No.

du dossier

IN THE COURT OF QUEEN'S BENCH OF COURDU BANC DE LA REINEDU NO\NEAU-

NEW BRUNSWICK BRUNSWICK

TRIAL DIVISION DIVISION DE PRIi\.llERF INSTANCE

roDICLAI~ DISTRJCT OF EDMUNDSTON CIRCONSCRIP' \j JUDIClAlRE DE

BETWEEN: ENTRE:

DANIEL LEVASSEUR and EDWARD

K~ V A,~A1JGH and the parties listed in Schedule
..A'" attached hereto,

PLAINTIFFS,

-and- - et

NEW BRUNSWICK SECURITIES

CO1\.DnSSION, ED LeBLANC, RICK HANCOX,
JAKE V AN DER LAA.J\T and MARK McELMAN, 0 S MAl 1011

DEFENDANTS

NOTICE OF ACTION Wn'H STATEMENT OF AVIS DE POlJ"RSl.1JTEACCOMP AG~"t D'UN

CLAIM ATTACHED EXPOSE DE LA DF.~1A."illE
(FORM 16A) (FORMLLE 16A)

To: New BrunswickSecuritiesCommission Destinataire:

Ed LeElanc
Rick Hancox
Jake van der Laan
Mark McElman
85 CharlotteStreet,SaintJohnNB E2L 2J2

LEGAL l'ROCEEDINGS HAVE BEEN PARLE f:EPOT DE PRESENT A V1S DE

COMJ\'IENCED AGA.lNST YOU BY FIT f'""c::; POURSUUE ..\.CC'Ol\fP,.\GN£ D'UN EXPOSE
TffiS NOTICF OF ACTION. DE LA DE~-\NDf., lJ"NEPOL"'RSLTlTE
JUDIClAIRE A tTEENGAGEE CO~lRE
VOUS.

If you wIsh to defend these proceedings,eithcT
you or a New Brunswick lawyer acting on your behalf
must prepare your Statementof Defence in the fom)
prescribed by the Rul~s of Court and serve it on the
plaintiff OTthe plaintiff's lawyer at the addTess;;I.1Qwn
below and, with pToof of such service, fil£ it In this
Lour! Ot"fice together with the filing fee $50
Si vous desirez presenter une defense dans
cette instance,vous-rnemeou un avocat du Nouveau-
Brunswickcharg~devousrepresenttrdevrezrediger
un expose de yotl.c d6fcnsc cn la forme prescrite par
Ics Rcglc5 de proc6durc:-Ic 5ignificr au demandeurou
A $00 avocat 3 i-adressc iodiquee ci-dessous et Ie
deposerau greftedt: cette Cour avec un droit de depot
d~ $50 et une preuve dc sa signification;

~
 -2-
if you are servedin New Brunswick, WITHrN
(a)
20 DA Y$ after service on you of this Notice
of Action With Statement ofCla.im Attached,
or
(hi if you are served elsewhere in Canadaor in
the United States of America, WITHIN 40
DAYS after such service, or
if you are sel",'edanywhere else, WITHN
(c)
60 DAYS after such service.
If you fail to do so, you may be deemedto
have admitted any claim made against you, and
without further notice to you, JUDGMENT MA 'xTBE
GIVEN AGAINST YOU IN YOUR ABSENCE
You aTeadvised that:
you are entitled to issuedocumentsand
(a)
present evidencein the proceedingsin
Englishor Frenchor both;
the plaintiff intends to proceed in the English
(b)
language; and
.(c) your Statement of Defence must indicate the
language in which you intend to proceed.
If you pay to the plaintiff or the plaintiff s
lawyer the amolU1tof the plaintiff's claim, together
with the sum of $100 for the plaintiffs costs, within
the time you are required to serve and filc your
Statement of Defence, fu rther proceedings will be
stayed or you may apply to ilie court to have the action
dismissed-
THIS NOTICE is signed and sealed for tl1e
Court of Queen's Bench by c2arr:Jt:l. :;)'c~ C<.-f
( fup
Clerk of the Court: at Edmundston NB, on the - ~
dayof_~~ .2011.
ORIGINALSrGNEDBY
CAROL!=SOUCy
~. (cJerk)
121 Church Street
P. O. Box 5001
Fdmundsron NB E
(a) DANS L($ 20 JOt-IRSde la signification qui
vous ser:1faite du pre5ent avis de poursuite
accompdgn~d'un expose de la demande,si
ellt vous est faite au Nouveau-Brunswick ou
(b) DAl'JS I._ES40 lOURS de la signification, si
elle VOIlSest faite dans une autre region du
Canadaoudansles:Etars~Unisd'Arntriqueou
(c) DANS LES 60 JOURSde la signification,
si elle vousestfaite ail1eurs.
Si valIs cmettez de Ie taiTe,vous pourrez etre
repute avoir adrllis toute demandc formulee contre
vous cr, sansau::J~avis, J1JGEMENT POURRA ETRE
RENDU CONTRE VOUS EN VOTRE ABSENCE.
Sa~hez
(a) vous avez Ie droit dans ia presente instance,
d'Cf1-;CWI'des document'; et de presenter
votre p:'euve en fra.n~ai$.en anglais on dans
les deux tangues;
(b) Ie demw1deura I' intention d' utiliser la langue
. et
(c) I' ex:).:
l de votre defensedoit indiquerla
ItU1l:u le VDUSavez I'intention d'utiliser.
Si, clap; ;c dilai accorde pour la signification
et Ie depot de l' t:xposede yotre d~fense,vous payezau
defnandeurCOu it 5011avocat Ie montant qu'il reclame,
plus $J00 pour couvrir sesfrais, il y aura suspension
de l'instance Ou vous pourrez demander a.la cour de
rejeter !'actlon.
CEI ;lSest signt e:tscelle au nom de la
Cour du Banc la Reine par
greffier de 1.1 If a -, ce
2O_-
(g?'iffier J
 -3-

ST A TEMENT OF CLATM

1 The Plaintiff, DANIEL LEVASSEUR. is an indi'!idual wr~o resides at 745 rue

Principale, in the Town of Clair, in the Province of New Bruns\IIick.

The Plaintiff, EDWARD KA V ANAUGH: is an individual who residesat 160

KavanaughRoadin the Town of GrandFalls,in the Provinceof New Bruns~ick

3. Each of the Plaintiffs listed in Schedule"A" areinvestors(hereinafterinterchangeably

called the "Plaintiffs" or the "Investors") and eachresidesat the location opposite his/her name,in

the Province of New Brunswick.

4 The Defendant, the New Brunswick Securities C.otTh-nission

("NBSC") is a body

corporate established under section 3(1) of the Securities .4ct, R.S.~ .B. Ch. S-5.5 (the ;'Act"), having

its headoffice in Saint John.New BfW1swick.NBSC is responsiblefor the administration of the Act

and it is a designatedCrown Corporationpursuantto the Proceedings.4gainstthe CrownAct,

R.S.N.B.Ch. P-18,sec 1

5. The Defendant,Ed LeBlanc ("LeBlanc") is a senior investigaror\vith the Enforcement

Division of the NBSC, Rick Hancox("Hancox") is the Executivo:Director of the NBSC, Jake

van cler Laan ("'van cler Laan') is the Director of the Enforcement Division, Mark McElman

("McEJ.man ' is a legal coWlselof the EnforcementDivision, and at all times material these

Defendantswereservants,agentsandemployeesofNBSC

6. On or aboutMarch 8, 2011,the Plaintiffs gaveno{ice to NBSC of their intended

action in accordance with section 15(1) of the Proceedings .4gaim"( the Cro111nAct.
 -4-
NBSC is funded directly by securities market pill1iLipants U1Ioughindustry, and
7.
amounts collected from administrative penalties,disgorgementorders and settlements.At all times

material, its mandatewas to protect investors from unfair, improper or fraudulent practices and to

foster fair and efficient capital markets and confidence jn thosem::.rkt:sby the public, including the

Plaintiffs.

8.
In the years from 2006 to 2009, Cenn-e de traitement d'information de credit

("CTIC") and its relatedcompany,CITCAP GroupeFinancierInc. 'IssuingCompanies")issued

securitiesto the Investors at various times and in varying amountsby way of promissory notes.The

cumulative an10tlntinvested by the Investorswas in excessof$6-4 million andthe investmentswere

governed by the provisions of and subject to the Act.

q Patrick Gauthier ('"Gauthier"), a Quebec resident, was at all times material the

president and sole directing mind of the Issuing Companies.He and the Issuing Companiesarenow

bankrupt.

10. The loansby the Investorswere evidencedby promissorynotesfrom the Issuing

Companiesal1dwere representedby Gauthier to be used for the sole purposeof factoring when that

was in fact not true. The said notes were securities within the defimtion of sametor securities law

andfailed to meetthe requirementsof NI 45.} 06

The Defendants reviewed the:investments and actions of Gauthier wld the Issuing

Companiesfrom the spring of2006 and it was only in 2008 that the NBSC concludedthat CTIC was

not compliantwith the Act. TheNBSC concludedthat CTIC wasconductinga rami-like Scheme

by using the investmentsof the Investors to pay other prior investors but took no action to colTect

it. By the time action was taken by the Defendantsto stop it, the total investmentswere estimated

to be in excessof$14 million of which $6_4million comprised ilie investrnentsoftlle mvestors

 -5-

12 The Plaintiffs statethat the Defendantswere not led on severaloccasions,starting

in 2006, that questionable investments were being sold by CITC In July 2007, suspicion was

confiJmedand the Defendantswere advisedby Autorite desmarchesfinanciers .'AvfF"), being the

Quebec securities commission that regulates trading in securities tlle Province of Quebec that

CITC was not in compliance with Quebecsecuritieslaw

13 Initially in 2006, the Defendants' legal staff ;.mc other clilployees of NBSC

negligently concluded that CITC was in compliance with tJ-lt::A~( and neglected to actively

investigate and pursue CITC despite the warnings and kno'-"1edge iliilt there was a question as to the

need to regulate the sale of loan agreemcntsby the Issuing Comp:mies.Even in 2007 when the

Defendantsrealized they ened they did nothing to protect the Plaintiffs

14. In or about July 2007, the Defendantsconcludedthat CITC was not in compliance

with the Act and rather than take action and protect the Plaintiffs, the Defendantsand eachof them

accededto a requestby the Alv1Fnot to notify the Plaintiffs or any them or CITC of the breach

of the securities law in both Quebecand New Bl"l1nswickpending investigation by the AMP.

15 The Defendants knew or should have known the names fuid addresse:sof the Plaintiffs

(investors) and the particulars of their investmentsby July 2007 and tiley had a dut)' of care to the

said investors to warn and protect them with respect to this invesLm~ntand they deliberately and

negligently refrained from advising them of the dangerto their inVeSln1ent

and potential for loss.

16. At various times after July 2007 and prior to February2008 the Defendantsor one

or more of them contactedthe AMF to obtain information on the orlgoulg investigation ofCITC but

they negligently allowed themselvesto be put-offby the AMF without receiving details of what the

AMF had found or what stepshad beentakento deal with ( TC \\'hile at tile same timp thpv
 -6.

continuedto accedeto the repeatedrequestsof the AMF not to contf\ct investors ";0 that the AMF

investigationwould not be compromised.

17,
was threatening to \\-ithdraw all of the funds then on hand, which at that time were in excess of

$8,000,000.00. The said LeBlanc and the other Defendants failed tc. take any or adequatestepsto

freeze the funds and preserve them for the benefit of the Investors and in the premisesthe funds were

the Plaintiffs sufferedlossand damage.

In or about the month of March 2009 the Defendfuits filed a motion with the NBSC
18.
to require the Issuing Companies to produce audited financial statementswhich they had promised

to do in late 2008 but had failed to do

19. On or about Apri13, 2009, the Defendants were adv::sedby Counsel for the Isslung

Companies that they would sig)1a Consent Order with respectto the motion giving them six months

to file the audited financial statementsandthe Defendantsagreedto same.

20, Shortly after receipt of the Consent Order in April 2009, the Defendantswere advised

that Gauthierwas boastingthat he had no intentionof pro'7idingthe promisedfinancial statements

in 6 monthsor at all; that hebelievedtheNBSC wasstupidandthe i\MF wereall idiots andthat the

6 monthshe hadbeengiven to file frnancialstatementswould give him plenty of time to cleanout

the assets and accounts of the Issuing Companies. As well, the Defendants were infomled that

Gauthier claimed to have a private account in Ottawa and that some $3,000,000 had beentaken from

the accounts of the Issuing Companies since October 2008 and tl1atGauthier planned to stop making

interestpaymentsto the Investorsand would only redeemthe investmentsover a period of 4 to 5

 7.

years and the said Defendants were urged to act quickly and in1Il1ediatel)T
to freeze or causeto be

frozenthe assetsand accountsof the IssuingCompaniesbut theyt"aiJc.-dto do soby reasonof which

the Plaintiffs sufferedlossand damage.

21 On or about the 27th day of May, 2009 Gauthier and the Issuing Companic:sfiled a

voluntary proposal to creditors under the Bat1kruptcy and Insol,,-eI)cyAct, R.S. C, 985, c. B-3

("BIA ") and on Or about the 2ndday of July 2009 the proposal t'ailed and Uley \\'ere petitioned into

Bankruptcy

22 The warnings to NBSC~ and the Defendants and other agentsand employeesunknown

to the Plaintiffs at this time, were timely and had they beenactedupon with reasonablediligence,

funds would have been available to pay the I11vestorsin full. Insteadthe DefendaIlts failed to exercise

reasonablecare and diligence in carrying out 111eirduties of care tow~d the Plaintiffs and made the

decisionto do nothing to protect investorsfrom unfair, improperor fraudulen!practices.

23. The Plaintiffs plead that the Defendants owed a duty of care to the Investors to protect

them.The Defendantsknew of potentialviolations of the Act andwilfully failed to takeany action

against the Issuing Companies or their officers or directors when the); knew or should have known

of the resultantloss and damageto the Investorsif timely and coITecriveactionwasnot taken,

24 The Plaintiffs saythe Defendantsandeachof themdemof!strated

a complete

25 The Dcfendants and each of them owed the PlaIntiffs and eachof them a duty

to act in good faith and the Defendantsfailed to perform said dut), and bj- reasonthereof the

Plaintiffs suffered loss arId damage in an aggregateamoUlIt of approxjmately $5.600.000.00

~

.8-

26

as follows

(a)
Damagesin the amountof $5,600,000.00;
Interest at the rate of7% per annwn compo~mdvdmonthly from the 1st dayof
(b)
May 2007until payment;

Costs of this action on such basis as may see! just to TheCourt; and
(c)
Such further and other relief as to this Honot:.rabl~ Court seems just.
(d)

DA TED at Fredericton, NB, this FAITa Ie 20

day of May, 2011.

Eugene
- - - J. ~~
Mockler, ~
"'1Q.C.

Solicitor for the Plaintjff~

Name of lawyer for Plaintiffs Nom dr: ]'avocat du demandeur:

Eugene J. Mockler, Q.C.

Name of firm: Raison socia!e (s'il y a lieu)

E. J. Mockler, ProfessionalCorporation

Businessaddress Adres~ PfvfessionIielle

495C Prospect Street

Fredericton NB E3B 9M4
Telephone: (506) 454-8200
Facsimile: (506) 454-7300