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Convicted real estate swindler James Edward “Jim” Pellerin was sentenced to three years in prison Thursday and ordered to pay more than a half-million dollars in restitution to the victims he defrauded in a failed house-flipping scheme.

Pellerin, 68, a prominent local real estate investor and consultant who has authored multiple books on the subject, was found guilty of 27 counts of fraud after a judge ruled he intentionally misled his lenders — including those who considered him a friend — in a scheme that was “motivated by greed.”

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Superior Court Justice Robert J. Smith said Pellerin “harmed, tricked and deceived” his 17 lenders by providing them misleading and false information on a house-flipping investment in Carleton Place.

The judge said Pellerin obtained $631,000 in loans and “knowingly made false representations” when he oversold the 12-unit property development by signing 21 different promissory notes with his lenders, each guaranteeing a 20 per cent return on their $30,000 investment.

He told his lenders he would “flip” the newly built homes on Code Crescent in Carleton Place for a tidy profit, but the deal collapsed in 2017 when he failed to sell any of the units by the closing date. He lost $275,000 in deposits, which were forfeited by the builder.

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

“Secondly, he assigned the same townhouse unit as security to several lenders. Thirdly, he used the balance of the funds loaned to him — over $300,000 — for his own personal use, including paying himself a salary of $150,000 plus other expenses, such as a personal coach, car lease payments and overhead expenses for his other businesses.”

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Pellerin also authorized changes to the units while they were under construction in 2017, which varied from the specifications outlined to his lenders without their knowledge or consent, the judge said. He changed floorpans from three bedrooms to two, removed some en suite bathrooms and changed some units from two storeys to one.

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

Smith ordered him to pay back $572,000 to his investors, without interest, within five years of the completion of his sentence. Any failure to repay the loans would result in an additional three years of jail time.

Pellerin’s defence lawyer, Bruce Engel, suggested that contentious point could form partial grounds for an appeal.

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

During his trial, Pellerin denied having any intent to defraud his lenders and his lawyer maintained the investment was simply a real estate deal gone bad.

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Engel told the judge his client lost everything when the project fell apart.

“I can tell the court he’s sorry, he’s apologetic and, if he had the money, he’d repay all the victims,” he said.

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

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

Pellerin lost his house, the judge said, and is now living rent-free with his sister-in-law.

Crown attorney François Dulude called for a four-year penitentiary term for the “sophisticated and large-scale” fraud.

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

The judge imposed a three-year prison term and barred Pellerin from working in the financial sector for five years after his sentence is complete.

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 filed impact statements in March for the judge to consider before rendering his sentence.

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

“They all feel they’ve been cheated 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, though none of those funds have yet been recouped.

“You caused a lot of sleepless nights,” investor Maurice Bouchard told Pellerin during a hearing last month. “You showed total disregard for your actions. Now it’s time for retribution. Apologies won’t suffice.”

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