Unlike the AG, Canadian regulators have already taken some action against Magellan.
Although Magellan publicist Resnick contends there was "no action" taken against Magellan in British Columbia, the British Columbia Securities Commission confirms that in 1997, it issued a Cease Trade Order against a group of Magellan companies for failing to file required financial documents. That order is in effect today, but it doesn't satisfy all investors.
Mike Bernard, spokesman for the British Columbia commission, says the bulk of the regulatory responsibility rests in Arizona's hands.
"I don't know what the answer is when matters fall between the cracks of jurisdiction," he says. "Given that many of the actual properties are in Arizona, it's seen as primarily a matter for the Arizona regulator."
"We have no power to do anything in Arizona per se," he says. "We have to rely on the good graces of the Arizona authorities."
Investors got the same response from Alberta regulators.
In January, the Alberta Securities Commission concluded a three-year investigation of Magellan by banning the companies from selling securities in Alberta until the year 2001. Magellan also paid the commission a $44,000 fine.
In a settlement agreement that documents apparent improprieties but does not accuse Magellan of wrongdoing, the Alberta Commission noted that Magellan managers improperly "transferred" about $6 million from Galleria Palms, a Magellan limited partnership that holds a Tempe apartment building, to other Magellan entities. The money was apparently later "transferred" back into the project.
Was this illegal commingling?
The Alberta Securities Commission says no.
Magellan "never intended to deceive or otherwise mislead the investors and never intended to jeopardize the project," the Alberta Securities Commission concluded.
The settlement agreement was too-little, too-late for investors who want their money back.
"Commissions don't get money back for investors," says Linder. "What we do is we say, 'You are a danger to the marketplace, therefore you are not allowed in the marketplace for a number of years.' . . . I know that is not very satisfactory for the investor who says, 'But they took my money.'
"The way our system works, and the way the American system works, is if you want your money, you go to court."
When asked to comment on the Alberta action, Resnick writes: "All matters have been resolved."
Alberta retiree Tom Esler believes much remains to be resolved.
He says he invested $23,000 in the Galleria Palms Limited Partnership. Three years later, Esler says he's gotten back only about $4,470.
Esler is livid. He contends Alberta authorities slapped Magellan on the wrist and washed their hands of the whole situation.
Alberta Commission spokesman Linder defends the agency's actions.
"You have the investors claiming black, you have Magellan claiming white," he says.
"All I can say is, what we looked at, we did not find what we would term as fraud . . . But Magellan is a huge entity, and we didn't look at every particular transaction. . . . In the matters we looked at in our investigation, the sanctions were more than adequate to deal with the situation we discovered."
"We barred these individuals from our marketplace for two years, and, presumably, investors in the future will take some heed of that."
But Magellan does not seem eager to get back into the business of raising money from small Canadian investors.
Investors like Ron Kuhn, for instance.
Kuhn, a British Columbia computer consultant, claims that three years ago he invested $30,000 in Magellan Traditions, a limited partnership set up to build and sell an apartment building in Mesa. Kuhn expected to reap a sizeable profit in two years. But three years later, Kuhn says he hasn't had a single cent of his original investment returned to him, and he's concerned that the partnership still doesn't hold title to the land. And like the Schroeders, Kuhn says he's received "very ambiguous" and "Clintonesque" updates from Magellan about the financial condition of the Mesa project. So Kuhn demanded explanations from Magellan, Magellan's accountant and regulators.
He says he got no satisfactory answers, so he concluded that it is not smart for Canadians to invest in an Arizona limited partnership.
"My opinion is that Magellan has exploited a jurisdictional nightmare," says Kuhn. "It is difficult for anyone in Canada to do anything in the United States or to access information about the projects. . . . I think Magellan is counting on this."
Disappointed with Canadian and American regulators, some Magellan investors took matters into their own hands.