On December 17, 2008 KPMG Inc. was appointed by the Ontario Superior Court of Justice as Receiver and Manager of New Life Capital Corp., New Life Investments Inc. and various related companies.
The Ontario Securities Commission ("OSC") held a hearing in December 2011 during which OSC Staff presented evidence to a panel of commissioners (the "Panel") in support of Staff's case against Jeffrey Pogachar ("Pogachar") and Paola Lombardi ("Lombardi"). Pogachar and Lombardi chose not to attend or to testify in their own defense. Staff's allegations against Pogachar and Lombardi included that: (a) Pogachar and Lombardi perpetrated a fraud on investors by using funds raised from the sale of securities for their own personal purposes contrary to the Securities Act (Ontario) (the "Act"); (b) Pogachar and Lombardi traded securities without being registered to trade securities in accordance with Ontario securities law contrary to the Act; and, (c) Pogachar and Lombardi, being officers and directors of the corporate respondents, authorized, permitted or acquiesced in the breaches of Ontario securities law by the corporate respondents contrary to the Act. On January 20, 2012, the Panel presented an oral Ruling wherein the Panel stated its finding that Pogachar and Lombardi had breached the Act as alleged by Staff. Further, the Panel found that Pogachar and Lombardi acted contrary to the public interest. The OSC proceeding is not yet complete; the Panel will render written reasons for its Ruling in due course and subsequently, the Panel will hold a hearing to determine the sanctions to be imposed on Pogachar and Lombardi.
On January 24, 2012, the Receiver sought and obtained from the Ontario Superior Court of Justice (the "Court") an Order which effectively gives the OSC Ruling the weight of a Court Order. A copy of that Order, which includes a copy of the Ruling, is posted on this website under Court Documents.
Further to the Receiver's Updates on October 17, 2011 and November 2, 2011, the Receiver attended before the Honourable Mr. Justice Campbell of the Ontario Superior Court of Justice today. Justice Campbell granted the relief sought by the Receiver as outlined in the Receiver's Eighth Report to the Court dated October 31, 2011, including approval of: (i) the sale of the Pacific Life Policy; (ii) an increase in the Receiver's borrowing limit from $250,000 to $2,000,000; (iii) the Receiver's proposed repayment of $180,000 to one investor in the Capital Advantage Program on the basis that the funds advanced by the investor constitute trust funds; and, (iv) the Receiver's conduct, activities and statements of receipts and disbursements as presented in the Eighth Report. The Court Order dated November 14, 2011 and the supporting Endorsement of Justice Campbell are posted under Court Documents.
At the request of Representative Counsel, the Receiver has posted a further Notice to Investors under Communications From Representative Counsel.
The Receiver has scheduled a motion for November 29, 2011 at which time the Receiver will request the Court's approval of: (i) the Receiver's fees and disbursements to September 30, 2011; (ii) the Receiver's Canadian counsel's fees and disbursements to September 30, 2011; and, (iii) the Receiver's Bahamian counsel's fees and disbursements to November 7, 2011. In support of such motion, the Receiver has posted: (i) under Court Documents, affidavits submitted by representatives of the Receiver, the Receiver's Canadian counsel and the Receiver's Bahamian counsel; and, (ii) under Receiver's Reports, the Receiver's Ninth Report to the Court dated November 8, 2011.
At the request of Representative Counsel, the Receiver has posted, under Communications From Representative Counsel, audio recordings of Representative Counsel's conference call with investors held on November 7, 2011 and Representative Counsel's Notice to Investors dated November 8, 2011.
The Receiver has been advised by Representative Counsel that it will be speaking to investors about the possibility of funding an offer for the Pacific Life Policy. The Receiver has already accepted an offer for the sale of the Pacific Life Policy and will be seeking the Court's approval of the sale on November 14, 2011. The Receiver is not involved in discussions with Representative Counsel and the investors regarding the possible competing offer for the Pacific Life Policy. For further information see Representative Counsel's letter to investors dated November 2, 2011 which is posted below under Communications From Representative Counsel.
The Receiver issued its Eighth Report to the Court (the "Eighth Report") on October 31, 2011. A copy of the Eighth Report has been posted on this website under the section titled "Receiver's Reports". Unless otherwise indicated, capitalized terms used in this Update are as defined in the Eighth Report.
As previously advised, the Receiver has scheduled a motion returnable November 14, 2011, at which time the Receiver will seek certain relief, including approval of the following: (i) the sale of one Policy (the "Pacific Life Policy"); (ii) an increase in the Receiver's authorized borrowing limit from $250,000 to $2,000,000; and, (iii) the Receiver's recommendation that the funds advanced by one investor in the Capital Advantage Program be treated as trust funds (the "Advantage Trust Claim") and that the Receiver be authorized to repay to that investor the sum of $180,000 in full satisfaction of the investor's claim in the New Life estate.
In connection with (iii) above, the Receiver has written a letter dated October 31, 2011 to all of the investors in the Capital Advantage Program advising, among other things, of the Receiver's recommended course of action with respect to the Advantage Trust Claim. A copy of the aforementioned letter has been posted on this website under the section titled "Notices to Stakeholders".
In the Eighth Report, the Receiver provides information on various matters, including: (i) the status of the Portfolio; (ii) the sales processes conducted by the Receiver in 2009 and 2011; (iii) the acceptance of an offer for the Pacific Life Policy; (iv) the Receiver's current cash position and projected cash requirements; and, (v) the status of the Receiver's efforts to recover and realize upon assets in the New Life estate, in particular the status of the going legal proceedings in the Bahamas and the Receiver's efforts to sell the Bahamian Condo.
As set out in recent Notices posted on this website with respect to the possible lapse of Policies, the Receiver continues to experience a critical shortage of cash and thus the Receiver's ongoing ability to continue the payment of premiums is in doubt. In the Receiver's view, the sale of the Pacific Life Policy is the only viable source of cash available in the near term. The proceeds from this transaction would enable the Receiver to make premium payments for several months, as explained in greater detail in the Eighth Report.