WHITE COLLAR CRIME PAYES

Investment con artist admits guilt, but may never face punishment for his crime, court told

Kevin Martin - Yesterday -  Calgary Herald

Calgary senior Vernon Ray Fauth pleaded guilty Monday to swindling investors out of more than $2 million.

The entrance to the Calgary Courts Centre.

But Fauth may never be punished for his crime as he is facing severe medical issues that may make him too ill to face a sentencing hearing, his lawyer told court.

Defence counsel Shamsher Kothari said Fauth, 75, is awaiting the results of medical testing which may prevent him from ultimately seeing justice for bilking investors through his Espoir Capital Corp .

“My client’s going through some serious medical issues,” Kothari told Justice Keith Yamauchi, without elaborating on what health problems Fauth faces.

“There could be a point that there’s not a next (court) date health-wise.”

Fauth pleaded guilty to a single count of fraud relating to investments he took in between Jan. 1, 2012, and July 8, 2015, when Espoir’s bank account had a zero balance.

Reading from a statement of agreed facts, Crown prosecutor Brian Holtby said an investigation by the RCMP Integrated Market Enforcement Team focused on that period and six specific parties which lent Espoir money under the promise of favourable interest rates.

“The amount the six lenders put at risk during the investigation period totalled $2,365,000,” Holtby told the Court of King’s Bench hearing.

“Their total loss was $2,227,751.”

The prosecutor said Fauth accepted short-term loans to Espoir for the purpose of putting the cash in “a pool of secured interest-paying investments.”

“The offender raised funds for Espoir by persuading individuals to loan money to Espoir in exchange for a debenture or promissory note which guaranteed a return.”

Over time Fauth created other companies which were supposed to offer investment possibilities.

“None of these companies was truly a going concern and none provided the type of investment opportunity that Espoir ostensibly pursued,” Holtby said.

Each investor was paid some interest over the period of their loans, but at less than the eight per cent promised. None of them received their principal loan amount at the closure of the loan periods.

“The offender led them to believe that the proceeds would be invested in a pool of secured interest-paying investments. Accordingly, Espoir could be relied on to pay back the principal and the promised interest.”

But that never occurred, the prosecutor said.

“In fact, the offender did not use the money as he represented he would,” Holtby said.

“Almost all of it was quickly paid to earlier Espoir investors/lenders or to the offender’s related companies. Interest payments stopped suddenly and by July 8, 2015, Espoir had no assets.”

In 2019, the Alberta Securities Commission ordered Fauth to repay more than $3 million over his fraudulent scheme.

The case returns to court Nov. 25.

KMartin@postmedia.com

On Twitter: @KMartinCourts