Ontario Securities Commission
IN THE MATTER OF THE SECURITIES ACT R.S.O. 1990, c. S.5, AS AMENDED
- AND -
IN THE MATTER OF JAMES PATRICK BOYLE, LAWRENCE MELNICK AND JOHN MICHAEL MALONE
Motion Hearing: February 23 and 27, 2006
Panel: Paul M. Moore, Q.C. - Vice-Chair (Chair of the Panel) Robert W. Davis, FCA - Commissioner Carol S. Perry - Commissioner
Counsel: Yvonne B. Chisholm - For Staff of the Ontario Securities Commission Joseph Groia, Gavin Smyth, Cullen Price, Alistair Crawley - For James Patrick Boyle John A. Fabello, Andrew Gray - For Lawrence Melnick
REASONS AND ORDER
The Motion
1On February 23 and 27, 2006, the respondents James Patrick Boyle ("Boyle") and Lawrence Melnick ("Melnick") sought an order dismissing the proceeding against the respondents on the basis that this proceeding was brought out of time in view of section 129.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act").
2The Statement of Allegations and the Notice of Hearing were issued on August 5, 2005. Therefore, the relevant limitation date is August 5, 1999.
The Issues
3The issues that we have to determine on the motion are as follows:
(a) Were payments received by Boyle or Melnick after August 5, 1999, and allegedly derived from sales of shares to broker dealers, part of the alleged course of conduct?
(b) Were sales in private transactions involving shares of Complex and Nucanolan, or certain transfers of shares of Complex or Nucanolan, in both cases after August 5, 1999, but in either case not involving broker dealers,
(i) part of the alleged course of conduct, or
(ii) when considered in isolation, alleged to constitute trading by the respondents without registration, or to be illegal distributions, or instances of improper or abusive reliance on exemptions from the registration or prospectus requirements of the Act?
(c) Should a hearing on the merits in this matter take place before we make a decision on the motion?
Allegations Relevant to the Motion
4Staff alleges in the Statement of Allegations that Boyle was the principal architect of a "course of conduct" involving the shares of three Ontario issuers: Complex Minerals Inc. ("Complex"), Nucanolan Resources Corp. ("Nucanolan"), and GoldMint Explorations Ltd. ("GoldMint"). Boyle allegedly conceived and designed transactions which he executed primarily through nominees and accommodation parties (the "Nominee Shareholders"), including friends, associates and members of his family.
5It is alleged that Melnick and Malone acted in concert with Boyle.
6Staff alleges that the respondents engaged in unregistered trading and authorized or facilitated unlawful distributions of shares of Complex, Nucanolan and GoldMint in a series of transactions. It is alleged that the predominant purpose of the unlawful trading and distributions was to create tradeable securities for sale to the public. It is alleged that the