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Décision du Bureau de décision et de révision en valeurs mobilières - Available in French Only 

Mount Real

Background

On December 7 and 8, 2005, the Autorité des marchés financiers (the “AMF”) conducted searches in eight locations related directly or indirectly to what became known as the “Mount Real Group.” The Mount Real Group consists of more than 120 companies incorporated in different provinces, such as Alberta and Québec, and different countries, such as the United States and the Bahamas as well as Canada. It also includes directly or indirectly more than 15 individuals acting as directors or officers for these companies. Transfers of directors and officers were made repeatedly within these companies at various times.

During the searches, the AMF seized more than 350 boxes of documents as well as computer hardware and electronic equipment representing more than 41.5 gigabytes. Some of the documents were seized in the offices of a lawyer; they had to be immediately sealed and placed in the custody of a sheriff at the Montréal courthouse in order to ensure solicitor-client privilege. The obligation to place those documents under seal gave rise to a long series of motions and arguments for access made before the courts.

In November 2005, at the request of the AMF, the Bureau de décision et de révision en valeurs mobilières (BDRVM) issued various freeze and cease trade orders in respect of numerous individuals and corporations related to Mount Real.

Also in November 2005, at the request of the AMF and on the recommendation of the BDRVM, the Québec Minister of Finance appointed a provisional administrator, Jean Robillard of the firm Raymond Chabot Grant Thornton.

To proceed with an analysis of the documents seized, the AMF drew on the services of five full-time investigators for more than three years. As well, four lawyers handled the matter.

Status and update ? Prosecution of representatives

On January 24, 2007, the AMF initiated penal proceedings before the Court of Québec against 24 individuals involved at various levels in the matter of Mount Real Corporation and its subsidiaries. The AMF filed 619 charges against these individuals for:

  • acting as a securities dealer or adviser without being registered as such with the financial market regulatory authority, thereby violating section 148 of the Securities Act, R.S.Q., c. V-1.1 (the “Act”);
  • aiding, by act or omission, Mount Real Corporation, Mount Real Acceptance Corporation, MRACS Management Ltd. and Real Vest Investments Ltd. with the distribution of a form of investment governed by the Act, namely, promissory notes issued by the above-mentioned corporations, without a prospectus approved by the AMF, thereby violating sections 11 and 208 of the Act;
  • making misrepresentations to investors, thereby violating paragraph 1 of section 197 of the Act.

The individuals against whom the AMF filed charges are as follows:

Christophe Balayer Laraine Lyttle Guy Prescott Paul Quenneville
Enrico Bruni William Marston René Proteau Paul Messier Jr.
Anthony Cappellano Yves Mechaka Fayza Rifai Armando Ferruci
Éric Couture Roberto Milzi Sylvie St-Denis Carole Dorion
Luigi Muro Yves Tardif Marc-André Froment Nick Mylonakis
Jaime Lao Wan Lian Francesco Iacono Antonella Niro Victor Lacroix

The 24 representatives facing penal proceedings have been heard before the Court of Québec (see press releases below). Only one representative (Enrico Bruni) has been acquitted.

Status and update ? Prosecution of officers

On September 22, 2008, the AMF initiated penal proceedings before the Court of Québec against five officers involved at various levels in the matter of Mount Real Corporation and its subsidiaries. The AMF filed 682 charges against these individuals for:

  • aiding, by act or omission, various corporations related to Mount Real Corporation with the distribution of a form of investment governed by the Securities Act without a prospectus approved by the financial market regulatory authority, thereby violating section 11 of the Securities Act, R.S.Q., c. V-1.1 (the “Act”) (285 charges);
  • aiding in making a misrepresentation that could influence the market price and the value of securities, thereby violating section 196 of the Act (252 charges);
  • aiding in making a misrepresentation in soliciting proxies or sending a circular to security holders, in a document or information filed with the AMF or one of its agents and/or in a document forwarded or record kept by any person pursuant to the Act, thereby violating section 197 of the Act (145 charges).

The officers against whom the AMF filed charges are as follows: Lino P. Matteo, Paul D'Andrea, Joseph Pettinicchio, Laurence Henry and Andris Spura.

It should be noted that the AMF filed 308 charges against Lino P. Matteo alone, seeking penal fines of $204 million in addition to a prison term.

To date, one of the officers has pleaded guilty to the charges filed against him. Following the investigation, Paul D'Andrea offered to co-operate, admitted he was guilty, and pleaded guilty on September 18, 2008 to 131 charges.
The AMF is seeking a joint trial in this matter. The date of the trial has not yet been set.

It should be noted that since the searches conducted on December 7 and 8, 2005, the AMF has brought several motions before the Court of Québec and the Superior Court of Québec, including:

  • motions to have the documents seized turned over to an independent third party;
  • a motion to examine the documents seized;
  • a motion to lift the solicitor-client privilege;
  • a process for the disclosure of evidence.

News Releases

Reports (Available in French only)

Dossier Mount Real Corporation - La Cour autorise l'Autorité des marchés financiers à intervenir – 17 mars 2006

Decisions by the Bureau de décision et de révision (BDR) in the matter of Mount Real (Available in French only)

Décisions à l'égard des représentants

Administration provisoire

Décisions pour Laurence Henry, Investissements Real Vest Ltée, Investsafe Ltd et Mapleridge Ltd

Décisions pour Corporation Mount Real, Gestion MRACS Ltée, Investissements Real Vest Ltée, Corporation Real Assurance Acceptation et Corporation services Media Gopher

Décisions pour Corporation services de gestion Mount Real, Corporation de capital Mount Real, Marché de capitaux Mount Real Ltée, Real Readers inc. et als.

Décisions pour Corporation Mount Real, Gestion MRACS Ltée, Investissements Real Vest Ltd, Corporation Real Assurance Acceptation, Valeurs mobilières Iforum inc., Services financiers Iforum inc., Lino P. Matteo, Laurence Henry, Joseph Pettinicchio, Andris E. Spura, Paul D'Andrea, Lowell Holden, Laraine Lyttle et als.

Divers

Décisions de la Cour du Québec (Chambre criminelle et pénale), de la Cour Supérieure et de la Cour d'appel du Québec (Available in French only)