An internal investigation by Hucamp Mines (YHU-V) has turned up some serious irregularities in the company’s cash and investment accounts with Rampart Securities, a wholly-owned brokerage subsidiary of Rampart Mercantile (YRH-V).
On Aug. 14, 2001, the Investment Dealers Association and the Ontario Securities Commission suspended the registration of Rampart Securities and froze all of its clients’ accounts. Then, on Oct. 24, the Ontario Superior Court issued a receiving order granting a request from the Canadian Investor Protection Fund that Rampart be placed in bankruptcy. The court appointed Ernst & Young as trustee in bankruptcy. Rampart Mercantile is in the process of winding down Rampart Securities.
The irregularities, noticed by Hucamp management on receipt of statements of account from the trustee, involve the unauthorized transfer of about $2.3 million from Hucamp’s accounts to other unrelated accounts at Rampart. Hucamp also said there are indications that unauthorized guarantees, in the name of Hucamp, were delivered to unrelated accounts at Rampart.
Hucamp has notified the trustee that the account statements do not agree with their own records and has demanded that the trustee reverse the unauthorized transfer. Hucamp has also told Ernst & Young that the company’s directors did not authorize the execution and delivery of any guarantees.
Hucamp has yet to hear from Ernst & Young, and doesn’t know when its cash and investments will be released. The company is considering its options, including legal proceedings.
Hucamp’s chairman and CEO John Illidge is currently a vice chairman of Rampart Mercantile. Patricia McLean, corporate secretary and a Hucamp director, acts as a consultant to Rampart Securities.
In related news, SLMsoft.com (ESP-T), a developer of electronic payment systems, has discovered similar irregularities in its accounts with Rampart Securities. SLM management says that about $6.3 million has been transferred from its accounts at Rampart to two unrelated accounts within Rampart without its consent. The company has demanded that the transfer be reversed. SLM awaits a reply from Rampart’s trustee.
Illidge is also on SLM’s board of directors. SLM’s CFO, Dev Misir is also a member of Rampart Mercantile’s board of directors.
None of the parties were immediately available for comment. Neither Hucamp nor SLM is certain as to the losses, if any, they will suffer.
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