AMF must pay Norbourg fraud victims

MONTREAL – A Quebec judge has ordered the province’s securities regulator to compensate 138 investors who sued the watchdog after they lost their savings in the massive Norbourg fraud.

Judge Bernard Godbout of the Quebec Superior Court ruled that the investors succeeded in proving that they were victimized by a fraud orchestrated by Norbourg founder Vincent Lacroix and that as a result they should be awarded damages by the Autorité des marches financiers (AMF).

Lacroix, convicted of fleecing about 9,200 investors in now-bankrupt Norbourg out of $115 million over five years, testified in defence of the investors. Their claims total $7.6 million.

The decision is considered a blow to the watchdog. It had argued that the investors should not be compensated because the fraud that occurred involved the management of mutual funds, which are not included among the financial products and services for which the AMF compensates.

The AMF had argued that the law is clear on that point. It may appeal the decision.

The watchdog has always agreed that there was a fraud that occurred at Norbourg. But it denied these investors compensation on the grounds that they lost their money through management firm Investissement SPA, purchased by Lacroix in 2004, and not through Norbourg directly.

The AMF argued that Lacroix was not involved in distributing SPA funds. Lacroix testified otherwise, saying he was the sole shareholder and administrator of the firm. To the delight of the investors, Lacroix explained his scheme in detail to the court this past March, saying he bought SPA to snag investors’ money and that he falsified documents to hide his actions.

"The right hand couldn’t ignore what the left hand was doing," he was quoted as saying. "It was a well-oiled and integrated distribution system."

Lacroix is now serving a 13-year prison sentence.