Issue 359: Finance
September 10-16, 1996
Hickman fights for time as Florida creditors win $4.2-million sale and seizure order
Former chair of Motion Works asking for more time to compile list of assets as pension-plan administrators launch coordinated attack
By Brent Mudry
A court battle for the assets of controversial businessman John Hickman III is heating up, five months after the would-be saviour of financially troubled software firm Motion Works Group was ousted following revelation of his involvement in financial irregularities concerning a Florida pension fund in 1990.
The latest woes of the high-rolling financier come as Hickman fights to stave off attempts to seize assets of $4.2 million in coordinated moves in courts in B.C., Texas and Idaho.
Vancouver lawyers for the plaintiff, a Palm Beach pension fund, are vigorously fighting Hickman's delay in complying with a recent B.C. Supreme Court order instructing him to file quickly a detailed affidavit listing his assets.
"With respect to your client's failure to provide the affidavit on a timely basis, we will be taking the position that he is in contempt of court," warns lawyer Mark Weintraub of Silber Weintraub in an August 27 letter to Hickman's lawyer, Bruce Quayle of Lang Michener Lawrence & Shaw.
An affidavit filed in court reveals that Hickman has too many assets and business dealings to list them all quickly. "Because the order is very broad and requires him to go through a great deal of material...the five days allowed by the order for providing the affidavit is insufficient," states Eve Lauder, Quayle's legal assistant.
Hickman's career as a Vancouver software financier ended in late March, when information about his previous financial dealings surfaced in packets of six-year-old U.S. court documents delivered to the B.C. Securities Commission and the Vancouver bureau of the Financial Post. The court papers revealed that Hickman and several companies he controlled were assessed in 1991 by a U.S. bankruptcy court for US$2.2 million owing to the pension fund of Palm Beach County Utilities Corp.
Hickman's Buffalo Capital Corp. took control of the utility in the mid-1980s and he served as its CEO before it entered Chapter 11 bankruptcy in January 1990. An unfinished Ernst & Young audit cited incomplete documentation and possible irregularities in the transfer of more than US$700,000 from Palm Beach to Buffalo Capital.
In a court-filed affidavit, Silber Weintraub legal assistant Lesley Legge claims Hickman reneged on an agreement to repay $500,000 to the pension fund in a bankruptcy reorganization plan, and failed to show up in court when the money was due.
In the affidavit, Palm Beach vice-president David Brownlee is quoted as saying that Hickman later agreed to pay US$150,000 within 60 days in a U.S. Department of Labour settlement, but ended up paying only US$135,000, stretched out over three and a half years in small payments. U.S. Secretary of Labour Robert Reich imposed a permanent ban on Hickman, barring him from ever serving in a position of trust with a federally regulated pension plan.
Hickman, who took control of Motion Works following a bitter boardroom ouster of founder Randall McCallum in 1994, never disclosed his Palm Beach dealings, the bankruptcy filing or the Department of Labour ban to officials at the Vancouver Stock Exchange or the B.C. Securities Commission. When the revelations came out in March, trading in Motion Works shares was suspended by the VSE, and Hickman and his board were forced out of the company
Securities filings show that while Hickman injected some money to help keep Motion Works afloat, his reign at the software firm was lucrative. A 1995 information circular notes that Hickman paid himself a 1995 salary of $248,000, and received $207,000 in shares and options for an additional 950,000 shares.
Court-filed documents indicate that Hickman's Palm Beach creditors quietly began to renew their pursuit of the entrepreneur in January. Days after the VSE halt in March, the Palm Beach creditors filed their Texas court judgment against Hickman and his holding companies in Idaho court, and Hickman was served on March 31.
On August 6, a B.C. Supreme Court judge issued a $4.2-million writ of seizure and sale in an ex parte proceeding, with no advance notice to Hickman's lawyers. Ten days later, Justice Glenn Parrett issued a court order freezing Hickman's assets wherever located and ordered him to provide an affidavit identifying all his assets. Court documents indicate the plaintiffs are especially interested in the 35-room mansion and 150-acre Sweet Briar estate that Hickman claimed he owned in a March 1995 BIV profile.
Both sides expect to square off in court in Vancouver in early September.*
