Investors in alleged Ponzi scheme fear millions gone
More than 150 people packed into an investors meeting in Montreal on Sunday to learn more from police and lawyers about what financial adviser Earl Jones has done with their money and how they might get it back.
The self-styled financial adviser is nowhere to be found and the accounts containing his clients' assets have been drained. Quebec authorities have frozen Jones's accounts and are trying to locate him.
Local and provincial police attended the meeting at a hotel in Pointe-Claire to gather statements from investors who suspect they’ve lost millions of dollars in a Ponzi scheme. The losses amount to life savings for some people.
Many of them said they had dealt with Jones for so many years, it never occurred to them to verify his credentials. Quebec's finance regulator, the Autorité des marchés financiers, confirmed Jones was never registered with them.
Kevin Curran, one of the organizers of the meeting, said his mother Karlene Kennedy invested with Jones but had not received a statement from him since the market crashed last October. He also said her mortgage payments have not been paid in two months.
Curran and his brother reached out over the internet last week and located other clients in similar situations. Curran said he planned on meeting with five or six people, and did not expect 150 to show up.
'There's no money'
"Probably some people [here] are saying that 'I'm just here as a friend,' but in fact it's them. I think there was a lot of that shame. That was tough to get through at the onset. They still didn't believe it, even though [their] kids were pushing since Monday, Tuesday [that] something's wrong," said Curran.
He and his brother passed all the information they collected last week to the AMF. Jones has not been charged with any crime and the allegations against him have not been proven, but the province's securities regulator froze his accounts and those of his company last week.
"We got the source documents and we know pretty much how deep it goes, at least enough to stop it. After that, you know, what difference does it make? There's no money, there's no money," Curran said.
Neil Stein, an insolvency lawyer representing one couple who invested, told the crowd his firm would try to bring Jones's corporation into bankruptcy, "to take possession of all the assets, to be able to distribute them to all the parties, as opposed to just the individual who's taking the proceeding."
Margaret Davis, an elderly investor at the meeting, said she doubts she'll ever see her money again.
"I can survive this month. After that, it's going to be a big question mark. Don't sleep very well these days," said Davis.
Quebec investors need 'new framework'
Michel Nadeau, executive director of the Institute for Governance of Private and Public Organizations in Montreal, said he believes losses by Jones's investors could turn out to exceed $100 million.
Nadeau said he thinks the Jones affair will lead to closer scrutiny of all private financial advisers.
"I believe unfortunately we will have to be more severe. To put a new framework. Meanwhile I think you should always deal with at least two financial institutions," said Nadeau.
Nadeau cautioned that investors can never be too careful when hiring a financial adviser.