‘HE IS A CON MAN’
Peers sentenced to 31/2 years
Joan Smith considered Jay Peers a good friend. They met through his father and stepmother, attended family weddings and funerals, and enjoyed parties and Christmas dinners together.
When the then-single mother decided she needed to boost her retirement savings in the 1990s, she began making monthly deposits with Peers, an Edmonton investment adviser, gradually increasing the amounts until his companies held her life savings and the education fund for her two grandsons.
Later, after she married, her husband mortgaged his house so Peers could work his money magic. Her daughter, sister, a cousin and a niece also invested with a man Smith describes as engaging and charismatic, the scion of a prominent Edmonton family lauded for his financial acumen.
But everything fell apart when Peers’ mortgage empire collapsed in December 2010.
Federal Mortgage Co. (FMC) and related investment management company Peers Foster Kristiansen Inc. (PFK) went bankrupt, leaving about $77 million in debts and few assets, not the complete security Smith had been assured was in place.
“I was in shock. I had just lost my complete life savings,” she said.
“Disbelief was the first thing I had to conquer, the realization that I had been duped, the realization it was all a fiction.”
On Thursday, provincial court Judge Fred Day sentenced Jeremy (Jay) Peers to 31/2 years in prison, more than a year after the businessman pleaded guilty to 11 charges under the Alberta Securities Act, including two counts of perpetrating a fraud on investors and five counts of making untrue or misleading statements regarding investing in FMC and PFK.
“He is a con man,” Day said as he delivered his sentence in an Edmonton courtroom.
The judge ordered lifetime bans that will prevent Peers from acting as an adviser or dealer under the securities act, becoming an officer or director of a corporation, and trading in securities — with the exception of personal trades.
Peers was also ordered to pay hundreds of thousands of dollars in restitution to two of his former clients.
Peers, the grandson of early Edmonton mayor and coal baron Harry Marshall Erskine (H.M.E.) Evans, was the key player behind one of the biggest, most complex securities frauds in recent Alberta history.
Now in his early 70s, Peers was at the centre of a web of more than a dozen interconnected companies run by him or his two sons, Marc Peers and Rob Peers.
Jay Peers and Rob Peers owned just under half of PFK through three companies they ran — the rest was held by various individual shareholders — and this gave them an approximately half interest in FMC.
The last report in 2016 by bankruptcy trustee PricewaterhouseCoopers said many assets of FMC and PFK were overstated, mortgages that had been paid off remained on FMC’s books, and inter-company advances weren’t properly authorized, documented or secured.
“Many transactions were convoluted to the point of being virtually impossible to understand and enforce.”
Little was left to cover the losses once financial institutions with secured mortgages were paid.
Hundreds of unsecured FMC creditors owed $38.7 million are getting back 2.6 cents on the dollar, cash raised primarily by selling real estate, while people without secured mortgages in PFK won’t see a dime.
A lawsuit filed by 23 plaintiffs claiming they lost $7.4 million in the bankruptcy of FMC and PFK alleged there was a “Peers family scheme” to solicit investments into the two firms that were then redirected to businesses and assets owned or used by family members.
The lawsuit claims this was “a classic Ponzi scheme” that paid returns using money from incoming investments.
Human and corporate defendants denied these schemes existed or that they did anything wrong.
Claims against most of the defendants were dismissed last year after an agreement was reached between them and the plaintiffs.
Licence fees from communications technology connected to the companies were transferred to the plaintiffs, who had a total of $528,000 paid into their lawyer’s account by February 2016.
Plaintiff Bob Mewburn claims to have had $3.2 million invested in the two failed firms, including funds from his late sister, Charity.
The families of Mewburn and Jay Peers have a long history — the two men kayaked and played golf together, their mothers and grandfathers knew each other, and the Mewburn family holding company’s assets were rolled into PFK shares.
Peers handled their money for about two decades.
“He has dealt with us shabbily, since we were friends, but he dealt with everyone shabbily,” Mewburn said from his Victoria home.
Mewburn said his losses have taken him and his wife from a comfortable life to “living on the knife edge.”
He thinks Peers started as a legitimate businessman.
“In a way it seems to me … it’s a story of colossal incompetence, of sinking good money after bad into investments that had no prospect of success,” he said.
“I don’t know what happened to him, if he had a psychological crisis, or just went bad.”
Smith, who isn’t part of the lawsuit, was in court Thursday to hear the sentence.
She stood to watch as Peers was taken into custody by two courthouse sheriffs.
After years of carefully tracking Peers through the court system, Smith seemed uncertain when asked how it felt for the case to finally have come to a close.
“I feel spent,” she said.