Friends and acquaintances of former High River resident James Macleod took the stand last week to testify about how they lost tens and, in some cases, hundreds of thousands dollars to him in an alleged ponzi scheme six years ago.
Nine people took the stand at Macleod’s six-day trial in a Calgary courtroom last week. Many of the people who gave Macleod their money to invest in first and second mortgages were from High River, the MD of Foothills and the surrounding area. One Stavely couple allegedly lost $275,000 to Macleod. Another man allegedly lost $175,000.
Some of the victims counted Macleod, a descendant of Col. James Macleod, as a friend, others knew him through the many service groups he belonged to and others had just heard he was giving 15 to 16.5 per cent returns on investments and came to him with their money in hand.
Richard Cooper testified he and his partner Deb Smith invested twice with Macleod. Their first deal was for a three-month mortgage loan worth $75,000. They were paid their interest and principal back and decided to invest again. Smith gave Macleod $60,000 and Cooper $10,000. Cooper told the court they never saw that money again.
“When the money and interest wasn’t paid to us on the date specified, he said he renewed the mortgage and assumed we didn’t need it back,” Cooper said.
By late April or early May of 2011, Cooper said he realized something was seriously amiss when a cheque Macleod wrote him to pay for his office space rent at a building Cooper owned bounced. Cooper said he asked to look at Macleod’s books and found out very little accounting was taking place.
“I became quite concerned about the mortgages and whether we might be paid back,” Cooper testified.
A meeting of the investors was held at a High River RV dealership. Macleod joined that meeting and told the investors the money was gone and offered to pay back the money over six years with money he was making through the mortgage brokerage. Some people at that meeting said Macleod admitted it was a scam, a word he said he doesn’t recall using.
The next day Cooper went to Macleod’s office and evicted him. Macleod drained his bank accounts to pay his employees and then found a job selling cars in Calgary the next week. He filed for bankruptcy, which included the debts he owed to investors.
Macleod has since moved to Nanaimo, where he is a general sales manager at a car dealership.
Macleod testified in his own defence. He told the court how he was running a successful mortgage brokerage in High River and decided to get into private lending as a service to the community around late 2007 or early 2008.
He talked about trying to keep up with other businessmen in the community he looked up to and said his High River office became the social hub of the town and said people came there to have a drink morning, noon and night.
“It was a fast life, a very fast life,” he said. “I spread myself too thin.”
Macleod said he had no business or accounting training and soon discovered there were no investments available that would pay out the high interest rates he’d promised.
“I didn’t know it would be this much to manage,” he said. “It was overwhelming.”
He said he pooled the money from investors in two bank accounts, where his income from the mortgage brokerage also was deposited, and used it to pay business and personal expenses and to pay the three investors who received their money and interest.
Macleod said he also used money from his mortgage brokerage and from other investors to pay the interest and principal to people whose payments came due.
Crown prosecutor Steven Johnston in his final arguments said Macleod committed fraud twice. First by telling people and having sign documents for mortgages and not investing in mortgages and second by using new investors money to pay the dividends and principal of other investors.
Macleod’s lawyer said his client never intended to defraud anyone and was simply over his head and uneducated in business and accounting practices.
“He never meant to hurt anyone,” said Vancouver defence lawyer Mark Canofari.
Justice Corina Dario will rule on the case Sept. 25.