A financial advisor and several others implicated in an investment scam incorporating standby letters of credit (L/Cs) still face the prospect of trial in the Canadian courts, even though the Royal Canadian Mounted Police (RCMP) decided not to prosecute some of them.

The scam was uncovered nine years ago, and one man has already pleaded guilty to fraud, but investors duped in the scam still want more people and organisations to face trial.

Class action

Investors who launched a class action lawsuit eight years ago to recover the lost investments last week went back to court to persuade a judge to certify a class action, which would allow the case to go to trial.

The investors are suing several individuals, including Ontario-based Bob Adams, a charismatic former church elder who apparently used his contacts in the church to woo investors. Other defendants include Select Financial Services of Cambridge, Ontario and Toronto lawyer, Robert Adourian.

Claim

The investors' original statement of claim asked for C$51 million in damages for breach of contract, breach of fiduciary duty, negligence and loss of opportunity.

They hope to recoup their original investment plus 12 years of lost interest.

Prime bank scam

The scam is a conventional prime bank fraud in which investors were persuaded that standby L/Cs could be bought cheaply by investors grouped into limited partnerships and sold on for huge profits.

Investors duly parted with their money, and some received payments soon after that to provide them comfort that they had made a sound investment. Eventually, however, they received very little return on their investments and realised that they had been conned.

Conviction

Some of the money from the limited partnerships was funnelled to convicted fraudster, Allan Huppe.

He pleaded guilty last year to defrauding investors of more than US$1.2 million and was sentenced to three years in a Canadian jail.

Duped

One of the main issues in the anticipated court case is whether the defendants implicated in the scam were aware of what was going on or whether Huppe duped them.

The RCMP did not charge Adams several years ago because they believed Huppe had duped the former church elder into his role in the scam. The mounted police also say that Adams even refunded some money to investors out of his own pocket.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.