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The president of Eron Mortgage Corp., behind what's been called the biggest fraud in B.C. history, was sentenced yesterday to six years in prison.

Brian Slobogian, 56, pleaded guilty in January to one fraud count and four theft counts in connection with five failed Eron development projects. Yesterday, Justice Peter Fraser of the B.C. Supreme Court imposed four concurrent six-year terms for the theft counts and a three-year sentence for fraud, to be served concurrently. The maximum sentence was 10 years.

The judge said Mr. Slobogian devastated the lives of Eron investors, many at or near retirement who saw their life savings vanish.

Mr. Slobogian showed no reaction to the sentence. "He was ready," said his lawyer, David Crossin, who indicated he didn't plan an appeal of the prison term because it was in the range of sentences for similar crimes.

The Vancouver-based company that Mr. Slobogian founded in 1993 collapsed Oct. 3, 1997, when the B.C. Registrar of Mortgage Brokers pulled its licence.

About $240-million invested by 3,000 to 4,000 people disappeared in the debacle. Eron's bankruptcy trustee expects ultimately to recover about $40-million but the rest remains unaccounted for.

The sentence drew sighs of relief from more than a dozen of Eron's victimized investors, many of whom feared the mortgage broker would get off lightly because the charges represented only a fraction of Eron's losses.

Investor Wendel Mayer said victims of the fraud began a pool on the sentence, betting a nickel each. "No one predicted he'd get six years," said Mr. Mayer, who with his wife, Barbra lost $850,000. "The highest was five and a half." Mr. Mayer was philosophical about the sentence. "We don't really live in a system of justice, we live under a judicial system of law. Based on that, I'd have to say it was fair.

Mr. Slobogian was initially indicted on 33 counts of fraud, theft and breach of trust related to five Eron projects. He was to go on trial on 14 counts, along with former Eron vice-president Frank Biller. But Mr. Slobogian agreed to plead guilty to a pared-down list of five counts, leaving Mr. Biller, chief salesman, to face trial alone.

Mr. Biller, 35, is scheduled to go on trial next Tuesday in B.C. Supreme Court before a judge who will hear the case without a jury.

Mr. Slobogian came to Vancouver in the early 1990s from Winnipeg, where he had been a teacher and failed businessman, having declared personal bankruptcy in 1985.

Eron was set up to solicit money from investors that would be lent to developers of specific real estate and other projects, including an oil play in California. Lenders would be paid interest monthly.

Lenders were promised annual returns of as much as 25 per cent, and were told their investments were well secured by the properties being developed. In reality, many of the projects were overleveraged -- some carrying four or more mortgages. And the investments were oversubscribed. Most of the developments were never completed.

Meanwhile, investors' money went into lavish personal expenditures, such as golf and resort-club memberships and Rolex watches.

A B.C. Securities Commission report concluded that initial investors were paid using the money solicited from later investors. The projects generally weren't profitable. The BCSC fined Mr. Slobogian and Mr. Biller $300,000 each. Mr. Slobogian received a lifetime ban on trading in the securities market, and Mr. Biller a 10-year ban. Both men declared personal bankruptcy.

At Mr. Slobogian's sentencing hearing, former Eron investors said the company's collapse erased life savings, splintered families and caused health problems. Some investors tried unsuccessfully to sue the B.C. Registrar of Mortgage Brokers, saying it should have tipped them it was investigating Eron in the months before it collapsed.

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