UPDATE: After several weeks on the lam, disgraced financier Earl Jones was arrested and charged with four counts of fraud and four counts of theft yesterday. His lawyer, Jeffrey Boro, suggested more charges will be laid in the coming weeks. Jones, who is free on bail, is expected to plead not guilty to the charges. This week, Maclean’s looked into how Jones allegedly defrauded his trusted clients for $50 million.
Until he scurried off in the night to parts unknown earlier this month, Bertram Earl Jones was a pillar of Montreal’s English community, an affable and charming fellow to whom hundreds of people entrusted their financial well-being for decades, a peerless businessman and loving father who doted on his elderly clients almost as much as his two daughters.
His reputation had already soured considerably by the evening of July 7, when Jones slipped away without saying a word to those whose savings he allegedly stole. Apparently, he couldn’t leave fast enough: investigators found thousands of documents packed into seven suitcases ready at the door of his office. In the days following, as calls went unanswered and cheques continued to bounce, he became known as a mini-Madoff, WASP instead of Jewish, Montreal instead of Manhattan, who allegedly targeted the very community where he’d lived for over 40 years—friends, associates, his own flesh and blood—for upwards of $50 million, maybe more. Jones has since hired a criminal lawyer and has purportedly been in Canada most of the time since his disappearance. His legacy will the hundreds of lives he’s upended and the millions of dollars he allegedly stole. “He knew what he was doing for a long time,” says lawyer Neil Stein, who represents numerous Jones clients.
It seems he did so through a relatively crude pyramid scheme, which, in its final months, was marked by Jones’s frantic quest for cash. Many of his clients-turned-victims handed it over, confident that he would work his magic as he had done so often in the past. Though the reigning question—how did he do it?—must be sifted out of the piles of documents Jones left behind, a Maclean’s investigation into his alleged scheme suggests he began his career legitimately enough some 40 years ago by managing the estates of well-off Montreal families.
According to lawyers and bankruptcy specialists, as well as several former clients, Jones likely stopped investing the money he managed sometime in the late ’80s, opting to use client deposits to finance his own lavish lifestyle. He allegedly targeted the estates of elderly people, almost all of whom he personally knew through his family, and in many cases thickened his client list by recruiting their children. He lured them in by promising steady (and seemingly arbitrary) rates of interest that Stein categorized as “completely fictitious.” The alleged victims include his brother, his godson, his sister-in-law, the doctor who delivered his children, even his own daughter.
The dozen or so clients interviewed by Maclean’s are at once furious at Earl Jones and at themselves for having fallen for his charms. “I was retiring and everything was going well,” said one victim. “I just got lazy. He wanted to consolidate and consolidate, and we trusted him more.” It is a common thread in the stories that lie in Jones’s wake: armed with a silver tongue and an apparent financial Midas touch, he was seemingly able to sell anything to those who trusted him.
Jones learned how to network early on. A gifted hockey player, he convinced many of his fellow players to invest with him when, straight out of high school, he went to work for Montreal Trust, where he specialized in estate planning. In 1980, he joined the Royal Montreal Golf Club. The oldest of its kind in North America, the RMGC was an ideal place to meet the wealthy set, and to recruit members into the investment firm he established in 1979, after he left Montreal Trust.
His client base centered largely in Pointe-Claire, an overwhelmingly English West Island suburb. Jones, several clients told Maclean’s, would sell himself as a family man—often mentioning his developmentally disabled daughter Kimberly. “He boasted about being a member of the board of Kimberly’s school,” one client said, referring to the Riverview School in Massachusetts. Evidently, his clients trusted him completely: “I’d be in his office, and he’d pull out people’s personal cheques from his files and sign them,” said one former Montreal businessman.
In return, Jones would provide regular and detailed statements of his customers’ accounts—at least, at first. Mary Coughlan began investing with Jones in 1983, and received a monthly statement detailing her assets and the mix of stocks and bonds in which Jones was investing. By the late ’80s, though, Jones’s investments shifted from stocks and bonds to loans on estates and mortgages made exclusively to other clients. At the same time, his statements became less detailed and arrived at irregular intervals—often only when clients asked to see them.
His story was similar each time. He would approach a client with a tempting offer: another client, he would say, was waiting for the estate of their parents to be disbursed, but was in need of cash immediately, usually for a big-ticket item like a house. Jones would ask the potential lender to finance his other client, offering anywhere from eight to 15 per cent interest on the loan. Often he would sweeten the deal with a “signing bonus” of several thousand dollars. The loans, Jones said, were securitized by the debtor’s estate.
Throughout the last 14 years, Coughlan had supposedly lent money to five other Jones clients. Another, Charlie Washer, purportedly lent money to the family of famed NHL referee Red Storey. “I thought I would let you know of an opportunity that came forward yesterday,” Jones wrote in an email to Washer last April. The story was familiar: Storey’s son Bob needed $75,000 in a hurry, and would pay a $10,000 premium on the principal after six months. After he obliged, Jones asked for another $25,000, and Washer obliged.
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