A former tv star who had hosted Quebec’s answer to Candid Camera was among the 95 victims of an investment scheme that regulators say merits jail time for four former advisors.
The Autorité des marchés financiers has laid 459 charges under the Quebec Securities Act against the four advisors, who are alleged to have lost more than $10 million belonging to former clients, some of whom were celebrities.
The AMF has charged Guy Charron, Richard Lanthier, Huguette Gauthier and Gérald Turp for offering illegal investments through Gestion Guychar (Canada) Inc.and associated companies. Charron, Lanthier and Gauthier operated a financial planning firm in downtown Montreal; Turp is Gauthier’s spouse.
The AMF is seeking a maximum of five years less a day of jail time for each upon conviction, plus fines totalling more than $8.3 million.
Publisher and TV personality Alain Stanké, beloved by TV watchers in Quebec for his good-natured pranks on unsuspecting members of the public, was one of those who lost savings in Guychar investments. Actor Gérard Poirier is another well-known Quebecer who was stung.
The four former advisors allegedly issued IOUs to clients between 1994 and 2007, promising above-market interest rates of 6%-18%. “These were investments without a prospectus,” AMF lawyer Nicole Martineau says.
Clients received notes indicating that either Gestion Guychar, Charron or Lanthier was borrowing their money; the notes promised to pay a given rate of interest on a maturity date, Martineau says. The clients frequently rolled these notes over into instruments with later maturity dates.
“The investors, in many cases, heard about these individuals through the grapevine,” Martineau says. “Essentially, the representations to investors were made by Charron and Lanthier.
“Sometimes, they told investors they were offering a loan that paid interest,” she explains. “To other investors, they said: ‘Lend us money and we will lend it to other people.’ Sometimes, they were simply offering ‘a good investment’ that would produce better returns than the banks. Other clients were offered investments in Gestion Guychar. So, the representations changed from one investor to another.”
In early 2007, the AMF received complaints from investors who hadn’t been repaid. In February and April of 2007, the AMF obtained orders from the quasi-judicial Bureau de décision et de révision en valeurs mobilières freezing the assets of the four and a series of companies. The BDRVM also has prohibited the four from dealing in securities or acting as securities advisors.
Charron had been registered with the AMF as an insurance agent and a financial planner until 2004, when he gave up his registration. Lanthier and Turp were registered as mutual fund representatives, while Gauthier was registered as an insurance agent. The latter three gave up their registrations last year, Martineau says.
In a separate investigation, the Chambre de la sécurité financière — an SRO that oversees mutual fund salespeople, insurance advisors and financial planners in Quebec — found evidence that at least one group of investors had been paid with money collected from other investors in 2006 and early 2007.
The CSF has filed disciplinary complaints against Lanthier and Gauthier. In a decision handed down against Gauthier in November 2007, the CSF’s disciplinary committee stated that Lanthier and Gauthier sold private investments to clients between 1994 and 2007, principally in companies operated by long-time business associate Charron, including Gestion PEMP and Guychar.
“Investors’ money was used, similar to a credit line,” the CSF decision states, “to finance the activities of these business partners, principally through PEMP from 1994 to 1998, and then, since about 2000, through Guychar.”
The CSF alleges Lanthier was active in the second half of 2006 in collecting money to finance a real estate project in Vermont: “The new sums invested with Guychar or with Charron were also used, notably, to allow Guychar and Charron to meet their obligations to certain inves-tors who were demanding their money.”
The AMF, for its part, has charged the four former advisors with acting as securities brokers without being registered and selling or helping to sell investments without a prospectus.
Lanthier faces 244 counts, including 89 with the possibility of a jail sentence and a maximum of $3.8 million in fines, according to an AMF statement.
Charron faces 202 counts, including 153 with the possibility of a jail term and maximum fines of $4.4 million.
@page_break@Gauthier faces 12 counts, including one with the possibility of jail time and fines totalling $160,000.
Turp faces one count of helping to sell an investment without a prospectus, which carries the possibility of jail time and a fine of $25,000.
Martineau says the four have yet to enter pleas on the charges.
Stanké lost “a large part” of his savings in Guychar investments. “I’m very happy to learn that these people will finally face justice,” he says. “Unfortunately, it won’t give us back what we have lost.”
The AMF is coming off a string of high-profile prosecutions over the past year. It scored a major win in December, when a judge sentenced Vincent Lacroix, founder and former CEO of Norbourg Asset Management Inc., to 12 years less a day on charges related to his looting of his firm’s mutual funds. That sentence was later reduced on appeal to 8.5 years — a ruling that the AMF has requested leave to appeal.
In July, the AMF brought another long-standing, high-profile case to a close when high-tech entrepreneur Benoît Laliberté was fined almost $900,000 after his conviction on 41 Securities Act charges, including illegal insider trading and misleading investors.
Laliberté is the former CEO of Jitec Inc., a dot-com era computer company that crashed in 2000. IE
AMF to ask for jail time for four Montreal advisors
More than 400 charges have been laid against a foursome who allegedly fleeced celebrities
- By: Don Macdonald
- September 3, 2008 September 3, 2008
- 11:25