Atlas Financial Holdings, Inc V.AFH

Lawsuit......it's just the beginning!

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Ashlar Financial Services Corp., a now-defunct collection agency, repaid most of an $800,000 debenture in 2001 that was not its liability, according to a lawsuit made public Tuesday in B.C. Supreme Court. The target of the suit is Vancouver businessman Ken Hallat, who sat on the board of Sleeman Breweries Ltd. until its October, 2006, takeover. He allegedly benefited when somebody fraudulently moved the debenture from an insolvent company to Ashlar. Ashlar started as a private transportation venture in 1995. It went public in 2000 when it did a reverse takeover with Brier Resources Corp., then a mining junior trading on the Canadian Venture Exchange. The company reported annual revenue of $16,599,486 at the time of the RTO. Ashlar Financial was a two-year promotion, delisting in 2003 after regulators suspended the stock over concerns with its financial results. The company pledged to make new filings, but was eventually placed into receivership and delisted. It appears to have never disclosed any dealings with Mr. Hallat. Tuesday's lawsuit was filed by Maana Enterprises Inc. and Intercon Capital Inc., two private companies trying to recover Ashlar's assets. According to the suit, Ashlar Financial Services had an $800,000 debenture on its books that should not have been there. The company repaid much of it in 2001 and 2002, but the suit says it was never a liability. The holder of the debenture was Novas Capital Corp., a private company Mr. Hallat controls. Novas lent money to Ashlar Financial Corp., a company that became insolvent in 1998, the suit claims. Evidently Mr. Hallat demanded repayment after somebody "fraudulently moved" the debenture from the old Ashlar to the public Ashlar. Ashlar Financial started making payments in October, 2001, and had paid $750,000 before it collapsed in August, 2002. Apparently the company also paid $496,043 in interest. It seems the alleged fraud was not discovered until accountants for Maana and Intercon started poking around Ashlar's books. Maana and Intercon are asking for $1,246,043 plus damages and costs. They are represented by Bob Breivik. Mr. Hallat has not responded to the allegations and they have not been proven in court. Mr. Hallat has served on several boards, including Sleeman Breweries Ltd., Rent-A-Wreck Industries Corp. and Sun-Rype Products Ltd. A number of public companies list him as a shareholder. He is also on the board of the B.C. Sports Hall of Fame and Museum Foundation and holds an MBA from the University of British Columbia.