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Dion worried about its multi-billion-dollar bingo deal
Dion Entertainment Corp DIO
Shares issued 52,267,597 Oct 1 close $2.50
Fri 1 Oct 99 Street Wire
by Brent Mudry
While Dion Entertainment prefers to downplay Howe Street stock promoter
Louis Dion's involvement with the company, now run by brother Leo, brother
Lou is a major player in the court petition recently filed against Border
Capital. The court action, filed Tuesday by Howe Street lawyer Rose-Mary
Liu Basham in the Supreme Court of British Columbia, features Louis Dion,
Leo Dion, MCG Millenium Capital Group, the Leo A. Dion Family Trust and
Promo Consulting as petitioners.
The named respondents include Border Capital Corp., Border Capital (Nevada)
Corp., IBC Investments, its directors Gregory Dureault, a Vancouver lawyer,
president Ottavio Boffo and Des Bosa, both Vancouver developers, Gaming
Properties & Investments LLC, Millenium Entertainment Group and Bingonet
(CY) Ltd. IBC, formerly Millenium Investments, and Bingonet are both based
offshore in Nicosia, Cyprus.
The petition seeks injunctions restraining the respondents from dealing
with IBC shares held by Border, Millenium Entertainment and Mr. Dureault,
dealing with related patents, and carrying out business of the joint
venture outside of Canada and United States, pending resolution of current
arbitration. Ms. Basham claims that Border and IBC have unilaterally
abolished the management committee of the joint venture, which comprises
"two members including Louis Dion."
Ms. Basham also claims the petitioners will suffer "irreparable harm" if
the injunctions are not granted. "The management and direction of a
potential multi-billion dollar business will be affected and interfered
with by the respondents' actions," states the petition.
The case traces back to early 1996, when IBC was the registered owner of
certain bingo software patents with the U.S. trade name BingoNet. Ms.
Basham claims that IBC, controlled by Mr. Dureault through his sole
shareholding in MEC, held the patents in trust for the Dion brothers and
Mr. Dureault. "In or about the spring of 1996, Louis Dion and Leo Dion had
extensive experience and expertise in the gaming industry and in particular
the bingo game and had extensive contacts in the gaming industry," states
the petition.
The Dion brothers' disastrous other bingo-stock promotion, Double Eagle
Entertainment, caught the attention of the Vancouver Stock Exchange later
that year. In August of 1996, the VSE vetoed a series of Double Eagle
deals. The exchange was concerned about Louis Dion's management agreement,
agreements for loans from Sodak Gaming International, a $1.5-million
private placement, the company's acquisition of the right to manage a Czech
bingo and lottery venture, and the granting of bonus shares and warrants to
Louis Dion for guaranteeing the Sodak loan.
Former broker Theresa Gortva, a close corporate assistant to Leo Dion, is
adamant that brother Lou has no current involvement with Dion
Entertainment. "Leo fired his brother several years ago," says Ms. Gortva,
a minor Howe Street legend in her own right for her past celebrations over
a then new office at LOM Western Securities.
The court petition claims that in April of 1996, the Dion brothers and Mr.
Dureault agreed to exploit the bingo patents through IBC. This included
setting up a joint venture with Wyoming-based Gaming Properties, controlled
by Mr. Bosa, Harmen Verbrugge and Gerardus Nowee. Border came into the
picture by June of 1996, and in August, it took over GPI's obligations,
after a reverse takeover.
The joint venture had a rocky history. Beginning in September of 1996 and
running through the spring of 1997, various disputes erupted amongst the
Dions, Millenium Capital, IBC, GPI and Messrs. Dureault, Verbrugge, Nowee
and Bosa over the number of Border shares they would receive, the ownership
and control of IBC, the beneficial ownership and rights to the patents, and
control over the operation and management of the joint venture.
In spring of 1997 the sparring partners settled their differences. In an
April 30, 1997, agreement, IBC, Millenium Capital and Louis Dion agreed
that he would be retained to provide personal services to find and creating
gambling opportunities. Shortly after the first settlement agreement was
reached, disputes again arose between the parties, according to the
petition. The squabble remained unresolved, and in March of 1998, the Dion
brothers and their fellow petitioners in the current case filed suit
against the Verbrugge group. In July of 1998, the warring sides agreed to
settle their squabbles through arbitration.
After numerous months of negotiations, the Dion group and the Border group
agreed to settle their disputes on July 30 of this year. Once again, no
happy settlement emerged, however, and by Sept. 14, the parties had reached
an impasse. The Dions claim that Border has unilaterally taken steps to
negotiate patent deals with third parties. The petition claims that on
Sept. 20, Border's Mr. Bosa told Louis Dion that Border expected to enter
into a contract with Interactive Entertainment Technologies LLC in the week
of Sept. 27. On Sept. 28, the Dion's marched off to court and launched
their petition.
"It is anticipated that the potential economic benefits that may be derived
from developing and marketing the patents and its related technologies may
be in the multi-billion dollar range," states Ms. Basham in her court
filing.
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