Norbourg victims recoup losses

…raising the total to $113 million, roughly 100 per cent of the capital lost (though the still-undetermined fees of the class-action legal team from Quebec City, to be deducted from the $55 million, will reduce the total somewhat)..There are no past examples of an agreement of this nature,”…

The Montreal Gazette
January 19, 2011

Norbourg victims recoup losses
Defendants agree to $55M settlement, lawsuit dropped
Paul Delean

Michel_Vezina_Jacques_Larochelle.jpg

Investor Michel Vezina (left) thanks lawyer Jacques Larochelle at the close of a press conference in Montreal yesterday. Investors in collapsed mutual-fund company Norbourg will be getting back almost all their money after a $55-million agreement. Photograph by: Phil Carpenter, The Gazette

Michel Vézina’s beaming face told the story.

The Norbourg nightmare is almost over for the 71-year-old South Shore resident and 9,200 other investors of the failed Montreal investment company, with an ending only the most optimistic could have imagined.

An agreement in principle concluded late Tuesday with institutions targeted by a class-action lawsuit means investors will recoup almost all the more than $100 million swallowed up in the 2005 collapse of Vincent Lacroix’s fraud-ridden empire. Cheques may be in the mail within four months.

Lawyers for the Norbourg victims called the agreement “a great victory” and precedent-setting for a case of this magnitude.

“I’m very proud, very happy and ready to turn the page, do other things than live the stress of the last five years.

“I’m ready to forget everything called Norbourg, including Vincent Lacroix. That’ll happen when I get my cheque,” said Vézina, who sat alongside the lawyers at their press conference yesterday, smiling throughout.

Vézina was a labourer who retired two years before Norbourg went under. He had to return to work when he and his wife lost virtually all their $300,000 nest egg, and committed himself to another renovation job as recently as Monday, because the long-rumoured settlement still hadn’t been inked.

Under the deal, which requires approval in Quebec Superior Court to proceed, a group of defendants – including Quebec securities regulator L’Autorité des marchés financiers (AMF), accounting firms KPMG and Beaulieu Deschambault, accountant Rémi Deschambault and trust companies Concentra and Northern Trust Company Canada – agreed to pay a total of $55 million, with no public breakdown of their respective contributions and no admission of responsibility.

The $55 million is on top of the $32 million in compensation the AMF paid from its indemnity fund to 925 Norbourg victims in 2007, and $26 million from the liquidation of Norbourg assets and tax refunds from Revenue Quebec, raising the total to $113 million, roughly 100 per cent of the capital lost (though the still-undetermined fees of the class-action legal team from Quebec City, to be deducted from the $55 million, will reduce the total somewhat).

In return, lawyers for the victims agreed to end all Norbourg-related legal action, including another class-action suit against the Caisse de dépôt et placement du Québec, which sold mutual-fund operations to Norbourg in 2003.

Not getting a decisive judicial determination of who was responsible for what is “the cost of reaching an agreement,” lawyer Jacques Larochelle said.

In a joint news release, the parties said they reached the settlement in the interest of the victims and to avoid a lengthy and costly trial due to begin Jan. 31. The mediation process was initiated and overseen by Superior Court Judge François Rolland.

Norbourg investors won’t even have to do any paperwork to get the money. Their names are on file and they’ll be reimbursed automatically, Larochelle said. If they’ve changed addresses, they should notify accounting firm Ernst & Young, which will handle distribution (on the tab of the AMF).

Asked the primary lesson of this particular case, Larochelle quickly answered “never put your trust in Vincent Lacroix.” The former Norbourg CEO pleaded guilty to nearly 200 criminal charges in 2009 and was sentenced to 13 years in prison. He reportedly is seeking to be transferred to a halfway house in Ontario.

Dr. Wilhelm Pellemans of Morin Heights, one of the co-plaintiffs in the class action, called the agreement “extremely satisfying” and praised the efforts and compromises of the parties involved as well as the “compassion” of the defendants who agreed to pay.

“There are no past examples of an agreement of this nature,” he said.

Pellemans said the victims always felt they had an excellent case, and “we had the (legal) team to get it settled.”

For the class-action suit, Larochelle joined forces with Létourneau Gagné, the small Quebec City firm with a history of significant legal victories for investors, including a $3-million judgment (with $1.5 million in punitive damages) against CIBC World Markets in 2006 for retirees Haroutioun and Alice Markarian.

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