Bilked investors oppose insurance payout to beneficiary
Supreme Court rules woman to receive money from man's life insurance plan despite Ponzi scheme
A Nova Scotia woman is $300,000 richer because of a ruling Tuesday from the province's Supreme Court.
Rita Christian was named as the beneficiary of one of several life insurance policies held by Glen MacArthur.
The total coverage of the policies was more than $1.5 million. Originally, MacArthur had named his mother as beneficiary of all his policies. But when she died in February, 2010, MacArthur changed beneficiaries to people he referred to as friends.
All of these friends were investors in MacArthur's firm, Barring and Company.
MacArthur died in May 2009. After his death, it was discovered that he ran a fraudulent investment scheme. According to court documents, MacArthur persuaded people to invest in equipment leases. He promised them a rate of return that averaged 10 per cent, payable after 90 days.
When MacArthur died, Christian tried to cash in the policy. She was opposed by both MacArthur's estate and the bankruptcy trustee handling the collapse of his business.
At the time of his death, MacArthur had liabilities of more than $12 million. That's the amount he'd promised investors, but could never deliver on. He had assets of slightly more than $186,000.
The Nova Scotia Supreme Court released Justice Richard Cregan’s ruling Tuesday.
"In 2003, he (MacArthur) was promising Mrs. Christian a return which one could only reasonably expect from a Ponzi scheme," he wrote.
"In the personal notes he left at his death he admitted that the money invested with him was lost," wrote Cregan. "There was no enterprise, no business, nothing with any underlying value."
But while he acknowledged MacArthur ran a fraudulent scheme, Cregan also said there was nothing in law that would deny Christian the money from the insurance policy. The policy payout is roughly the same amount as Christian is owed for wages and investments in MacArthur's defunct business.