'We all lost all our money': Victims defrauded by Jim Pellerin still haven't seen a penny in restitution

“This crippled a lot of people’s retirement plans.”

Published Mar 14, 2024 • Last updated 12 hours ago • 5 minute read

Greg Walker was the lead investor in the project promoted by Jim Pellerin. Walker invested $150,000 and lost it all. Photo by Jean Levac /Postmedia

The $600,000 real estate scheme began to unravel for Jim Pellerin back in 2018, when his lenders met and compared notes on their defaulted loans. That was when they discovered multiple investors had been promised the same property with an identical civic address.

James Edward “Jim” Pellerin, 68, a prominent real estate investor who has authored several books on the subject, was found guilty of 27 counts of fraud in February for defrauding 17 different lenders of $30,000 each on a failed house-flipping scheme.

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According to a summary of the case from Superior Court Justice Robert J. Smith, Pellerin had “oversold” a 12-unit townhome development in Carleton Place, collecting $30,000 from 17 lenders and promising each a secured stake in an individual unit.

Greg Walker had never met fellow investors Colin Leech and Mary Jane Kelleher until 2018, when they compared their promissory notes — which guaranteed a 20-per-cent return on their investments — and discovered they had been issued for the exact same unit: 30 Code Cres.

Mary Jane Kelleher and Colin Leech lost $30,000 in an investment made with Jim Pellerin. Photo by Jean Levac /Postmedia

“Pellerin presented himself as a real estate investor with 25 years’ experience and he had written three books,” Walker said in an interview. “Having 25 years of real estate experience implies that you know how to count beyond 12.

“He knew he was selling more of these homes than he had available.”

Many of the investors met Pellerin following a 2016 table presentation at the Ottawa Real Estate Investors Organization (OREIO), where he pitched the plan to invest in a townhouse development that was to be built in Carleton Place, with the investment returned within nine months, plus 20 per cent profit, once the homes sold.

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In a separate interview last week, Leech said the discovery that he and Walker had been sold duplicate units “was our first indication that there was something much larger going on than we had previously imagined.”

Kelleher reached out to others who had invested with Pellerin, while Leech and Walker kept a spreadsheet with a running tally of the investors who had signed up for one of the 12 units.

“The tentacles started spreading out, one of the lenders posted on the OREIO members’ bulletin board and people started coming out of the woodwork,” Leech said.

“We were able to find all of these other victims and compared notes, and that’s when we found out he had double-sold some of the units,” he said. “By the time we went to police, we knew about 13 different investors who had bought 20 units, and only 12 were ever built.”

According to the judge’s summary of Pellerin’s trial, he had oversold the units by issuing 17 promissory notes for 11 properties. In one case, three victims had been issued promissory notes for the same unit.

Pellerin testified in his defence at trial and blamed a “clerical error,” though the judge rejected that argument.

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“At the same time, Jim was promoting more services on the internet, online courses, consultations,” Kelleher said. “The whole idea that he was continuing his business as usual really bothered us.”

Pellerin had offered the investment opportunity through his company, Innovalty Investments Ltd., which ceased operations in July 2017.

Pellerin most recently operated as an investment advisor under the Street Rock Group, which he founded in March 2021, according to his online profile, about three months after he was charged with fraud by Ottawa police.

Fraud investigators seized Pellerin’s bank records and calculated that $630,000 was collected from investors, while only $275,000 was ever deposited to the builder, Grizzly Homes.

None of his lenders knew that Pellerin had paid himself $100,000 in salary from the funds in 2016, with an additional $50,000 salary in 2017. He also used the funds to pay for an additional $60,000 in “operating expenses” for his other businesses and “personal expenses” for coaching and other overhead expenses.

“At that point, nobody knew it was fraud. We all thought the deal just went south,” said Walker. “I called the builder, Grizzly Homes, and they told me, ‘Yes, we have a $25,000 deposit on each of the 12 homes … and who are you?’

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“They told me they only had one customer and that was Jim Pellerin. They said they had no knowledge at all about these investors who are supposed to have an interest in the property.”

None of the homes sold by the closing date outlined in the promissory notes and the entire $275,000 deposit was forfeited “as a result of (Pellerin’s) failure to close the transactions on the date agreed upon,” according to the judge’s summary.

The promissory notes, the judge ruled, contained “a false representation that the lenders would have a valid security interest” in specified townhouse units, “which caused them to advance the $30,000 loans to (Pellerin) and put their economic interests at risk.”

Pellerin’s defence lawyer, Bruce Engel, argued in court that the lenders lost their money “as a result of unforeseen events that occurred, namely bad luck and bad management and that (Pellerin) never lied about any material fact,” the judge wrote.

Each lender listed in the indictment lost all $30,000 of their investment, except for one who managed to recover $25,000 and another who “demanded the return of the money,” the judge wrote.

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“Everybody else got screwed. We all lost all our money,” said Walker, the lead investor in the project who had signed up for five units. He invested $150,000 with Pellerin and lost it all.

Despite winning a lawsuit against Pellerin where Walker was awarded damages, he has yet to see a penny in restitution.

“He owes me this money and the court agrees that he owes me the money, but then what happens?” Walker asked. “If he doesn’t have a regular paycheck that you can garnish, you have no recourse. So how do I get my goddamn money back?”

Victim impact statements are set to be read into the court record on Friday as the judge considers an appropriate sentence for Pellerin.

A social media photo of James Edward “Jim” Pellerin. The fraud case against him involved 17 different lenders of $30,000 each on a failed house-flipping scheme in Carleton Place. Photo by @jim_pellerin/Instagram

When reached by phone last week, Engel declined to comment on the criminal case and declined comment on the ongoing efforts to recover the money. Engel suggested Pellerin may appeal his guilty verdict.

“This crippled a lot of people’s retirement plans,” Walker said.

Pellerin was charged criminally in December 2020 and the matter went to trial in late 2023. He was found guilty on Feb. 7.

“Getting scammed by a stranger is one thing,” Kelleher said. “Getting scammed by someone you think is a friend is something worse.”

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