Mining magnate denied debt to himself

Yukon businessman Jon Rudolph owes money to many people including, he insists, himself.

Yukon businessman Jon Rudolph owes money to many people including, he insists, himself.

But the mining mogul’s claim that he should pay himself first, before dealing with angry debtors, was recently rejected by the Yukon Supreme Court.

Rudolph bought the Ross placer mine on Dominion Creek, 80 kilometres southeast of Dawson City, in 2005. It formed part of the construction and mining empire that Rudolph had cobbled together over two decades. As Rudolph’s businesses grew, he even became the patron of a prestigious Christmas ball in Whitehorse.

Then the bills began to pile up and the empire came tumbling down.

Last year Rudolph was forced to sell 130 pieces of heavy equipment owned by one of his companies, Golden Hill Ventures Limited.

In all, Rudolph owed $12 million to creditors. In an agreement struck last year, they ended up being paid just five cents on every dollar owed.

Throughout it all, Rudolph insisted he wasn’t bankrupt – he just needed time to restructure his businesses and strike a new loan agreement.

Yet two big debts remain unpaid today.

He owes Norman Ross, the placer mine’s founder, $3.4 million. He also owes Mackenzie Petroleums $739,500 for fuel supplied to the mine operation.

When both Ross and the fuel company made legal claims to the mine’s assets two years ago, Rudolph responded by making a similar claim, or lien, of his own for $4.7 million.

But, in a judgment issued last week, Yukon Supreme Court Justice Ron Veale decided that to allow this would be “completely contrary to the object and purpose” of the Miners Lien Act.

Rudolph’s case depended on the complicated corporate structure put in place at the mine, involving three separate companies: Golden Hill Ventures Limited, Golden Hill Ventures Limited Partnership and Ross Mining.

All three companies are based out of the same building, using the same staff and blanket insurance.

And, in all cases, the “sole proprietor and controlling mind” is Rudolph, said Veale.

Essentially, Ross Mining subcontracted Golden Hill to run the mine. And when Ross Mining went bust, Golden Hill asserted that it had been soaked, too.

Just how much it was owed, fluctuated in court. Originally $4.7 million, the amount rose to $6.8 million and later fell to $2.8 million as the judge began to weed out questionable claims.

Yet Golden Hill did more than work for Ross Mining. It also managed Ross’s accounting, payroll and government filings. Veale concluded that Golden Hill is “both owner and supplier” of Ross Mining so it would be nonsense to award it a lien against the company.

John Wierda, a director of Mackenzie Petroleums, said this week that his company will continue to pursue its lien. Having to operate without such a large payment presents a “huge” challenge to the company, he said.

Rudolph did not respond to an interview request.

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