Canadian Fraud
The Eron Mortgage fraud happened in British Columbia. That is not a typo. It’s not the “Enron” fraud. It’s our own very particular Canadian Fraud.
What’s different about this fraud is that a detailed study of the ins and outs of how and why it happened was performed. And the results are intriguing.
The report is titled “Eron Mortgage Study.” The principal researcher was Neil Boyd, LL.B., LL.M., Professor and Associate Director, School of Criminology at Simon Fraser University. The study, conducted in 2004 and 2005, is the first comprehensive study of an investment fraud and includes responses from more than 2,200 Eron Mortgage investors. This was a detailed project. Researchers reviewed relevant existing research on investment fraud; reviewed the B.C. Securities Commission findings on the case, held several focus groups; and distributed two sets of surveys – an initial one to 520 random Eron investors, and a refined, final version to 1,765 investors. They also conducted 180 telephone interviews and had face-to-face meetings with regulators, legal counsel, accountants and other experts in securities legislation and investor fraud.
The first thing that strikes you is the sheer number of victims. Roughly 2,800 people became prey to this one scheme and this is just one private market deal in one Canadian province.
The second thing that hits you is the absolutely devastating affect that losing money in this scam had on people. Consider this quote received from an Eron investor:
It made sense to me. Joe Blow has a piece of property but can’t proceed, because of not having capital to proceed. Therefore he borrows money at high interest until he gets the infrastructure together for this project that he’s hoping to have happen. As soon as he’s got something, the banks or someone else can mortgage it for him, and he would pay back the high interest loan.
A friend of a friend that told me about Eron, and at the time I was a struggling single parent, and he encouraged me and an awful lot of others to invest in this…so I invested all the savings I had – about $14,000. All I remember is that I was a single parent and was struggling. I know that to some people the $14,000 wasn’t much, but it was disastrous to me.
That’s often the “hook”: the ideas seem to make some logical sense.
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