When Denise Octeau-Tesher realized in 2009 she’d been defrauded of about $75,000 by disgraced Montreal financier Earl Jones, she assumed she’d never get a penny back.
Understandably, the Alfred, Ont. retiree greeted the news Tuesday that Royal Bank of Canada had settled a class-action suit against it by Mr. Jones’s defrauded investors for $17-million with relief. Roughly 150 investors who lost $40-million with Mr. Jones should receive funds equal to between 30 per cent and 50 per cent of their losses in the next few months.
“I’m still on the high of knowing this will be over,” the 74-year-old Ms. Octeau-Tesher said in an interview. “Even though some of this is going for the legal fees” – an estimated $4.3-million – “at least it’s better than anything else we could have hoped for.”
But while the settlement will bring much-needed cash to defrauded investors, it won’t fix the financial straits – or raw emotions – they still experience.
“Emotionally it’s been a ride for us,” said Ms. Octeau-Tesher, who has had to remortgage her house and dip into a line of credit to afford home repairs and family visits. “I went through every feeling, through rage, things I wouldn’t even want to express in case somebody else does it and I get blamed for it ... This has made me very untrusting of people. It’s depriving me of feeling secure.”
Other victims are at risk of losing their homes – some already have – because Mr. Jones convinced them to remortgage their houses and give the money to him to invest. “We have 12 people who are barely holding on to their homes,” said Kevin Curran, whose mother is in that situation. Mr. Curran heads a group of victims attempting to negotiate a settlement with the mortgagors, Bank of Montreal and Bank of Nova Scotia, but says talks are stalled. (BMO declined comment, and Scotiabank was unavailable for comment). “No amount of money anyone gets back will help them because they’ll never get the full value of the debt,” Mr. Curran said.
That includes the mother of Virginia Nelles, who lives in the ski village of St-Sauveur, Que. “She lives in complete anxiety every day whether she’ll be able to stay in that house or not,” said Ms. Nelles, the lead plaintiff in the lawsuit. Ms. Nelles and her brother – also victims of Mr. Jones – have had to sell properties to help her out. “We gave up a lot,” she said.
Mr. Jones was sentenced to 11 years in jail after pleading guilty in January 2010 to two counts of fraud. Posing as a financial adviser, Mr. Jones ran a Ponzi scheme, using money entrusted to him by his investors – most of them Montreal West Islanders now in their retirement years – to pay back other investors and to finance his lavish lifestyle, buying luxury cars and properties in Florida, Cape Cod and Mont Tremblant. The funds ran through his Royal Bank account at the Beaconsfield, Que. branch. The lawsuit had alleged Royal Bank turned a blind eye to his actions, while Royal denied the allegations, saying it was also a victim.
Mr. Jones, whose victims included relatives and even a godson, got to know Ms. Octeau-Tesher when she worked in the benefits department of Teleglobe in the 1970s. He was retained to settle the estate of a deceased employee; she was so impressed by his work that she later hired him to do the same thing for three of her relatives. When she moved in the late 1990s, he offered to help. Other clients have reported Mr. Jones made similar personal connections with them.
She opened a retirement savings plan through Mr. Jones in the early 1990s, and when it came time for her to convert her RRSP in 2006 into a postretirement savings vehicle, he convinced her to invest it through him in what he claimed was a high-interest savings vehicle. “Three years later I found out it was all a crock,” she said.