MONTREAL - Victims of a financial fraudster in Montreal should be getting their compensation cheques in the next few days.
Earl Jones was sentenced in February 2010 to 11 years in prison for defrauding clients over a 25-year period. He was arrested in July 2009 after the pyramid-scheme fraud was discovered.
The estimated amount of the fraud changed as accountants took a closer look at the books. Jones pleaded guilty to defrauding 158 investors of a little more than $50 million, a dollar amount that was initially pieced together by the bankruptcy trustee.
The victims, many of whom are senior citizens, reached a $17-million out-of-court settlement in 2012 in their $40-million class-action lawsuit against the Royal Bank of Canada (TSX:RY).
On Monday, it was announced that cheques totalling $12 million have been sent to Jones' victims. The rest will go to lawyers.
Much of the money initially lost by Jones' clients was held at an RBC branch on Montreal's West Island. Victims claimed the bank was negligent and should have been able to act on irregular behaviour from Jones — something the bank denied.
Jones operated a financial-services business for more than two decades.
The unregistered, self-styled financial planner ran a Ponzi scheme in which many of his former clients were friends or family and people he met through word-of-mouth.
Some people invested money with him directly. Others were clients through the estate-management part of his business, and some he sought out and recruited by falsely promising returns of 10 to 12 per cent on personal loans.
He bilked everyone from close family friends to his own brother, all while living lavishly with multiple homes and frequent trips.
Jones' criminal case heard he never invested a penny of the money people gave him.
The victims had argued in their civil suit that the bank was aware of irregularities in the Jones account but did nothing. RBC said it did nothing wrong.