Edmonton man faces possible jail time for $5M Ponzi scheme

The architect of a $5 million Ponzi scheme is likely facing prison time after pleading guilty to 22counts of fraud over $5,000 last month in Edmonton.

Timothy Ray Carruthers, 60, defrauded 35 people over seven years in an elaborate scheme involving bogus mortgage loans, according to the agreed statement of facts. He pleaded guilty to all 22 counts on Feb. 7.

At a sentencing hearing Friday, Crown prosecutorLeah Boyd called Carruthers a "financial predator" who used his victim's money to fund a "lavish" lifestyle.

"He was for many people their trusted financial advisor," Boyd told the court. "He took their life savings into his own hands with no compunction, no hesitation, frittering away that money and then going back for more."

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The Crown is asking for a six to seven-year jail sentence.The defence said a five-year term is appropriate, arguing the prompt guilty plea serves as an expression of remorse. The maximum sentence for fraud over $5,000 is 14 years.

'This is a man without conscience'

Kim and Jacqueline Krahn met Carruthers in 2009 after seeing his ad on the Internet. Carruthers offered them financial advice and prepared their tax returns, thenapproached them with a joint-venture opportunity involving mortgage loans a year later.

Carruthers said the purported borrowers were looking for a bridge mortgage loan, a way to help them pay for a new house while they waited for their current one to sell. He forged land title documents and fraudulently used the names of legitimate law firms to cover up the scheme.

It was a script Carruthers would rewrite and repeat to dozens of investors between 2009 and 2017.

"This is a man without conscience," Kim Krahn said after Friday's hearing.

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Kim and his wife lost more than $140,000 to 11 fraudulent joint ventures orchestrated by Carruthers. The couple'sretirement plans have been put on hold.

"Money we were hoping to pass onto our children later that's up in the air. My inheritance from my recently passed mother that's gone," Krahn said.

Carruthers repeatedly used his position of trust to defraud investors, the Crown said. His victims included former colleagues, the woman who cleaned his office and the grandmother of his daughter-in-law.

"Mr. Carruthers showed no mercy, even when it came to family relationships," Boyd told the court.

Carruthers sat through Friday's hearing from the prisoner's bench, wearing a button-up shirt and slacks, and left the courtroom accompanied by his lawyer.

Money used to fund 'lavish lifestyle'

Carruthers used the money to support a"lavish lifestyle" shared with his wife, Brenda, Boyd said.

The couple went on dozens of vacations between 2010 and 2016 to locales such as Bora Bora and Mayan Riviera, according to the agreed statement of facts. He gave his wife nearly $500,000 in pay cheques and paid off his daughter's credit card bills. He bought a Porsche and a diamond ring worth $40,000.

Boyd, the Crown prosecutor, said Carruthers was motivated by "nothing but greed".

"The fountains of money from investors had dried up and that's what caused Mr. Carruthers to stop his fraudulent behaviour," she said.

Carruthers filed for bankruptcy in June 2017 as the scheme was falling apart. It was the third time he had filed for bankruptcy in Canada.

"Am I frustrated that he lived large on our coin? It's frustrating, no question about it," Krahn said. "The chances of us getting something back is minimal."

The sentencing hearing is expected to continue before Court of Queen's Bench Justice Larry Ackerl on Wednesday.