MONTREAL – The two sides embroiled in more legal fallout from the Earl Jones saga got a lesson this week in how the disgraced money man managed to wrangle large mortgages for elderly clients – without their knowledge.
On Monday, mortgage broker George Kimbal (Kim) Whitehead took the stand in Quebec Superior Court in the lawsuit of plaintiff Electa McMaster vs. Industrial Alliance Insurance and Financial Services and notary Linda Frazer.
McMaster was saddled with a $367,000 mortgage on her du Musée Ave. home in 2006.
She maintains she never authorized this mortgage and that Jones used his power of attorney – granted 15 years before – to sign on her behalf.
Whitehead was the broker for her mortgage and Frazer was the notary.
Whitehead said Frazer, whom he knew through business dealings, told him he should meet with Jones because the two could do business together.
Whitehead said Jones contacted him in 2005, and they subsequently did “about a dozen” deals together.
“We made these deals with Earl Jones representing his clients,” Whitehead said.
Forms were faxed from his home office in Ste. Marthe to Jones’s offices in Pointe Claire.
Whitehead told the court he had never met McMaster or spoken to her.
“All the correspondence was done through Earl Jones’s office,” he said, including taking credit details for McMaster over the phone.
Whitehead never verified what Jones told him were McMaster’s holdings and sources of income.
When McMaster’s lawyer Ron Auclair asked him if he took note of the date on the power of attorney, the broker said no.
“I didn’t look at the date; it’s up to the lender (Industrial Alliance) to do due diligence,” Whitehead said of passing the documents along to the financial firm.
“Did you ever look at the house?” Judge Pierre Tessier asked Whitehead.
“No, your honour,” he replied.
An asset statement from Jones said that McMaster’s home was worth $700,000, which Whitehead said showed him the solid nature of the client, and he received a positive credit check through Equifax.
When McMaster noticed in June of 2007 that $2,100 had been taken from her account for several months, she called Jones to ask about this supposed authorized payment.
She testified Jones told her it was a mistake, to ignore it and he would fix things.
McMaster sold her home in 2010 and the money from that sale is sitting in escrow pending the outcome of her lawsuit.
The McMaster mortgage which was accepted was one of three Whitehead brokered for Jones in a seven-day period in December 2006; the other two were for Jones’s properties in Dorval and Mont Tremblant.
The three raised $1.1 million, which was deposited in the Earl Jones in Trust slush account.
The trial continues Tuesday.
Jones was sentenced to 11 years in prison for theft and fraud in February 2010.
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