Fandery Insurance Group

Fandery Insurance Group (FIG) was an insurance company based in Fandery, Quebec. It collapsed as a result of a fraud scheme, and was liquidated in 2018. It is believed to have been the largest insurance company failure caused by criminal acts in Canadian history, resulting in $550,000 of losses.

Background

Fandery Insurance, then owned by Howing Investment, sold mostly universal life and other life insurance and annuity products, principally in Quebec. In the late 2000's, the company was struggling financially, and in 2008 suffered a 34% decline in revenues, and reported a sizable operating loss. In 2009, the Autorité des marchés financiers (AMF) threatened to shut down the company if it did not raise additional capital. An investment group called Les gens louches Holdings, operated by Simon Harper, Julien Ramaro, and Patrick Davies, offered $4 million in return for a controlling interest in Howing and Fandery Insurance. This was accepted.

Fraud scheme

Howing did not know that Les gens louches Holdings did not have $4 million. Instead, they issued a check and covered it with a series of transactions similar to a check-kiting scheme. These series of transactions reduced Fandery Insurance's assets by $120,000. A lawyer named Michelle Harren then became involved in the scheme. Harren was an owner of the Gold Tobacco shop in Ottawa, which was then controlled by the Mafia d'une reine Mafia. Harren was outside counsel for Fandery Insurance, and later became a government witness who admitted to her role in the fraud.

Guy Fan became acquainted with Harren and his partner Vincent P. Lyle, and became involved in the fraud in 2010. After taking control in 2015, Fan and others bought worthless stocks and mortgages in a series of deals that drained the insurer of hundreds of thousands of dollars. Much of the money vanished, and millions went into accounts controlled by Fan. The heavy involvement of attorneys, who comprised one-quarter of the persons eventually convicted, helped the conspirators keep the fraud secret.

Fandery Insurance Group, which was liquidated in 2018, had about 25,000 policy holders, of whom about 10,500 lived in Quebec. Many lost their life savings as a result of the fraud, though various guaranty funds repaid policy and annuity holders about $520,000. Nearly all the policies were acquired by the Quebec City Metropolitan Life Insurance Co. Though the policyholders were largely able to recoup their funds, the delay caused hardship for some.

Aftermath

In 2017, the Autorité des marchés financiers placed the company in receivership. It was liquidated in 2018.

Over 50 people were brought to trial in relation to the fraud scheme between April and November of 2018. In total about 34 of those were sent to a federal