Montréal – The Autorité des marchés financiers (AMF) yesterday filed 51 charges in the Court of Québec against former Norbourg president Vincent Lacroix. The charges pertain to two broad types of accusation:

  • manipulating the price of mutual fund units (27 counts);
  • providing the AMF with documents containing misrepresentations, in particular financial statements, annual reports and annual information forms (24 counts).

The penal 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 (IMET).

“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.

Flow of funds
According to the report of September 30, 2005 prepared by 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 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. 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 AMF’s 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.

Recourse for benefit of investors
Preparations for the civil recourse on behalf of investors is under way. In this regard, the following companies have been added to the list of defendants, which includes Mr. Lacroix and a number of persons associated with this matter, against whom the AMF has filed a claim:

  • KPMG – $21,7 million;
  • Beaulieu Deschambault – $74 million;
  • Northern Trust – $115 million;
  • Concentra Trust – $115 million;
  • Placements Norbourg – $79 million.

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. Other legal actions may be launched in the future.

Deterrent penalties
“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. 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,” concluded Mr. St-Gelais.

To perform its primary mission, which is to protect Québec consumers, the AMF has to combat economic crime more actively, further promote sound corporate governance in the financial sector and enhance its oversight of compliance. The AMF will pursue its efforts in this regard.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

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