Man gets six years for bilking 22 people in Ponzi scheme

Greed was the one factor motivating a man who defrauded nearly two dozen people out of a total of $5 million during a multi-year Ponzi scheme, a judge said Wednesday.

Timothy Ray Carruthers was sentenced to six years in prison for his role in a mortgage loan scam that emptied retirement plans and drained children’s education funds — all to pay for a lavish lifestyle that included luxury cars, international travel and expensive jewelry.

Court of Queen’s Bench Justice Larry A. Ackerl said Carruthers was “driven by self-indulgence and greed.” Carruthers did not react as he stood to receive his sentence.

Police charged Carruthers with 22 counts of fraud over $5,000 in July 2018. An investor who did not receive agreed-upon funds reported Carruthers to police two years earlier, and that launched a sprawling fraud probe.

According to an agreed statement of facts entered with the court, Carruthers began searching for investors to provide borrowers with bridge mortgage financing in 2009 through his company, Wakina Consulting Inc.

Carruthers would approach potential investors claiming bank managers had come to him with borrowers in need of short-term bridge financing. He would claim the so-called investment was a joint-venture and that his company would cover between 50 and 75 per cent of the mortgage loan.

Court heard the “borrowers” would pay Wakina a setup fee followed by interest payments each month. The investors were then supposed to receive monthly interest payments, which they would split with Carruthers along with part of the setup fee. The investments were supposedly backed by liens or caveats placed on the titles of the home the borrower was selling, as well as the new home.

The borrowers were, in fact, an assortment of 57 people who Carruthers knew but who had never entered into any sort of agreement to borrow money from Wakina. They included neighbours who he had known for 35 years and people whose taxes he had prepared.

The documents Carruthers provided to the investors were designed to look real but were in fact false. Ackerl said Carruthers forged land title certificates, T5s, profit-and-loss statements and other documents throughout the scheme.

Court heard Carruthers’ investors were friends, relatives and work contacts. Ackerl said in one case he recruited a woman who cleaned an office where he worked. The woman spent her entire inheritance on the scheme.

Ackerl said he used the money to pay for “opulent” vacations to international locales “all funded by his criminality.” Money also went toward his daughters’ credit card bills, a Porsche and a $40,000 diamond ring for his wife — who he paid a salary despite the fact she held no job with the company.

At the time of his plea, only about $1.7 million of the roughly $5.3 million “invested” with Carruthers had been paid back. Carruthers has been ordered to pay restitution to 22 investors — the largest of whom suffered a net loss of more than $572,000.

Court heard that Carruthers is 60 years old and has four adult children. He has a Grade 11 education, and worked for four financial service companies before founding Wakina in 2001.

He has filed for bankruptcy three times, most recently in June 2017.

Nineteen victims read impact statements during the sentencing hearing, detailing how the scheme had emptied retirement savings accounts and their children’s education funds.

As profound was the impact Carruthers’ actions had on his victim’s ability to trust people, Ackerl said.

His ultimate sentence of six years was in between the Crown and defence submissions.

Crown prosecutor Leah Boyd argued a six- to seven-year prison term was appropriate. The defence argued for five years followed by a period of probation.

Ackerl said the fact Carruthers’ abused a position of trust as a financial planner, along with the magnitude and complexity of the fraud, argued for a more severe sentence.

His early guilty plea — Carruthers ultimately made just seven court appearances in seven months — was a mitigating factor because it saved court resources and further trauma to victims.

A fraud over $5,000 conviction carries a maximum sentence of 14 years and a minimum of two years if the fraud is over $1 million.