Real estate fraudster Jim Pellerin sentenced to three years in prison

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Real estate fraudster James Edward “Jim” Pellerin was sentenced Thursday to three years in prison and ordered to pay more than half a million dollars in restitution to victims he defrauded in a botched house flipping scheme.

Pellerin, 68, a prominent local real estate investor and consultant who is the author of several books on the subject, was found guilty of 27 counts of fraud after a judge ruled that he intentionally deceived his lenders, including those who They considered a friend, in a plan. that he was “motivated by greed.”

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Superior Court Judge Robert J. Smith said Pellerin “harmed, deceived and deceived” his 17 lenders by providing them with misleading and false information about an investment to remodel a home on Carleton Place.

The judge said Pellerin took out $631,000 in loans and “knowingly made false statements” when he oversold the 12-unit development by signing 21 different promissory notes with his lenders, each guaranteeing a 20 percent return on his investment. of 30,000 dollars.

He told his lenders he would “sell” the newly built homes on Code Crescent at Carleton Place for a sizable profit, but the deal fell through in 2017 when he failed to sell any of the units before the closing date. He lost $275,000 in deposits, which the builder lost.

“He falsely promised that each note would be secured by an interest in the purchase and sale agreement of a specific housing unit,” Smith said in his sentencing decision.

“Second, he assigned the same housing unit as collateral to multiple lenders. Third, he used the balance of the funds lent to him (more than $300,000) for his personal use, including paying a salary of $150,000 plus other expenses, such as a personal trainer, car lease payments, and overhead expenses. of his other businesses. “

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Pellerin also authorized changes to the units while they were under construction in 2017 that varied from the specifications described to his lenders without his knowledge or consent, the judge said. He changed floors from three bedrooms to two, eliminated some en-suite bathrooms and changed some units from two floors to one.

After losing the initial investment, Pellerin was left with $356,000 in loans, according to court calculations.

Smith ordered him to return $572,000 to his investors, without interest, within five years of completing his sentence. Any default on the loans would result in an additional three years in prison.

Pellerin’s defense attorney, Bruce Engel, suggested the disputed point could provide partial grounds for an appeal.

According to his lawyer, Pellerin plans to file an immediate appeal and has already hired appellate specialist Howard Krongold, who has appeared as lead counsel in more than 100 cases before the Ontario Court of Appeal.

During his trial, Pellerin denied intending to defraud his lenders, and his attorney argued that the investment was simply a real estate deal gone bad.

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Engel told the judge that his client lost everything when the project failed.

“I can tell the court that he is sorry, that he apologizes and that, if he had the money, he would pay all the victims,” ​​he said.

Pellerin declined when the judge offered him the opportunity to speak Thursday.

Smith said Pellerin currently works as a consultant and has been earning $10,000 a month for the past 10 months.

Pellerin lost his home, the judge said, and now lives rent-free with his sister-in-law.

Crown prosecutor François Dulude called for a four-year prison sentence for the “sophisticated and large-scale” fraud.

Engel responded with a suggested sentence of 18 months in a provincial jail. The defense did not object to the restitution order.

The judge imposed a three-year prison sentence and banned Pellerin from working in the financial sector for five years after serving his sentence.

Born in Moncton and educated at the University of New Brunswick, Pellerin moved to Ottawa in 1984. He worked as an IT consultant for the federal government while building a reputation as a savvy real estate investor.

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A dozen victims submitted impact statements in March for the judge to consider before handing down a sentence.

Pellerin investors had to delay their retirements and many had to work another four or five years to rebuild their finances, the judge said.

“Everyone feels they have been deceived and betrayed by Mr. Pellerin, most of whom thought he was a friend,” Smith said Thursday.

Many of his victims felt “ashamed and diminished” in the eyes of their spouses, children and siblings.

Several of the victims sued Pellerin in civil court and were awarded damages, although none of those funds have yet been recovered.

“You caused many sleepless nights,” investor Maurice Bouchard told Pellerin during a hearing last month. “You showed complete disregard for your actions. Now is the time for revenge. Apologies will not be enough.”

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