Royal Bank settles lawsuit over account used in frauds

Victims of Earl Jones to net $ 12 million

MONTREAL — The Royal Bank of Canada has settled a lawsuit for $ 17 million over its relationship with disgraced financial adviser Earl Jones, avoiding a trial in a class- action lawsuit.

The offer was accepted by the victims on Monday. They had previously rejected an offer of $ 12.5 million.

“We were told that if it went to trial the bank would appeal and the case would last 20 years — it would go on till everybody in the group was dead,” said Denise Tesher, one of the many seniors defrauded by Jones.

The lawyers’ cut will be 25 per cent, leaving about $ 12 million for the claimants.

The initial claim in the classaction suit was $ 40 million, for alleged negligence by the RBC in handling the huge slush account that convicted financial adviser Jones maintained at a Montreal- area RBC branch.

Lawyers for the victims came across an internal message from a bank employee sent in 2001 that warned Jones was using a large business account at the branch improperly.

The agreement sets the stage for the drawn- out process of settling the capital loss claims for the more than 100 victims who entrusted their life savings, estates and inheritances to Jones, only to see their money vanish into the Ponzi scheme that paid for four homes and the high- flying lifestyle Jones and his family enjoyed.

Jones is in prison in SteAnne- des Plaines, Que. Convicted for theft and fraud, he was sentenced to an 11- year term in 2010.

“We never thought we’d beat the Royal Bank and we never thought we’d see the end of this,” Tesher said.

The bank confirmed the settlement on Tuesday but continues to deny it was complicit in the Ponzi scheme that defrauded 150 people of $ 50 million.

“RBC has closely examined its role in providing Earl Jones with a bank account and is satisfied that it was not negligent,” the bank said in a statement on Tuesday. “The proposed settlement amount of $ 17 million is the result of many months of discussion between RBC and the class- plaintiffs and seeks to address some of the financial difficulties the class- plaintiffs faced as a result of entrusting Mr. Jones with their financial affairs.”

Joanna and Bob Earle lost almost $ 1 million to Jones.

“We won’t have closure until we figure out exactly what we’re getting and it has been unsettling to live without our nest egg,” Joanna Earle said. “What we get back will be our security blanket in case we need care. It will be enough to make our lives less worrisome. We figure 35 to 50 cents on the dollar, and while we’ll never get all we lost back, that’s still better than nothing.”