CTV News Montreal

Updated: Mon Jul. 13 2009 8:15:08 PM

CTV.ca News Staff

Dozens of people who invested thousands of dollars with Montreal financial planner Earl Jones fear they may lose their life savings and their homes after their trusted adviser went missing last week and allegedly took as much as $50 million with him.

Montreal police are working with the RCMP and the Autorite des marches financiers (AMF), Quebec's securities regulator, to piece together exactly what has happened to Jones and the money.

The AMF froze Jones's bank accounts on Friday. However, the regulator said they are nearly empty.

Jones, who has not been charged with any crime, was not only a financial adviser, but also managed the estates of several clients. He also appeared to be responsible for paying some clients' taxes, Lurie reported.

Many investors knew Jones for several years, saying they considered him a friend or even treated him like family.

At Jones' condo, his name was removed from the building's registry after dozens of clients kept showing up at his door. Mail has also been piling up.

Clients describe Jones as a charmer who put any fears of mismanagement to rest with his good nature.

Betty Davis, who invested her life savings with Jones in 1980, said "we found him very affable, and he seemed straight up and down. It tells you how smart we were."

Davis said that Jones was friendly and was easy to get along with.

"He was always interested in what was happening with the boys, what I was doing, how my golf game was going," Davis said.

The AMF has said that Jones wasn't a licensed broker, meaning there is little recourse available for clients.

"We didn't know that guy," said AMF spokesman Sylvain Theberge.

One investor said Sunday that she may lose her home, while a 94-year-old widow said Jones, "took all my savings."

Bankruptcy lawyer Neil Stein told the group that a bankruptcy petition was filed on their behalf. It is scheduled to go to court on July 29.

Forcing Jones's company, Earl Jones Consultant and Administration Corp., into bankruptcy would allow authorities to seize his assets and distribute them among the creditors.

In the meantime, authorities still don't know where Jones has gone. Beauchemin said that he has homes in Mont-Tremblant, Cape Cod and Florida.

Frances Gordon, whose partner of 25 years is Jones's brother, said everything she had was invested with her brother-in-law.

"I would say come back," Gordon said. "Please Earl, come back and tell us what happened, because we have to know, we don't understand."

Comments are now closed for this story

marko
Didn't this guy's firm belong to some sort of regulatory body? How about the Canadian Investor Protection Fund? or the Mutual Fund Dealers Association? There is no mention in the articles of redress available to investors.

John from Fredericton
This could be Canada's own Bernard Madoff.

Mack Chiu
As an accountant, I always advise my clients to be prudent and careful with their money. Investing is just like gambling. There is no guarantee that you will make money. If you cannot afford it (like mortgaging your house when you are retired), don't touch it. But I guess people are people. Some always fall into traps. And they have nobody to blame except themselves.

Melanie
A comedian said: "The best way to make a million dollars in the stock market is to start with ten million dollars." The stock market is a gamble, a crap shoot. I don't care how trusted your advisor is, don't hand over all your life savings and trust somebody with it! Gamble in the market if you must, but make sure it's an amount you can afford to lose.

Jason
Time for the laws in Canada to chance because we are going to see much more of these scams and people are going to be out of their life savings... FOREVER!

That being said, police agencies like the RCMP need the man power, the funding and the laws to come and grab these while collar criminals.

Like I said, in Québec this is the second scam of it's kind, this one and the Norbour incident...

Be vigilant people, they are out there!

Dd
Why on Earth do people put their "life savings" into one investment. How can anyone with that much money not know that there's no such thing as a get rich quick scheme. Putting all your eggs in a basket is only asking for trouble. Have the sense to diversify!!!

Michael
People need to educate themselves on finances and stop trusting others to do what they need to do for themselves. I've been swindled out of substantial cash before and I know the feeling it leaves you with. Now, however I run my own affairs and make far more $$ than any institution will even make for me.

Buyer beware, be very aware!!

meerkat
who can you trust now a days? bank employees steal, investors steal. i guess that's why some people forgo interest and hide the money under their mattress. doesn't seem like such a bad alternative.

david sawkiw[saskatchewan farmer]
What's the problem here??

Our politicians rip us off all the time.

They always get away with it.

What is worse; freely giving your money to someone and getting ripped OR being forced to pay money and getting ripped?

John
This story and others like it underscore three basic truths. 1. There is no free lunch, if it sounds to good to be true, it probably is.

2. No adviser can consistently beat the market.

3. The higher the interest rate the higher the risk.

I feel terrible for these people but the rules remain valid.

MP
Looks like the old fad of stuffing money under your mattress is going to be coming back as there's no one left on this planet you can trust.

Steve in Montreal
It's too bad that people get scammed by non-certified brokers.

If it's sounds too good to be true, it probably is.
Warren Buffet recently recalled this timeless quote.
If you want to invest, learn to do it yourself. Learn about Dripping.

JoshS
It's very sad when a "trusted" financial planner rips off even his relative.

This points out:

-Trust no one with control of your money.

-Do your own thing, with help if you need it. But you make the decisions and control your accounts.

-Don't keep all your eggs in one basket. Have enough baskets so losing one won't lose you sleep.

Pistan Browk- Brantford
I live paycheck to paycheck so it's difficult for me to conjure up any empathy. If I had any money I can't imagine that I would place it anywhere but in something secure and no more than what could be insured through deposit insurance.

Confused
People keep commenting like the clients of Mr Jones made a bad investment decision and didn't diversify and such. That doesn't really make sense to me, I'm sure these people thought they were diversified, Mr Jones probably told them they were in a range of mutual funds or seg funds or whatever, I don't think poor investment decisions is a problem here, I think these poor people just got swindled.

I bet 90% of financial planners out there could pull a few fraudulent manoeuvres and be off to the Caymans by next week if they really wanted to, but they obviously don't and won't because they are hard working honest individuals.

Have any of you ran a background check on the person down at the local bank last time you had a question about your mortgage or mutual funds? I didn’t think so....

Lucky_Eddie
As I read this story, the people did not lose their money to investments gone bad, nor do I see anything about people being victims of their own greed by buying "too good to be true" investments. It sounds like a simple case of fraud. It happens, just like any other thefts. Which is why I wouldn't entrust my money to an individual, but rather go with a large institution.

SM Ottawa
Yet again, don't put all your eggs in one basket!

Seniors should not be playing the stock market (with everything they have) or investing in risky small groups like this.

Get a GIC from a major institution and you don't have to worry about this. If you're feeling like taking chances, invest a small portion of your portfolio in stocks or investments, that way if the firm goes under (or runs away with your cash) your not out selling your home to raise funds.

I feel bad for anybody that gets cleaned out, but if you gave all your money to this guy, that's a recipee for disaster.

Stockmeister
Very sad but the old adage still holds true - BUYER BEWARE.

These folks were blind and got burned. They have nobody to blame but themselves. Not that I don't want to see the person responsible lynched though.....I do.

Wise Investor
Just invest with the trusted banks people that way when an advisor that works for them turns sour, you're covered.

Sure you won't get the same rates as these Madoff's but...ya still got yer money.

SM From Brampton
For every 1 that they find at least a hundred more are not accounted for. Criminals on the streets are not the only problem. These guys are just as bad or worse in my opinion.

Denise
The laws in Canada do NOT NEED to change. It is so easy to screech for more laws rather than assume responsibility for our own actions, isn't it? Let's make it Harper's fault since he seems to be the favourite scapegoat of the year. We can enact all the laws we want (and Canada's nanny state has MORE THAN ENOUGH) BUT what really needs to change are the investors, more specifically their lack of common sense, ignorance, and greed. Any or all of these 3 factors are usually at the root of these occurrences. This was obviously a risky way to invest so I am assuming these people thought or were told that they were receiving returns better than some kind of "better than average" market returns? What kind of investments was Jones peddling? These investors need to take some responsibility for the consequences of their actions. How much real investigation did they do prior to investing with Jones and why invest with such a small privately owned company? Taking out mortgages to invest - are you KIDDING??? Unless Jones is found we may never know what really happened.

raj
I am finding it hard to feel sympathy.Some people are full of greed, they mortgage their homes, and for what? more money.Money is the root of all evil.

JFC
It is very obvious the punishment does not come even remotely close to match this kind of crime in this country. Pathetic!

Shawn on the coast...
I have to agree with "Confused" here and say that most of the people making comments seem to be judging the wrong people in this article.

Yes, its true, you have to have a certain amount of risk tolerance to investment money in the stock market, and yes you have to be diversified, and you should know your limits on how much you can afford to lose before you pull out.... but thats not the problem here... this people aren't dumb investors, these people didn't necessarily go for a get rich quick scheme, these poor people are victims, that had no idea what was happening to their money.

It was like if you thought your money was save, and the money on your bank statement was a real number, and walking in the next day to withdrawal it, and the bank just being got. These people are victims.

It is my belief that all of you "Eggs in one basket people" should just think about this story a little longer before dishing out investment advice... Its not a case of improper investing... its a case fraud, pure and simple, that unfortunately stands to ruin the lives of everyday Canadians much like yourselves.

Frankie Gillespie
So. I thought it couldn't happen in Canada. Too many regulations, etc,. etc. Obviously not enough regulations or checks and balances.

D Smith
First rule of investing: "never invest more that you are willing to lose!" I know it is rather conservative, but who invests so much that they would lose their house if the investment fails, not very smart.

Jasper
This smells of a Ponzi scheme to me.

Anne
I guess the solution is, do not do business with an individual, only go via long established banks/institutions etc.

Michael (Ottawa)
Steve in Montreal: "It's too bad that people get scammed by non-certified brokers."

Who are you trying to kid Steve?!

People regularly get scammed by 'certified brokers'... it's called churning and they ALL do it. With the advent of online trading I suspect they do even more of it. They also engage in naked shorting and a number of unsavory actions. I don't know who I distrust more, lawyers or brokers.

As others have said:
1) there is no free lunch
2) If it sounds too good to be true it likely isn't true
3) do your own homework
4) Diversify

robert
hee hee hee, "money" the route of all evil. I have none, nothing, not a red cent to my name. Sure enjoy living my life on this planet, pay check to pay check. I will die as I live, dead flat broke with a smile on my ugly face, any small amount of cash owed to me goes to S.P.C.A. animals are honest..Me happy? you bet...

Former Financial Planner now 100% Investor
SM: "Get a GIC from a major institution and you don't have to worry about this...."

GIC pays what 3%?

Investment 100K @ 3% = $3,000
Personal Income taxes = $1000+-
Inflation reduction = -$2,500
Net loss = -$500 annually
5 Year GIC = %500 bucks left in purchasing power.

GIC = Guaranteed to lose the purchasing power of your money!!

Randy
Well I can just about guarantee you one thing. If he gets caught and is found guilty, he won't get anything close to Madoff's sentence in a Canadian court.

Henrik Citivia from Essex
This is worse than flibbity flobbity floo.

Robert
I do feel bad for these investors escpecially those who re-mortgaged their homes.

However, when someone asks senior citizens to take out another mortgage on their homes which have long been paid off to invest in a security this should raise serious alarms. When you get older, you should have a trusted family member or friend help you in making any major investment decisions. You see all these infomercials on TV about how you can make money selling these strange products and then you have these so called financial GURUS giving conferences on how to make it rich, but when you really listen to these so called GURUS, what they tell you is nonsense.

If a strategy or an investment requires you to take out more credit or go into debt, you really have to question the agenda behind the strategy. Again with those infomercials about making money by selling a company's products, if this were true wouldn't everyone be doing this?

Finally, no matter how much regulation you have(AMF or Provincial government) the truly ruthless advisors will find a way to rip off client money. By establishing a relationship with clients over many years, he is able to reel them into believing him.

Bob in LOewisporte
CLASSIC Elder Abuse..

Nukasami Yoshitoshiba from Halifax
In Japan, this would never happen as all investors are tied to the government. Maybe Canada should enact the same legislation.

Nanook - The Next Real Thing
Greedy guts!!!!! Serves you all right. What's wrong with a bank??? Oh yea, you can get another 1/2% interest with a weasel.

Patrick
It is truly sad to see the elderly
get swindle like this....!

Mark M
Read a book and invest your own money, nobody will take care of your cash as well as you can. Why pay somebody big bucks for something you can do yourself, just research what you are getting into!

Jim in Ottawa
I'm troubled but not surprised by the comments above who refer to investing in selected companies on the stock market as "gambling." You are only gambling when you are uninformed about what you are doing. Furthermore, stock market investing has nothing to do with this article. That's completely off-topic.

The issue here is a violation of trust. While certainly we all need to take responsibility to do our homework before handing our life saving over to anyone, there is an inherent human capacity to assume that most people we deal with are trustworthy. This person has severely violated that sacred covenant. He must be sought out, made an example of, and punished to the fullest extent of the law.

TC
Easy to blame the victims in all this. Most of them are elderly.

Greed knows no bounds. Funny, once upon a time we all thought corruption was a thing of Mexico but the truth is that enough is never enough. Mexicans do it out of desperation but our excuse is that we want leather seats and a bigger house with a monster big-screen tv. I understand them, but I don't understand us.

We are a lost culture and somewhere along the way we've sold out.

Shannon Walker
I fully agree with Lucky_Eddie. This story has nothing to do with the "risk" involved in the stock market. In fact, the article didn't even say what type of investments his clients had. Some of them may have been investing in GICs (or thought they were).

...

And please, let's not tell each other "trust nobody with your money". That's as silly as saying that women shouldn't trust men in relationships, or vice versa, just because you recently had your heart broken. Just do your homework to make sure your financial advisor works for a well-established company, and to make sure you understand the risks involved in any investment you buy, and you will be fine.

Mike Nait
Why don't people just put their money in a savings account and stop being greedy. Then this wouldn't happen.

Tom Hanna
If that don't put a run on those cold hearted, money gouging banks, nothing will!