Earl Jones victims apply to sue Royal Bank

The victims of Montreal financial adviser Earl Jonesannounced Friday theyare seeking a judge's permission to launch aclass-action lawsuit against the Royal Bank of Canada.

The petitioner named in the suit is Virginia Nelles, whose brother and mother lost almost $1 million invested with Jones.

The suit filed in Quebec Superior Court alleges that the Royal Bank's Beaconsfield Branchin Montreal and its employees were aware that Jones was misusing his personal account at least as far back as November 2001 but did nothing.

The legal documents allege that Jones enjoyed a privileged status at the bank because of his standing in the community and as such the transactions weren't vetted.

"The petitioner submits that Earl Jones could not and would not have been able to carry out a Ponzi scheme to the detriment of the members of the class were it not for the negligence and willful blindness of the Royal Bank," the claim reads.

None of the claims against the Royal Bank have been proven in court.

The suit seeks the full amount that was deposited in the account between 1981 and 2008. A spokesman for the Earl Jones Victims Organizing Committee says the amount determined by lawyers is about $40 million.

"They did not act in a prudent, vigilant or reasonable manner in the operation of this in-trust account," said Joey Davis, in reference to the bank.

The claim alleges if the Royal Bank had kept closer tabs, Jones would not have been successful in perpetrating his 30-year scheme.

RBC has not yetfiled a statement of defence, but the bank said in a statement that it, too, was a victim of Jones.

'We were deceived by Mr. Jones, just as his clients were' Royal Bank

"We were deceived by Mr. Jones, just as his clients were," the bank said in a statement. "Until 2009, there was nothing to signal that Mr. Jones was anything other than a legitimate and successful businessman.

Mr. Jones used his long-standing reputation in the community to take advantage of both clients and companies."

RBC said in a statement that by using its logos and letterhead, Jones lent legitimacy to his Ponzi scheme, even though no such accounts existed.

We did not know that Mr. Jones was misrepresenting RBC's role in his business until Mr. Jones was arrested," the institution said.

RBC acknowledged that Jones' in-trust account, opened some 25 years ago, was operated as a personal account. It added in the statement that in-trust accounts don't have any special status or restrictions."Banks do not monitor the transaction activity of an in-trust account differently from any other type of personal or business account," RBC said.

The bank added: "We are appalled at the damage Mr. Jones has inflicted on so many people and are actively assisting the trustee and authorities involved in this matter."

Jones is due to be sentenced on Feb. 15 after pleading guilty last month to two counts of fraud totalling roughly $50 million. The charges covered his 27-year career as a financial adviser on Montreal's West Island. Jones bilked 158 clients out of $50.3 million. His criminal proceedings heard that he never invested a penny of the money and none of it has been recovered.