Requisition forms continue to pour in at
rate of 100 per day
(not counting any that are being turned
in to Manitoba Federation of Labour)
Several developments in the battle between Crocus shareholders
and the receiver, Russ Holmes, to wrest control of Crocus from the
hands of the receiver, occurred today.
In a fax sent to me this afternoon Holmes indicated that he will
decide by 5:00 pm Wednesday whether or not to turn over a list of all
Crocus shareholders to the Crocus Investors Association. (Normally any
shareholder is allowed to see a list of all other shareholders in a corporation.
In Crocus's case, beginning with former acting CEO Alfred Black, all
requests to see the list have been denied.)
The list may prove to be important to Crocus shareholders in
the drive to collect 1700 names on "requisition" forms which will force
the receiver to call a special meeting whose purpose would be to vote
on the GrowthWorks proposal.
At the present time, forms are continuing to pour in, but it
is by no means certain that the necessary number of names will be collected
prior to March 29, which is an all-important court date. (On March 29
the receiver is hoping that the court will give permission for him to
begin distributing $1 per share to every Crocus shareholder. The Crocus
Investors Association is taking the view that the $1 distribution is unnecessary
and a needless expense, since the GrowthWorks proposal includes a plan
to distribute $1.50 per share, along with what is likely to be $4.43 in
shares in the GrowthWorks Canadian Fund.) Our association will be asking
the court to order the receiver to withold any distribution of funds and
to order a special meeting of the shareholders to vote upon the GrowthWorks
proposal instead.
For those of you whose heads are spinning with all the twists
and turns in the battle over Crocus, let me put it to you in a nutshell:
What we have now is a receiver fighting desperately to maintain control
over Crocus so that he can continue to charge exorbitant fees (coming
out of the fund). Can anyone blame him for refusing to consider any proposal
that would take this jampot away from him? Let's call a spade a spade,
Russ: We aren't going to be submitting a "request" from shareholdes to
you imminently. It's going to be a "requisition" which, in effect, is
an order to call a meeting. You can continue to put up all the resistance
that you want, but you can make things a lot simpler by admitting that the
tide has turned overwhelmingly against you (not that it was ever very much
for you; unfortunately, when the former board of Crocus resigned en masse
on June 30, appointing a receiver was the only available option.)
Now that GrowthWorks has submitted a very good offer to shareholders
and has said that their proposal no longer requires us to drop our
class-action lawsuit, a good deal is out there for the taking. Unfortunately,
as with most things associated with Crocus over the years, it seems that
the last thing on the minds of anyone involved in running Crocus has
been what's good for the shareholders. Just ask James Umlah - my nominee
for Crocus character with the most chutzpah. Russ, don't try and
knock Jimmy from his throne.
The Manitoba Federation of Labour announced today that
it, too, was calling upon Crocus shareholders to sign the requisition
forms calling upon the receiver to convene a special general meeting
of Crocus shareholders.
This move will probably insure that we obtain the minimum number
of signatures necessary to force the receiver to call a meeting for
the purpose of voting on the GrowthWorks proposal.
As much as I applaud the M.F.L. move, however, I wish to make
it clear that I had no prior knowledge of what the M.F.L. had planned,
nor is the M.F.L. working in concert with the Crocus Investors Association.
As a matter of fact I received an angry e-mail this morning from a Crocus
shareholder wanting to know why I was now co-operating with the M.F.L.
(For those of you who don't know, the M.F.L. was the "sponsor" of the
Crocus Fund. Don't ask me to explain what "sponsor" means, because it
sure doesn't mean that they were concerned about the shareholders' interests.)
I hope the M.F.L.'s contribution to our fight proves successful,
but at the same time, I don't want them to think for a moment that
shareholders are willing to forgive the huge role they played in getting
us into the mess. Yes, they're trying to make amends for their past
mistakes - this is a start, but that's all it is.
I received a tip today that the receiver for Crocus,
Deloitte & Touche, is preparing a massive mail-out to all Crocus
shareholders. No doubt, D & T is frantically preparing a counterattack
to the GrowthWorks offer. We are likely to see some sort of piece extolling
D & T and how much they are doing for the shareholders.
Question for Russ Holmes (the receiver): How much has been
paid out in fees since Dec., 2004 to all the myriad consultants, accountants,
lawyers and other scavengers who have attached themselves to the Crocus
file? We are told the bill is close to $3 million - all out of Crocus
shareholders' pockets. No wonder you and all the lawyers who are acting
for the various defendants want to hang on to this baby. At $800 an hour
(which is what some of the lawyers are charging), you're all going to milk
this sucker for what it's worth, aren't you?
Crocus investee companies getting ready
to support GrowthWorks proposal?
One of the aspects of this entire Crocus imbroglio that
has not received much attention in the media is the effect that Crocus's
troubles have had upon the 50 companies that are still part of the
Crocus portfolio.
According to the CEO of one of those companies, with whom I
spoke following Wednesday's shareholders' meeting, even the companies
that are still performing well are stigmatized by their association with
Crocus. Some have had difficulty with their banks, while most have
had very many problems working with the receiver for Crocus.
As a result, it was this CEO's contention that the vast majority
of Crocus investee companies would be only too glad to see GrowthWorks
take over from the receiver.
I asked him whether he would be willing to go public with his
concerns and whether he would urge other heads of investee companies
who share similar opinions to do likewise.
I was told that they would. Let's see what develops on this
front.
New lead lawyer David Klein gives views on class-action
lawsuit
The meeting opened with the introduction of the new legal
team. David Klein spoke to the audience about how he intends to pick
up on the work already done by the previous legal team. Klein stated
that he intends to amend the statement of claim, which was filed in July,
2005, to include all Crocus shareholders as parties to the lawsuit. (Under
the previous statement of claim only those shareholders who had purchased
their shares in the years 2000-2004 would have been eligible to participate
in the lawsuit.
Klein also said that he will be spending the next few
weeks closely examining the possibility of adding the Province of
Manitoba to the list of defendants. It is his view, he said, that
the province should be added since it clearly ignored a multitude of
"warning signs" and "red flags" that should have alerted government
officials to the realization that the Crocus Fund was in terrible trouble
long before sale of shares in the fund were frozen in December, 2004.
Following his remarks Klein answered a number of questions
from audience members. Several shareholders wanted to know how the
GrowthWorks offer to purchase Crocus affected the lawsuit. Klein said
that he wasn't sure yet what effect the GrowthWorks offer would have,
but the lawsuit would continue apace.
Levi suggests price of $5.93 per share is possible
Following Klein's remarks and the question and answer
session, David Levi, CEO of Growthworks, launched into a detailed presentation
of the offer GrowthWorks was making to Crocus shareholders. The offer had
several components, chief among which was an assurance that Crocus investors
would receive no less than $70 million in total for their shares with the
prospect that they might receive considerably more.
According to Levi, if shareholders were to vote to accept
the offer from GrowthWorks, a valuation process would commence following
acceptance of the offer during which both the assets of Crocus and the
assets of the GrowthWorks Canadian Fund would be valuated. If the assets
of Crocus were found to be worth what the receiver said they were worth,
which is $85 million, then Levi said that Crocus shareholders would receive
a payment of $5.93 per share. The payment would be made up of an immediate
cash payment of $1.50 for every share that each shareholder owned, along
with shares in the GrowthWorks Canadian Fund equivalent to $4.43 of value.
Further, the GrowthWorks offer holds out the prospect that
all Crocus shareholders would be able to redeem their shares in the
new fund that would result from the merger of Crocus and GrowthWorks
Canadian Fund prior to the normal eight year hold period and receive further
30% tax credits from the provincial and federal governments were they to
reinvest in the Growthworks Fund.
Levi did admit that many components of his offer are predicated
upon receiving approval from the provincial government and Manitoba
Securities Commission, but he was optimistic that those approvals would
be given.
Levi stressed the importance of having shareholders sign
the requisition forms that were distributed at the meeting and, for
those shareholders who weren't able to attend, mailing or faxing the
forms into the address given on the form.
Fresh news...finally
Posted Feb. 25/06
I know, I know - I haven't kept this website
up-to-date. Many readers of this site have been after me to update
it. Why haven't I done it more quickly? Well, the honest answer
is that I created this site in September/04 to try and alert people
to the Crocus scandal. At that time, it was just beginning to dawn on
most of the public that something was wrong at Crocus.
Now, a full year and a half later, so much has
happened that I hardly need to be sounding the alarm any more. We've
gone through a wild ride with Crocus and their good friends in the
NDP government (although to listen to Gary Doer you'd think that he
and Kostyra never had all those many meetings with Sherman Kreiner
where they were thinking up ways to keep Crocus propped up at the expense
of its shareholders.)
So, where are we now? We've just gone through a turbulent
month where our lawyers found themselves booted off the case by
a judge who deemed practically anyone who had ever heard of our number
one nemesis, namely Hollywood Umlah, to be in a conflict of interest.
Not only did we lose Paul Walsh and his incredibly hard working associate
David Soper, we also lost Harvin Pitch and his entire Toronto team. I
don't mind admitting it was a tough pill to swallow. Robert Tapper must
have been crowing about his fantastic achievement to anyone who would
listen.
I've got news for you, Robert. We've got new lawyers
and boy, have we got some ringers. You see, Robert, this case has
attracted a fair bit of attention, don't you think? As a result, we
had no problem finding a law firm with vast experience in the field
of class action litigation. As a matter of fact, there were several national
firms that were competing with one another to take over this case. Remember,
no one on our side will get paid a cent unless we win. Doesn't that tell
you something about how solid the experts think our case is? (Of course,
Gary Doer doesn't have a thing to worry about, does he? If anyone was hoping
that we'd just fade away and forget about how our self-righteous government
didn't do a damn thing to protect us when it knew full well that Crocus
was on the verge of collapsing, it's Gary and his faithful fixer, Eugene
Kostyra.)
In addition to the superbly qualified national firm
that we now have representing us, we also have two very local experienced
local lawyers, neither of whom is "conflicted" in any way. (I love
that term: "conflicted". Somehow it has a religious connotation to
it, don't you think?)
Anyway, here's the full text of a press release I issued
to the media today:
Crocus shareholders announce
hiring of new lawyers in class action lawsuit
The Crocus Investors Association today announced that
its new legal team is now in place.
One month ago the lawyers representing Crocus Investment
Fund shareholders in their class-action lawsuit against officers
and directors of the Crocus Fund, as well as the firm’s auditors,
underwriters and the Manitoba Securities Commission, were removed
from the case in a decision by Justice Shawn Greenberg.
Justice Greenberg had concluded that Crocus investors’
lawyer Paul Walsh was in a conflict of interest because he had once acted
for Crocus’s former Chief Investment Officer James Umlah, even though
it was many years ago, and in matters that had nothing to do with the
current class-action lawsuit. Greenberg noted that Walsh may have special
knowledge about Umlah’s assets that would help Walsh’s clients (the
shareholders) if a judgement were to be awarded against Umlah. She also
ruled that Toronto lawyer Harvin Pitch was tainted because of his connection
to Walsh.
Immediately upon release of the judge’s ruling the Crocus
investors set out to contact the best lawyers available who could
step in to fill the void left by the exclusion of Walsh and his firm,
along with Pitch and his firm.
Although it hasn’t been easy to find Winnipeg lawyers
who have had no professional relationship with any of the defendants
named in the lawsuit, or who are not already acting for any of the
defendants, we are now pleased to announce that we have found lawyers
who are not only eminently qualified to take over the case - they are
eager and enthusiastic to do so.
The lawyers are:
David Klein of the firm Klein Lyons, which has
offices in Vancouver and Toronto, will take over from Harvin Pitch
in guiding the lawsuit along. Klein, a former Winnipegger (as was
Pitch) has a phenomenal track record of success in class actions.
Following is a brief description of his career:
David Klein is one of Canada's top class action lawyers.
He has won over $200 million for thousands of victims in a wide range
of landmark lawsuits including several securities mispresentation
class actions.
Mr. Klein has represented plaintiffs in over 20 class
action lawsuits across Canada including the first class actions
certified in British Columbia, Manitoba, and Newfoundland & Labrador.
He was President of the Trial Lawyers Association of British Columbia
in 1998-99. Mr. Klein is a member of the British Columbia, Ontario
and Washington State bars.
His firm’s website is http://www.kleinlyons.com.
Joining Klein and his associates will be well-known
Winnipeg lawyer
Jay Prober, who has years of experience in
a wide number of areas of the law. Not only is Jay an outstanding
criminal defencel awyer, he also served as counsel to the Churchill
Forest Industries Royal Commission of Inquiry - an episode in Manitoba’s
history that bears a fascinating resemblance to the Crocus scandal. (See
http://www.crocusfundalert.com for a detailed examination of the similarities
between the CFI scandal and the CIF scandal.)
Jay was also counsel to the Stopplel family during the
Thomas Sophonow inquiry; counsel to the Air Canada inquiry (Gimli
glider); and had also successfully defended Sargent Mike Kipling in
Sargent Kipling’s court marital for refusing to take an anthrax vaccinatiion
prior to the first Gulf war.
Jay can be reached at his office at 957-1205 or at his
residence at 284-6862.
Assisting Jay will be
Norman Boudreau of the
firm Booth Dennehy. Jay and Norman have worked together on many
previous cases. Norman represented Thomas Sophonow during the Sophonow
inquiry and successfully sued the Manitoba government for $1 million.
Norman will be involved in representing Crocus shareholders
in various proceedings in court, some of which are slated to occur
as early as March. Norman can be reached at his office at 957-1717,
e-mail: nboudreau@boothdennehy.com
Together, these fine legal minds are ready to step immediately
into the void that was left as a result of Justice Greenberg’s unexpectedly
sweeping judgement. The shareholders will not be asking for any
postponement of proceedings. We are ready to resume the fight to
achieve fair compensation for shareholders who, unknowingly and
through no fault of their own, have been victimized by what went on
at the Crocus Fund for years.
Crocus shareholders (as well as the media) will have
the opportunity to hear from and speak personally with these three
lawyers at a meeting of Crocus shareholders that will be held Wednesday,
March 8 at the Victoria Inn, 7:30 pm.
Sorry to disappoint all the lawyers
for the other side - you thought you hit a home run, but it turned
into a foul ball.