RBC settles Earl Jones fraud victims lawsuit
$17M out-of-court deal will compensate some 150 Ponzi scheme victims
- Original lawsuit sought $40 million
- Settlement worth $17 million
- Claimants will receive a percentage via
The Royal Bank has reached a $17-million out-of-court settlement with dozens of victims of Montreal fraudster Earl Jones.
The class-action lawsuit claimed an RBC branch in Beaconsfield, Que., was aware that Jones — a former financial adviser — was exploiting his personal account for his fraudulent dealings with his clients.
The 158 plaintiffs alleged the Montreal West Island bank branch could have done more to stop Jones, who regularly deposited cheques with double endorsements and forged signatures.
The deal is a "fair settlement, given the circumstances of this case," said Joey Davis, a Montrealer who has advocated on behalf of Jones's victims, including his mother.
Most of the victims are elderly, and a drawn-out court case would have exacerbated their ordeal.
Several victims lost their life savings, and some lost their homes. The settlement will see them recoup about half of their investments' net worth.
Jones pleaded guilty in 2010 to two counts of fraud totalling roughly $50 million, in connection to scams that spanned nearly three decades.
He is serving 11 years in jail, after his fraud was uncovered during the summer of 2009.
Bank denies negligence
Plaintiffs originally sought $40 million in the lawsuit, which took about four months to settle, after victims refused the bank's initial offer of $12.5 million in 2011.
In a statement issued Tuesday, RBC said it is "pleased to have reached a negotiated settlement agreement, but denies any wrongdoing.
"RBC has closely examined its role in providing Earl Jones with a bank account, and is satisfied that it was not negligent."
The settlement "seeks to address some of the financial difficulties the class-plaintiffs faced as a result of entrusting Mr. Jones with their financial affairs."
The RBC has previously claimed it was also a victim of Jones's fraud.
A percentage will be distributed evenly to all claimants.
Earl Jones scandal sparked legal change
The suit's main petitioner was Ginny Nelles, whose family lost its $1-million inheritance after investing it with Jones, a close family friend.
The deal is a "major milestone" that will help victims achieve closure, Nelles said.
It also marks major changes for white-collar crime in Canada, she said.
When the scam was first discovered, "we had just come off Bernie Madoff, and Earl Jones basically struck a chord with the public."
Jones's victims lobbied the federal government for tougher white-collar crime sentences.
The Conservatives' white-collar crime legislation took effect last November.
It includes a mandatory two-year prison sentence for fraud over $1 million.
Sentencing decisions will now take into consideration aggravating factors, such as the fraud's impact and complexity.
The proposed class-action lawsuit settlement is pending Quebec Superior Court approval, expected in mid-March.