More than 500 investors packed into a Montreal hotel meeting room last month to hear a grim report from a government-appointed administrator of the Mount Real Corp. group of companies.

The verdict from administrator Jean Robillard was that investors will recover little of the $126 million they sank into promissory notes issued by affiliates of Mount Real, a now-bankrupt vendor of magazine subscriptions.

Investors attending the meeting were presented with a mind-bending chart showing the Byzantine corporate structure of Mount Real and its related companies.

Some at the meeting took to the microphones to rail against the Quebec financial services watchdog, the Autorité des marches financiers, for failing to protect them. But most investors — many of whom were senior citizens — sat quietly, frowning and shaking their heads.

Sadly, these people are just a small contingent of the thousands of ordinary investors who have suffered losses in a trio of major investment scandals that have come to light over the past year in Quebec. In total, the losses run to three-quarters of a billion dollars.

Retail and institutional investors stand to lose almost all the $482 million they poured into funds offered by Norshield Financial Group, a Montreal hedge fund operator.

And then there is Norbourg Asset Management Inc. , the mutual fund group. The AMF alleges $115 million was embezzled by Norbourg CEO Vincent Lacroix.

Developments in each of these cases have been coming hot and heavy in recent weeks as various investigations and court actions proceed.

> Mount real. In February, the AMF and Robillard killed a plan to relaunch the Mount Real group after an intense court battle with a bankruptcy trustee who was quarterbacking the proposal.

The plan featured an offer from a U.S. businessman to buy the insolvent group’s assets. But the businessman turned out to have had dealings with Mount Real principals, and he eventually withdrew his bid.

After the proposal collapsed, a Superior Court judge ordered the firm and two of its affiliated companies into bankruptcy, clearing the way for a liquidation of the assets.

$5.3 million, not $100 million

Mount Real was shut down last November by the AMF after the firm began to default on promissory notes it had issued to investors. The AMF has said some of those notes were issued and sold illegally, and that Mount Real had misled investors about its operations.

At the investor information meeting, Robillard said a database of 223,000 magazine subscription contracts is valued on Mount Real’s books at almost $100 million. But in reality, only 12,000 contracts are active, for a value of just $5.3 million.

But, he noted, $105 million on the books as advances, loans and investments to other firms is sprinkled across 30 related companies. Transactions among these companies — many located in the U.S., the Bahamas or Bermuda — were directed by Mount Real CEO Lino Matteo.

Efforts to recover the money have so far borne no fruit, and examination of some of the companies’ books has shown little more than transactions with other related companies. Mount Real companies have just $784,000 in cash.

The AMF has recently moved to take away the licences of a number of investment advisors who sold Mount Real promissory notes to their clients while at the now-bankrupt iForum Financial Services Inc. and iForum Securities Inc. The parent company of these firms was operated from the same address as Mount Real and shared a president with Mount Real in Joseph Pettinicchio.

> Norshield. In a recent report to Norshield investors, a receiver said investors will recover, at most, 10¢ on every dollar invested in Norshield hedge funds. The recovery could be as low as 3¢ on the dollar.

Most of the money, including $132 million from 1,900 retail investors, never went into hedge funds, according to RSM Richter Inc. receiver Raymond Massi. Instead, it flowed into offshore entities in the Bahamas and Barbados, many of which are insolvent or under contested ownership.

Quebec and Ontario securities regulators are investigating the Norshield debacle. The Quebec Provincial Police are also believed to be investigating Norshield, which has ties to Mount Real.

Norshield CEO John Xanthoudakis blames his firm’s business reversals on a long-standing legal dispute with animation firm Cinar Corp. over offshore investments Cinar made in the late 1990s.

@page_break@> Norbourg. Apparently fed up with waiting for the RCMP to move, the AMF laid a raft of charges against Lacroix in March.

Jean St-Gelais, the tough-talking president and director general of the AMF, called on the courts to be tough on Lacroix to show that commercial crime does not pay. Lacroix deserves jail time, St-Gelais says.

The AMF laid 51 charges against Lacroix under the Quebec Securities Act: 27 counts of manipulating the price of mutual fund units and 24 counts of providing false financial statements to the AMF.

The charges carry maximum penalties of $5 million in fines and five years of imprisonment on each count upon conviction.

At a press conference, St-Gelais, appeared particularly irritated by a Web site set up by Lacroix, who has pleaded not guilty to the charges.

“Vincent Lacroix has misappropriated the money of thousands of investors,” St-Gelais said in a press release. “Far from regretting his actions, he claims publicly to be the victim. The message must be clear: it is intolerable to believe fraudsters can get off easily.”

The AMF says it has turned up 137 improper withdrawals between March 2000 and August 2005 from funds in the Norbourg, Evolution and Hedgevest families, for a total of $115 million.

The money moved through 26 accounts belonging to Lacroix or his companies, and was used mainly for keeping Lacroix’s money-losing companies afloat, although some was also used for his personal benefit, the AMF alleges.

The RCMP’s integrated market enforcement team continues to investigate the Norbourg case and could lay its own criminal charges. IE