One investor’s tale of deceit: how a medium and rogue traders made her lose everything

When you invest in a so-called psychic financial adviser, you take on risk – you don’t know which way the wind will blow. And you leave yourself even more vulnerable to a “detective-like” approach that pits you against unregulated securities lawyers.

That’s how author Larry Klinsky describes how a class-action lawsuit claims he took money from investors at a Montreal meditation centre, then abandoned them when their affairs ran foul of Ontario securities regulators.

Klinsky, who earned $500,000 in eight years, never had a degree in economics or finance.

Instead, he says he earned his wealth through closely reading psychic books and believing in reincarnation. Even his parents bought into the mystics’ act.

“Whenever they visited, the karmic lightness struck them, and we re-born once,” he says. “People do these things – they just think they’re going to make a lot of money.”

But, years later, when the firm he ran was caught up in a class-action lawsuit, he and his wife knew it was over.

Klinsky argues the money was “collateralized” by loans guaranteed by a group of unnamed strangers who made legitimate investments.

Two weeks before the suit was to go to trial, Klinsky, 59, a Toronto lawyer, decided to go to court to help build his defence. There, a charming shamanic story twisted by “psychics, tantric therapists, hucksters, bogus psychics, illegal financial advisers and crooked lawyers” became a hot case.

“He started sharing some of the information he had learned about other investors,” Klinsky says. “And eventually, they put their story together.”

For almost 10 years, the firm itself did little more than email customers about how to invest in a special silver investment. Then one day, in 2008, it stopped updating investors about its returns and vanished.

When suspicions grew, the Ontario Securities Commission started talking. It ordered six arbitrators to settle a case of alleged “proprietary trading” in which Klinsky and others reaped a 10 per cent profit, according to court documents. Then the body went after the creditors of the business he started, including a man whose identity is protected in the court papers.

The result was a stunning set of court filings in which a group of claimants – including hospital workers, professors and children’s rights activists – said they lost $100,000 on every transaction. They even reported Klinsky had returned the funds, but showed no record of the exchange.

Klinsky says the process of getting to court has left him and his wife “very severely bruised emotionally”. Both will never invest in such a company again. “We don’t want to put anybody at risk,” he says.

The financial legacy of the 2007-09 financial crisis is frequently described as buried in people’s memories. Klinsky’s case suggests investors never recover from that lost year. Some victims in the class-action suit claim they were cheated out of more than $10,000 each in what they see as a top-priority case for the OSC.

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