIES COMMISSION



"Michael Watson"

______________________________

MICHAEL WATSON

Director, Enforcement Branch

 



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 Ernest Kiss ("Kiss") and others;

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

ANDWHEREAS Kiss entered into a Settlement Agreement in whichhe 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 Kiss 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 28 and March1, 2002 is approved;

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

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

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

DATEDat Toronto this day of , 2002



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