The Quebec millionaires who have invested in the Huot Group are claiming nearly $150 million from a major partner of this real estate giant. They say they are victims of fraud and a scheme that “resembles a Ponzi scheme”.
• Read also: A crooked past for real estate developer Stéphan Huot
• Read also: Stampede for promoter Stéphan Huot, who is forced to reduce his lifestyle
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“The Plaintiffs feel as cheated as the investors whose funds have been embezzled by Vincent Lacroix and Bernard Madoff”, write the millionaires, who without embarrassment mention the names of these two fallen fraudsters in two civil lawsuits obtained by our Investigation Office .
These creditors allege that Robert Giroux and his companies would have set up a “stratagem” which would have allowed them to enrich themselves and lead a luxurious lifestyle, while benefiting the promoter Stéphan Huot and his companies.
“Giroux used the Plaintiffs as an ATM and lent their money to Huot and the Huot Group in the most total recklessness”, plead the Plaintiffs, who “fear” now to “write themselves into history of the biggest financial scandals and never to find” their money.
Robert Giroux is the businessman from Quebec who, through his companies Q-12 and SH, brought some 75 millionaires from the capital to invest hundreds of millions of dollars in the Huot Group. These investments “so-called secure and protected by sufficient guarantees” brought a return at the “very attractive rate of 12%”.
Photo taken from Robert Giroux’s Facebook page
But according to the plaintiffs, the company set up by Groupe Giroux “is akin to a Ponzi scheme” (see below). Giroux would have paid the interests of the investors as much with the money coming from the new investors as through “new hidden loans”, they argue.
“The scheme set up by Groupe Giroux and consisting in pumping and squandering the Plaintiffs’ money enabled it to enrich itself unduly and to maintain an excessive and luxurious lifestyle”, allege the Plaintiffs, citing as an example its ” prestigious house in Cap-Rouge” and “his luxurious chalet in Beaupré”, in particular.
The businessman would also have “contributed to the financial debacle of the Huot Group in addition to hiding it” by granting it several “hidden loans” at “usurious interest rates of up to 60%”, by through one of its companies.
“Faced with the Huot Group’s growing needs for money, Giroux had every interest in lending it more and more money, since for each loan and at the time of any renewal, the latter received management fees and / or staggering application fees”, they write.
The millionaires were reportedly informed in December 2022 of the financial difficulties of the conglomerate, which “was no longer able to meet some of its obligations”.
Despite this, Groupe Giroux continued to solicit new lenders in addition to granting additional loans to Groupe Huot and Stéphan Huot, “while they were insolvent”, plead the plaintiffs.
The system would have worked until the “discomfiture” of the Huot Group, made public last February.
Through their companies, a first group made up of forty millionaires is now claiming $85.3 million from Robert Giroux and his companies. Twenty others are suing them for $62.9 million, an amount that would have been “entirely squandered” by the defendants.
Giroux would also have entrusted to a third party that he “knew that they would be the subject of lawsuits” on the part of investors who would like to “recover their losses”, but that his companies would then be “empty shells”. Giroux would also have begun the liquidation of millions of dollars in assets.
Afraid of not being able to recover their money, the lenders demanded and obtained the seizure of bank accounts, shares, buildings and land belonging to Robert Giroux.
At the request of the millionaires, the court also issued a provisional injunction last Thursday formally prohibiting Robert Giroux and his companies from disposing of or mortgaging their assets. Robert Giroux will also have to reveal to the plaintiffs “the nature, the value, the place where all [ses] active around the world. The case is due back in court this week.
Remember that Robert Giroux was dismissed from his companies last May, in the wake of this affair. The Autorité des marchés financiers is also carrying out verifications in this file after receiving several complaints.
Stéphan Huot is not targeted by these legal proceedings. The Huot Group is facing a real financial rout, as Millenum Construction filed for an $84.2 million bankruptcy and Stéphan Huot was dispossessed of several of its rental complexes as well as the Transrapide distribution center.
His financial setbacks have also forced him to considerably reduce his luxurious lifestyle, revealed in June our Office of Investigation.
“A Ponzi scheme involves taking money from an investor to pay false returns to other investors or simply to reimburse investors who want their money back. Fraudsters can thus give a false impression that the money invested brings good returns and that there is no problem in recovering the money invested.
“Most often, a Ponzi scheme is discovered after the fraudster has disappeared or is no longer able to meet requests to withdraw the investments. It is then too late since there is no more money in the accounts. Ponzi fraud can be combined with several other types of fraud.
Source: Financial Markets Authority (AMF)
The case of Bernard “Bernie” Madoff
Wall Street financier Bernard Madoff operated a historic fraud of some $65 billion over several years. This figure of New York finance dipped into the investments of his new clients to pay or reimburse his older clients. The scheme only came to light at the time of the 2008 financial crisis, when Madoff found himself faced with several demands for mass withdrawals.
File photo, WENN
Sentenced in 2009 to 150 years in prison, he died behind bars at the age of 82, in 2021.
Excerpts from the lawsuits initiated by the millionaires against Robert Giroux and his companies:
“While the Giroux Group has enriched itself by several million dollars and has built a financial empire at the expense of the Plaintiffs, the city of Quebec is experiencing one of its greatest financial debacles in its history.”
“Giroux has neither the skill nor the expertise required to manage investments of such a scale and knowingly conceived and elaborated a scheme which made it possible to defraud the Plaintiffs with a structure which he knew was risky and doomed to failure. .”
“Giroux carefully recruited the Plaintiffs and convinced them to entrust him with millions of dollars on the grounds that they should consider themselves privileged to be part of [d’un] fund made up of successful business people mainly from Quebec City.
“Giroux went full speed ahead and dazzled the Plaintiffs without ever revealing to them that his lending strategy was doomed to failure and that he himself was ignoring it.”
“Groupe Giroux acted wrongfully by granting loans to Groupe Huot and Huot then in financial difficulty, with the aim of artificially maintaining their operations and enriching themselves.”
“Giroux solicited a good number of investors and lent their money to the Huot Group, while making sure to collect exorbitant fees through his lies and subterfuges, and thus made it possible to artificially maintain this company in operations and thus contributed to build the house of cards that has collapsed.”
“Thanks to the scheme put in place by Groupe Giroux which enabled them to build a veritable financial empire of several tens of millions of dollars, the Plaintiffs’ money either disappeared into thin air or was transformed into real estate and movable assets. now in the hands of Groupe Giroux.”
“The Plaintiffs are seeking the joint and several judgment of Groupe Giroux in reimbursement of sums of money that they have invested and the losses that they have thus suffered due to the grossly negligent and improper management of the funds […] which were squandered for the benefit of Groupe Giroux and Groupe Huot.”
