Eron Mortgage VP pleads guilty to fraud, theft charges
Former Eron Mortgage Corporation vice president Frank Biller pleaded guilty on Tuesday to four counts of fraud and one of theft in connection with the biggest mortgage swindle in B.C. history.
Biller's case was adjourned by B.C. Supreme Court Justice Mary Boyd until May 9 for the prosecution and defence to agree on a statement of facts before sentencing.
Biller, 35, is the second executive from Eron to plead guilty just prior to trial.
Last month, Brian Slobogian, Eron's former president, was given a six-year prison term.
Evidence showed that many of the investors lost their life savings. Slobogian had siphoned off some of the money raised to buy condos, luxury watches and country club memberships for himself and family members.
Slobogian, 56, entered a surprise guilty plea in January to one count of fraud and four counts of theft. The maximum sentence Justice Peter Fraser of the B.C. Supreme Court could have given Slobogian was 10 years in prison on each count.
Beginning in 1993, Eron Mortgage raised more than $200 million from 3,350 investors, many of them seniors from British Columbia. The company fell apart on Oct. 3, 1997 when the B.C. Registrar of Mortgage Brokers pulled Eron's licence.
The B.C. Securities Commission found that investors were promised returns of 24 per cent â returns that Eron knew could not be paid. Investors thought their money was going into real estate projects in western Canada and the U.S.
But evidence at the commission hearing found that most of the money went to pay for high interest payments on earlier investments, and the rest was siphoned off for other uses.
The Crown said some properties carried as many as four mortgages.
Investors lost an estimated $182 million in what a securities commission panel called "a massive fraud" before the broker's licence of Eron and its principals was eventually lifted.
Executives of Eron Mortgage and four affiliated companies were fined $1.8 million.
Investors who lost money subsequently sued the B.C. Registrar of Mortgage Brokers, arguing that he had failed in his duty to protect them when he didn't issue a public warning as soon as he suspected problems at Eron Mortgage.
But in late 2001, the Supreme Court of Canada ruled against the investors, saying the registrar's duties fell short of requiring him to issue such a warning.