The Autorité des marchés financiers announced that it filed 51 charges against former Norbourg president Vincent Lacroix in the Court of Quebec.

The charges involve 27 counts of manipulating the price of mutual fund units, and 24 counts of providing the AMF with documents containing misrepresentations, including financial statements, annual reports and annual information forms. None of these allegations have been proven.

The AMF says that sentences being sought consist of prison terms of up to five years less a day as well as fines varying from $20,000 to $5,000,000 on each count. “The AMF has been very careful in filing penal charges under the Securities Act so as not to hinder any criminal proceedings that might be launched by the Integrated Market Enforcement Team,” the AMF says.

“Mr. Lacroix misappropriated the funds of thousands of investors. He continues to take steps to hamper procedures. He refuses to co-operate. He is contemptuous of investors and institutions alike. Moreover, far from expressing any regret for his conduct, he publicly claims that he is being victimized. The message must be clear. It is unacceptable for defrauders to have an easy ride,” said AMF president and CEO Jean St-Gelais.

The regulator says that, according to the report of the provisional administrator of the Norbourg and Evolution funds, there was a discrepancy of $130 million between the financial statements of the Norbourg Group and the assets under management held by the securities custodian Northern Trust.

The AMF says it has since identified 137 or so irregular withdrawals between March 2000 and August 2005 from the Norbourg, Evolution and Hedgevest funds, for a total of more than $115 million. “This $115 million transited through any one of the 26 accounts held by Mr. Lacroix or his companies. They were primarily used to acquire and maintain companies operating in the red,” it alleges. “Without this inflow of funds derived directly from investors, Mr. Lacroix’s companies could not have remained operational. Moreover, to conceal the misappropriation of funds, a scheme was set up to alter the actual account statements of Northern Trust.”

The regulator says that its priority is protecting the interests of defrauded investors. “Although the losses are substantial, the AMF is making every effort to recover as much money as possible for the benefit of these investors,” it says, adding that preparations for the civil recourse on behalf of investors is under way.

“The investigation into this matter is continuing, and the acts carried out by individuals and businesses associated however remotely with this scandal are being keenly scrutinized,” the AMF says, noting that it is making claims against assorted other firms. “Other legal actions may be launched in the future.”

“Economic crimes are serious and detrimental to investors and society at large. As such, penalties in line with the seriousness of the offence must be imposed against the perpetrators,” says St-Gelais. “It is now up to the courts to engage in the cause by taking steps to ensure that jurisprudence better reflects the reality of economic crimes and that sanctions deliver the maximum deterrent effect.”