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.
Trouble was, no one knew they were borrowing money. Red Storey’s widow Bunny only found out about the purported loan two weeks ago, after Jones disappeared. Ditto Mary Coughlan, who only recently found out she had “borrowed” $50,000 from fellow Jones client Christiane Jackson. In each case, Jones’s clients say their signatures had been forged. Maclean’s was able to view several of the loan agreements; in several instances the lenders’ signatures aren’t uniform.
All the while, Jones was bullish about his investments. He claimed to have a locked-in “high interest instrument” with the Royal Bank that allowed him to buck the bleak economic outlook of late 2008. Even when cracks began to appear—cheques to the nursing homes of several clients began to bounce three months ago—Jones remained ebullient, usually blaming the glitches on his computer. For Jones’s clients and family alike, it remains the most unnerving aspect of the whole fiasco: even as their fortunes were melting away, Earl Jones remained the picture of stability and reassurance until the day he disappeared.
In reality, Jones was eagerly trying to secure more cash for his operation—particularly in the last few months. He approached Jackson’s neighbours for roughly $125,000 (luckily for them, they didn’t get the financing in time). One Westmount couple was hit up for $50,000 after Jones told them another pair of clients needed a down payment for their home. Jones promised an eight per cent return. Margaret Davis “loaned” $20,000 to the Persmann estate, with a promised return of 15 per cent. As before, the purported debtors hadn’t sought to borrow any money.
“I used to say to him, ‘Earl Jones, you’re so full of s–t,’ ” said Jackson. “ ‘Do you think I actually believe that you are getting 15 per cent?’ It would offend him. He said that he wouldn’t have been in business for 35 years if he was doing something fraudulent.”
Jones also prepared taxes for many of his customers, and in April sent out statements purportedly co-signed by Montreal notary Pierre Courchesne indicating the amounts paid on their estates. The taxes were never paid, and Courchesne maintains his signature was forged.
Jones’s secretaries Debra Stewart and Nancy Wynands acted as gatekeepers as he became less and less available over the last few months. “Earl picked up your call late last night,” Stewart wrote on March 10 to Dominique Jackson, who was trying to withdraw money. “He was away with his kids and grandchildren.”
On June 26, Jones reassured his godson, who’d invested nearly a million dollars with him, that all was well with the estate of his mother, Wendy Nelles. A week or so later, two clients of Jones filed papers against Earl Jones Corporation through their lawyers, compelling Jones’s company to pay out their family’s estates. On July 6, a seemingly calm and collected Jones left a voice message for Dominique Jackson, Christiane’s daughter, complaining of a recent minor medical procedure. “I’ll survive,” he said in a reassuring tone, adding he was looking forward to their meeting the next day. Jones himself was gone by the time authorities seized his company assets on July 10. His bank accounts, like the illusion of Earl Jones himself, were empty.