Dutch-Canadian community learns a hard lesson
Some 200 residents of Canada - mainly elderly and 80 of them Dutch born - are facing tough financial times, because their lifetime savings appear to have gone up in smoke.However, the man they entrusted with their money says he still hopes to pay them back. The unfortunate emigrants have got together and are hoping to take their one-time 'savings manager' to court.
Meanwhile, a Canadian court has already put the money man's Canadian business into the hands of a receiver. Radio Netherlands Worldwide's Dutch-language service spoke to some of the Dutch-Canadian people whose lives have already been dramatically altered by their financial losses, and to the man they say has lost their savings in dodgy deals: Harry Snoek Jr.
In the immediate post-war years, Dutch emigrants in places such as Canada tended - like many other minorities - to stick together when they could, often turning to familiar institutions such as the church to help them stay in contact with one another, their language and their culture. It was in the protestant Christian Reformed Church in Brampton, a suburb of Toronto, Canada, that many of the investors, such as those interviewed in this RNW video, met fellow parishioner Harry Snoek.
He was to become a trusted figure when it came to handling their savings. He would take receipt of their money, for which he issued promissory notes, and invest it, mainly in land. Since Toronto was a rapidly expanding city, with new developments being launched all the time, land proved to be a profitable investment choice. Over the many years - starting in the 1950s - in which Snoek Sr handled these investments, he paid his 'savers' a good rate of return - up to 8 percent per annum - and in full accordance with the notes he issued. Some people have reported how he would always give them their money back early if they needed it.
In 2004, Snoek's son, Harry Jr (now 48), took over his father's portfolio, creating a Canadian limited partnership in which to house the investment business and apparently inherited the almost unquestioning confidence the investors had always placed in his father. He also established a new company, Total Developments International, which, as its Canadian website stated, existed to provide 'land, financing, project management and design-build services to industrial and commercial clients'.
One investor, Ed Mesker (67), first became suspicious in July 2007 when Snoek Jr said he could not pay Mesker the money had asked for right away, because that money was tied up in some promising projects. Mesker recalls that Harry Snoek later gave him a verbal guarantee that there would be money aplenty by September. If there was, Mesker never saw it.
After that, the once profitable returns the 'Snoek savers' had come to expect dried up totally. In December 2008, all those who held promissory notes were notified in writing by Snoek that the economic crisis had forced him to cancel the normal three-monthly interest payments. One month later, another letter promised them the Snoek business operations would be subject to an accountant's investigation. Meanwhile, some of the investors were already in financial difficulties, some of them serious. Ed Mesker, for instance, had bought a house which he was later to lose.
In July of 2009, Mesker called a meeting of people who had money invested with Snoek. Eventually a group of 172 holders of the promissory notes came together in the Snoek Creditors' Action Group (SCAG). They hope to get at least some of their money back through the Canadian courts. In total, their joint claim reportedly amounts to about 40 million Canadian dollars (approx 28.5 million euros). Ed Mesker, however, is doubtful they will get anything. While Snoek reportedly still owns a number of plots of land in Canada, sale of that land in an undeveloped state is unlikely to raise the kind of capital needed to compensate the investors.
Harry Snoek Jr granted RNW an interview - in Dutch - at his villa in the Netherlands in September. Also present were his lawyer, Ron Roelse, and his financial advisor, who also happens to be his brother-in-law, plus Snoek's accounts for the last few years.
He clarified the bankruptcy of his business operations in both Canada and the Netherlands, saying that the economic recession coupled with media vilification of him as a fraud were the underlying causes. It appears that Snoek too has fallen on relatively hard times. His lawyer says he's not charging much for his services right now, because he feels his client should be able move on with a 'clean sheet'.
Saving father's business
Harry Snoek explained why he had changed the business model once followed by his father:
“When I took charge of my father's business in Canada in 2004, I was confronted with a outdated operation […] I could foresee risks, certainly in the event of an economic recession. I wanted to save my father's company - we needed different ways of making money.”
Since the 1970s, the money provided by a total of almost 200 promissory note holders and investors had been invested in land and other real estate. The 'savers' and investors were paid interest on their investments at a level of up to 8 percent. According to Harry Snoek Jr, he wanted to make even more on the investments. He says he got the agreement of a number of investors - members of the 'committees' which managed the land - for the creation of a development business, Total Developments Ltd.
“I looked into the construction of big yachts - over 40 metres. A sound business, with attractive margins. I also did business with the Port of Rotterdam Authority, which had space for a shipyard capable of building large yachts […]. I established Holland Superyacht Industries. To do so, I took out private loans and transferred a part of the capital from Canada with the knowledge of some of the promissory note holders.”
The very last part of that statement meets with a firm denial in Canada. Willem Groen in 't Woud, a promissory note holder with a claim worth 700,000 Canadian dollars says: “We only heard about this after the event.” Harry Snoek counters that by saying: “The folders and drawings of the yachts were hanging on the walls in our office in Canada. If asked, we would inform the promissory note holders about our activities.”
Snoek says things went well in the initial years of his control of the business operations, up until about the end of 2007. Harry Snoek Jr: “Around mid-2007 we were negotiating […] about the sale of all the land [we owned] in Canada. After five months of talks, ING Real Estate Properties unexpectedly decided not buy, because of the credit crisis.” It appears that claimant Mesker asked Harry Snoek for his money while these negotiations were under way, in July 2007. Snoek says he asked Mesker and others to wait for a short while and that they didn't have a problem with that. However, as the RNW video records, Ed Mesker denies this and says he kept on ringing to try and find out what was happening to money.
The luxury yacht business also ran into trouble: “After Lehman Brothers went bankrupt in September 2008, four contracts were cancelled in a period of four weeks.”
Since the summer of 2009, when many of those with a claim against Harry Snoek Jr created the Snoek Creditors Action Group, and as a result of their subsequent participation in the legal proceedings against him (instigated by another party), the two sides have communicated purely through their respective lawyers. But Snoek says he has gone on working - travelling all over the world, in fact - trying to make plans to make money. One project involved building a yacht for a new client, using a shipyard in Turkey.
Harry Snoek Jr says:
“The returns were earmarked to fund a proposal that would see secured creditors get all their money, and holders of promissory notes 70 percent of theirs. Unfortunately, the lawyers and my absence […] simply led to an increase in the mutual mistrust. Some people regarded the fact that I was in the Middle East a lot as a sign I planned to run away, just as they said that I had 'diverted' the money I had earned. My proposal wasn't widely discussed, and in October a liquidation request was filed."
In March 2010, an article about the Snoek case was published in the Toronto Star newspaper in which, Harry Snoek says, he was depicted as a con artist. He says that the client for the yacht cancelled his order a week later: “That article cost me hundreds of thousands, and my businesses millions. Even my bank cancelled the mortgage for my house, and my mother's house has to be sold.”
After watching the RNW video, featuring some of those who feel cheated out of their savings, he comments that the whole matter affects him deeply, “the more so since I know all those people personally'. Yet he says he's doing his best, and would really prefer to reach a deal with them: “The land is still an asset. It can be developed. I expect the real estate marker will pick up again. But now it's the receiver's word that counts - that's the only party earning a lot from this case.”
Harry Snoek Jr does not regret anything he did, but he does regret the way things have gone:
“I really have done my darned best. I've been away from home a lot. I haven't stolen anything. All those ridiculous stories about parties and the luxurious life I'm supposed to live. Yes, I did go to the Seychelles - for a client. And yes, I do have a Jozef Israëls hanging on the wall, a sketch - worth 1200 euros. Do you want to buy it?”
As regards the people who want their money back, he says he's terribly concerned, and his lawyer comments that in his opinion filing for personal bankruptcy would be the best option for his client, “But Snoek has not chosen that option.”
Harry Snoek adds: “That would mean everything in Canada would have to be sold and that would result in a sizeable additional loss for the creditors, because then the land could not be developed.” Perhaps with this in mind, his lawyer Roelse adds that an out-of-court settlement would be the best option.
Photo credits: Ian Muttoo;paul (dex);Яick Harris;jpctalbot