Gordon Pape, a veteran personal finance adviser whose writings in The Money Letter dished out stock advice to ordinary Canadians for 25 years, penned his last recommendation for the newsletter in December. Mr. Pape began his association with The Money Letter in 1984 when he was appointed as its publisher. He began writing his column a few years later and continued to do so after the newsletter was sold to MPL Communications Inc., until late last year when he was dropped from the roster. Mr. Pape publishes his own newsletters, including Internet Wealth Builder, where he says he will update his Money Letter recommendations for subscribers.
But Mr. Pape's fate is just one scene in a drama unfolding at MPL. The Toronto-based company run by Stephen Pepper and Barrie Martland and controlled through their Marpep Publishing is embroiled in a lengthy lawsuit launched by an MPL minority shareholder, Donald Carlson.
As well, in the past year there has been turmoil among its freelance contributors and editors, including Mr. Pape, because of issues over late payment for their services. Indeed, an editor of Money Letter and Tax Letter since the early 1980s, Mike Keerma, departed last summer after he says MPL fell behind in paying him by seven months. Asked about this, Mr. Pepper told us, "We have turnover like everyone else."
MPL, which is listed on the TSX Venture Exchange, has had a number of money-losing years recently, and a steadily declining stock price since 1999 despite publishing several well-known investment newsletters, including its flagship Investor's Digest.
Last August, Mr. Pepper and Mr. Martland and their associates attempted to buy out minority shareholders - namely Donald Carlson and his family. The offer was set to expire 13 days before the start of the trial now being decided in Alberta - the result of a shareholder oppression lawsuit launched by Mr. Carlson back in 2003.
In it, he alleged that Mr. Pepper and Mr. Martland had improperly taken millions of dollars from MPL in management fees and interest-free revolving loans. Mr. Carlson's group asked the Ontario Securities Commission to stop the insider bid, claiming it was "opportunistic" because the controlling shareholders stood to avoid paying out as much as $8.3-million in restitution if they lost the suit. However, the offer expired Nov. 4 and the trial began Nov. 17 in Calgary; judgment is expected in February.
Mr. Pepper and Mr. Martland say in their statement of defence that they performed crucial marketing and management services in return for the fees, that the contentious loans were for tax-planning purposes and that the one payment that did not have a "valid business purpose ... was promptly repaid when its existence was questioned." They also say the court should consider that an independent committee of the board, appointed in 2004, has already addressed many of the issues raised.
Mr. Pepper declined to comment on the lawsuit.
CORRECTION
David Carlson is a minority investor in MPL Communications Inc. C His first name was spelled incorrectly yesterday.