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Mount Real fraud victims determined to stay on the radar

May 2012

A 1998 article in Investment Executive, a financial industry newspaper, painted a glowing profile of Mount Real as an exciting company on the rise. It quoted chief executive Lino Matteo as saying, “The company offers an unusual combination of capital plus financial management.”

If you were an average investor, with a trusted adviser you had known for 11 years, and if you saw the names of well-known accounting firms on the papers shown to you, it would be easy to invest in this reputable company listed on the stock exchange.

How could you know that, in fact, its main business was selling magazine subscriptions and that in 10 years the same newspaper would report that a class action suit had been launched against the company and its auditors, including Lino Matteo, Paul D’Andrea, B2B Trust and Penson (affiliated with the Laurentian Bank), Deloitte & Touche, BDO Dunwoody and Schwartz Levitsky Feldman.

The article reads: “For years, Mount Real presented itself as an up-and-coming professional services company with consistently growing revenue and profits. … But a government-appointed administrator who took over the firm in late 2005 found an empty shell with little in the way of ongoing business, the suit notes.”

Mortification is often the first reaction. “I’ve been very reluctant to come out from behind the curtains. I’ve been pretty embarrassed by myself,” said Archie Luccisano, one of 1,600 victims who collectively lost $130 million. A project manager at Air Canada, now working at Wal-Mart, Luccisano was offered his pension in one lump sum, with advice to turn to an adviser to manage the money. William Marston, who had worked with him for 11 years, urged him to invest it all in Mount Real, Luccisano said.

By the time he suspected his future was in jeopardy, it was too late.

Most victims, because they have investment income, were seniors, says Janet Watson, the spokesperson of the group. Encouraged by the activism of the Earl Jones victims, she wants to keep the scandal, which came to light seven years ago, in the public eye.

“The Mount Real victims did everything right,” she says. “They followed the rules of investing, checked if the adviser was registered, checked the financial statements of a company with a stellar reputation. The point is that this can happen to anyone, and the loss and its effects on victims are devastating.”

A poignant case is that of Len Perrigo, who lost more than $99,000 and whose son, 70, lost $150,000. In a letter to the media he wrote: “I am a WW11 veteran, age 95, and as I served my country throughout the entire length of the war, I am much too old to be able to go back to work, so I have had no option other than to adjust my way of life accordingly to a much lower standard of living. It is extremely unlikely that I will have the privilege of living to see any retribution meted out by the courts, but if my letter and your making known about this affair could bring about some reward for the hundreds of others that will still be alive, then this would make me extremely happy.”

Watson says the victims’ only hope is the class-action suit, which will only begin in March 2013. As the case is highly complex, involving a web of more than 120 companies, very little has been done to bring perpetrators to justice or help the victims. The Quebec securities regulator has a compensation fund but Mount Real victims don’t meet its criteria, says Sylvain Théberge of the Autorité des marchés financières. The fund does not cover promissory notes, which were sold by Mount Real.

“The fund covers the insurance sector, where it is easer to prove fraud,” Théberge says. “In Mount Real, this is much more difficult to establish.” The RCMP has refused to investigate, Watson says.

Though some have been fined—Marston was fined $104,000—the money will not go to the victims, Théberge says. It will, by law, go into an “education fund.”

Théberge says investors must check that their adviser is registered on the AMF website. But only by calling the AMF and knowing what to ask can you learn whether an adviser is registered for the products they sell, whether these qualify for compensation and whether there were previous complaints.

“Do not rely on the AMF and do not rely on the government,” says Joey Davis, who was instrumental in obtaining a settlement for the Earl Jones victims. “You can do everything right, go with the biggest and the best, you can invest with the Royal Bank, and this can happen.”



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