2023-06-22 04:00:00
This is not the first financial setback for real estate developer Stephan Huot, who went bankrupt and was found guilty of fraud during one of his first residential development projects. And creditors at the time never saw their money once more.
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“At the time, he had not paid his suppliers,” says a source who was at the forefront of this fiasco that occurred in 1996, which ended in bankruptcy and criminal charges.
In 1996, Stéphan Huot – who has been making headlines since mid-February given the serious financial problems of his company, the Huot Group – was at the head of a project to build 32 single-family units in the Quebec region, called Big line. Through his companies, he acted as landowner, builder and broker.
In August of the same year, the project would have experienced financial difficulties and lacked liquidity, can we read in several judgments rendered in the 2000s.
With the help of his accountant, Huot would then have set up a strategy of bank fraud, known under the names of kiting or “check cavalry”.
The kiting is “an illegal maneuver consisting of circulating checks between several related accounts so as to take advantage of the time that elapses between the deposit of a check and its clearing”, explains a judgment.
Huot allegedly circulated approximately 1,000 NSF checks totaling more than $62 million between personal and company accounts, from September to December 1996.
The promoter was thus able to obtain additional financing from the banks, which mistakenly believed that the companies had solid backs. However, the subterfuge was discovered and the company found itself indebted to four banks for the sum of $650,000.
In November 1996, the buildings of the residential project were subject to legal hypothecs. The following year, Huot declared itself insolvent and one of its companies was put into bankruptcy. Creditors never saw their money once more, according to judgments at the time.
In February 1999, following a police investigation, Huot faced five counts of fraud. He pleaded guilty in October 2000 and received a conditional discharge. He must still pay $75,000 to a charitable organization and perform 250 hours of community work.
Some current lenders of the Huot Group were unaware of the past of its leader, they let us know. Others knew him, but still trusted him.
“It had been more than fifteen years. We were impressed by the development of the group, we thought it had recovered well. But rest assured that we, as investors, have asked ourselves the question: where is the money?”, explains a lender.
Stéphan Huot did not want to comment on the facts of his past and recalls that to date, he no longer has a criminal record. Indeed, the criminal record is temporary in cases of conditional discharges.
“I regret that I am being given a criminal label,” he wrote in a statement he sent to us.
– With Philippe Langlois and Ian Gemme
Also sanctioned by the syndic
The syndic of the Association of Real Estate Brokers and Agents of Quebec also looked into the case of Stéphan Huot in the wake of the fiasco of the Grande Ligne project.
In 2003, the property developer was targeted by two disciplinary heads, including one linked to bank fraud. He pleaded guilty in 2006 and had his real estate broker’s license suspended for three years. However, he obtained that this decision not be published in a local newspaper.
Huot also pleaded guilty in 2000 to four other disciplinary charges, including one of charging a 10% commission when a contract stipulated 7%. He was sentenced to fines of $4,600.
The previous year, he had been fined $1,800 for prohibited solicitation of clients. His ignorance of the rules was then deemed inexcusable by the Discipline Committee.
To date, Stéphan Huot no longer has a brokerage license.
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