Wilhelm Pellemans says he never lost faith justice would be done and that he and the thousands of victims of the Norbourg financial fraud - one of the biggest in Canadian history - would ultimately be compensated for their losses.
The 70-year-old plastic surgeon said Wednesday he's more than satisfied with the $55-million settlement that will - subject to approval by a Quebec Superior Court judge - allow the 9,200 Norbourg victims to recover nearly all the money they lost in the massive scam.
"I am happy for myself and for the 9,200 others," Mr. Pellemans said at a news conference to announce an agreement in principle reached in a class-action suit against Quebec's securities regulator as well as Northern Trust Co. Canada, Concentra Trust, accountant Rémi Deschambault and accounting firms KPMG LLP and Beaulieu Deschambault.
The settlement, which involves no admission of liability, comes just days before the class action alleging negligence was to go to trial.
The fraud and embezzlement scheme, the largest ever in Quebec, was a key development leading to changes at the Autorité des marchés financiers (AMF) that included a near-tripling of its enforcement team. The provincial securities regulator, which has already paid $31-million to Norbourg Asset Management Inc. investors, will pay $20-million of the settlement.
Mr. Pellemans said that, while he never wavered in his belief that Norbourg investors would be compensated, ups and downs over the years led him to wonder if there would be full recovery for the victims. Many of them lost their life savings in the scam orchestrated by Vincent Lacroix, Norbourg Asset Management Inc.'s president.
Mr. Pellemans and co-lead plaintiff, investor Michel Vézina, alleged in the suit that the provincial regulator and firms that provided accounting or trust services to Montreal-based Norbourg didn't act soon enough to put a stop to the swindle at the mutual fund company.
"What we achieved today is a victory for us," he said.
Indeed, full recovery of money lost in big corporate fraud schemes is unusual, says Toronto forensic accountant Mark Rosen.
"It's very rare in Canada that you see that type of recovery," he said.
While the settlement is not a precedent, victims of convicted fraudster Earl Jones in Quebec are hoping it will strengthen their class-action suit against Royal Bank of Canada, which they allege should have known the Montreal investment adviser was stealing from his clients.
The Norbourg settlement means that all other ongoing legal action in the case will cease - including a move to win class-action approval against the Caisse dépôt et placement du Québec for allegedly not conducting proper financial checks when it sold an investment fund to Norbourg in 2003.
A spokesman for the regulator said it made sense to settle to avoid a long and costly court case. "We have learned lessons from Norbourg," he said, pointing to the beefing up of the AMF's enforcement team, to 120 staffers from 45, several years ago.
In addition to the $55-million that is expected to start being disbursed in about three months, about 925 Norbourg investors received $31-million in indemnities from the AMF compensation fund in 2007. Another $26-million has come from the sale of assets and tax refunds.
Mr. Lacroix was arrested in 2005, after the collapse of Norbourg.
He was convicted of securities act violations in 2007 and pleaded guilty in 2009 to nearly 200 criminal charges of fraud, conspiracy to defraud, money laundering and other illegal acts. He received a 13-year prison sentence, the longest for white-collar crime in Canada, but the term was later reduced. He has a parole hearing later this month and could be released to a halfway house soon after.