A B.C. man has been ordered to pay more than $800,000 to the estate of an elderly woman he bilked for years in a crude Ponzi scheme.
John Rusin scammed "vast sums of money" from his longtime friend Johanna "Jenny" Sledin over the period of a decade, according to a B.C. Supreme Court decision issued Tuesday.
"He took advantage of an unsuspecting and unsophisticated elderly friend who trusted him implicitly," Justice Geoffrey Gaul wrote in his decision.
"She gave him carte blanche with respect to most of the funds she wished to invest and depended on him to keep her best interests at heart. Instead, he used this elderly lady's money for his own purposes and to keep his charade of a viable investment scheme afloat."
Sledin died in 2000 at the age of 98, but the judge has ordered Rusin to pay Sledin's estate $830,247 for breach of fiduciary duty, plus an undefined amount in special costs.
According to Sledin's family lawyer Edward Burgess, Rusin's scam was a "variation of an unsophisticated, limited investor ‘Ponzi scheme,' an investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit."
But unlike in a typical Ponzi scheme, "Mrs. Sledin was both the initial and the subsequent investor," Burgess told the court.
Rusin had been friends with Sledin and her husband since 1971, according to court documents.
Even though he was 37 years younger than the Polish immigrant, Rusin regularly accompanied Sledin to the hospital while her husband was dying. After he passed away in 1975, Rusin began helping Sledin out with her financial affairs.
Until Sledin suffered a stroke in 1996, she made numerous investments with Rusin, earning some of the money back in interest, but always re-investing more.
In one typical year, she earned $91,000 in interest but invested an additional $110,000.
Sledin even sold Rusin her Vancouver house when she moved into a seniors' home at the age of 92. Rusin bought the property on East 40th Avenue for $270,000 and resold it two months later for a $41,000 profit.
By the time she died, Sledin's considerable savings had dwindled so drastically that she became concerned she would not have enough left to live on.
"Sledin was distressed by the fact that she appeared to be on the verge of impecuniosity notwithstanding the fact that she had lived a very frugal life and had accumulated what should have been sufficient financial assets for her to maintain a reasonable standard of living for the balance of her life," Justice Gaul wrote.
After her death, Sledin's family demanded that Rusin provide records of all the money he had received from her. He refused, and the family filed suit.
Besides demanding that Rusin repay Sledin's estate, the judge also ordered a restraining order preventing Rusin from disposing of or transferring any of his property until a full accounting has been made.