Hearing date set in Cornerstone state case

MISSOULA - An April 26 hearing date has been set in the state's administrative case against former Polson businessmen Keith Kovick and Robert Congdon.

The men ran Cornerstone Financial Corporation and K and B Investments out of Polson from 2004 to March 2009.

The Commissioner of Securities and Insurance Office has investigated the men since the fall of 2008 for their alleged involvement in a securities fraud scheme and for violating several portions of the Montana Securities Act. Among the allegations is that the pair conducted a Ponzi scheme involving more than 100 investors and up to $14.3 million.

The hearing will run through April 30 at the Missoula County Courthouse. A prehearing telephone conference has been set for April 22.

The hearing is open to the public and will allow all parties to examine evidence, witnesses and to present evidence.

According to Securities and Insurance office's communication director Jackie Boyle, the respondents Congdon and Kovick have issued no reports or experts. The state's expert witness is Deputy Securities Commissioner Lynne Egan.

An injunction issued in March 2009, then continued, by the Auditor's office froze the pair's assets. A court-appointed receiver has been working to inventory and organize the assets, which will eventually be sold.

Case receiver, Billings attorney Eric Nord, hoped to file a complete list of qualified assets and get a auction date set by a judge before the end of the year. Claims were due to Nord and the Helena District Court by Dec. 30.

He said on Friday that process has been delayed as he continues to locate and secure qualified assets of value.

Another factor holding up the final list of assets is Congdon's recent assertion that he wants to wait until after the April hearing and an "actual determination of his liability," Nord said.

Nearly 60 claims were submitted. Many alleged victims filed multiple claims, hoping to reclaim some of the investment funds they allegedly lost to Congdon and Kovick.

Several proofs of claims are listed after the Dec. 30, 2009, deadline date, but Nord said he does not plan on challenging claims filed within a reasonable time period to that date.