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Norbourg missing funds may be higher

Sources say it could top the $70-million estimated by agency

MONTREAL -- The alleged embezzlement at Norbourg Asset Management Inc. adds up to more than the $70-million cited by regulatory authorities three weeks ago, sources say.

"My understanding is that the numbers are bigger" than the $70-million that officials from Quebec's Autorité de marchés financiers (AMF) initially put out, said a source familiar with the investigation into allegedly improper transactions at Montreal-based Norbourg.

The AMF shut down all activities at Norbourg and its mutual fund subsidiaries three weeks ago and suspended the investment counsellor licence of its president and controlling shareholder, Vincent Lacroix.

Mr. Lacroix has said he will co-operate with efforts to recover the missing money.

An RCMP-led investigation continues.

The $70-million figure cited by the AMF is based on financial data from December, 2004, but Norbourg was not shut down until eight months later, and investigators are finding evidence of more money going missing during that interval, said a second source familiar with the probe.

AMF spokesman Philippe Roy said yesterday that the agency was careful to point out at a news conference three weeks ago that the $70-million figure was an estimate based on numbers as of December, 2004, and that the final tally could end up being higher or lower.

Investors will know for sure how much money has gone missing in a week or two, when Ernst & Young submits a report in which it is expected to disclose the actual figure, he said.

There was widespread speculation in Montreal financial circles yesterday that the missing funds could end up being in the $100-million range, making Norbourg one of the biggest financial scandals in Quebec history.

Mr. Lacroix's father, Donald Lacroix, said in an interview yesterday that he isn't putting much store in the numbers being bandied about, including a statement made by AMF head Jean St-Gelais last week that as many as 15,000 -- mostly small -- investors may have been victims of the alleged embezzlement.

(Mr. St-Gelais said three weeks ago that 5,000 to 10,000 investors may have been victims.)

"It's gone from 10,000 to 15,000. It's ridiculous. There aren't even 10,000 investors" in Norbourg's two funds, Norbourg and Evolution, Mr. Lacroix said.

Investor confidence has been rocked by the Norbourg scandal, as well as a second one in the province's embattled mutual fund industry that broke earlier this week.

The AMF is probing the disappearance of $3.4-million at Zenith Stable Value Growth mutual fund. Also under investigation is Denis Patry, president of Zenith and Conseillers Planiges.

All of the Montreal company's assets have been frozen.

© 2007 The Globe and Mail. All rights reserved.

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