The Eternal Ponzi Sheme: j∞$
$10,000 x 40,000 stacks = $400,000,000
Mounties call case the biggest investment fraud ever in Alberta
In what Mounties are calling the biggest Alberta investment scam, RCMP have arrested a Chestermere man accused of stealing hundreds of millions over the last decade.
They're also seeking Milowe Allen Brost's alleged accomplice, Calgarian Gary Allen Sorenson, 66, in a Ponzi scheme that spanned continents and ensnared as many 4,000 victims, with half from Calgary and Edmonton.
The two are accused of running a series of phony companies to which an international collection of investors loaned money with the promise of a lofty rate of return in the gold market, swindling at least $100 million, said RCMP Supt. Eric Mattson, though court documents allege it's as high as $400 million.
"They were all shell companies, there was no publicly traded company involved," said Mattson.
"I've been at this for a long time and this is certainly the largest I've ever seen ... $100 million is a conservative figure."
In a document sworn by an investigator in order to seize phone records, it was suggested one company controlled by Milowe Brost owed shareholders $1.25 billion. The document sworn by RCMP Sgt. Scott Fuller last Nov. 21, said one witness provided a statement claiming Brost's son Casey indicated Syndicated Gold Depository raised "approximately $400 million."
"I believe ... (Milowe) Brost rapidly became the controlling mind behind SGD slowly removing (other participants)," Fuller said.
"SGD under Brost's stewardship raised money with the intention of loaning the funds to (other Brost interests)," Fuller said.
The affidavit was sworn to get phone records for a number used by an M.B. Gonne, an alias used by Brost, the officer said.
Fuller alleged Brost used $19 million in investor cash in one company to pay off SGD investors. Working as a centrepiece front company in the scheme was an entity called Merendon Mining Corp. Ltd., which was allegedly promoted by the accused pair through firms called Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies.
Brost was yesterday given bail conditions that included a $100,000 surety and a ban from travelling outside the province. Sorenson is believed to be in Honduras, which does not have an extradition agreement with Canada.
Each has been charged with theft over $5,000 and fraud over $5,000.
HOW PONZI SCHEMES ARE RUN
Step 1: Invent a "business" and convince people it will be profitable. Induce a few people to invest by promising huge returns and complete safety of investment.
Step 2: Pay early investors huge returns, as promised. They become excited and invest more, and tell their friends and associates, who also invest. Use the funds from later investors to pay returns to early investors. Convince most investors to leave all their money in the scheme allowing it to compound, rather than receiving a regular payment.
Step 3: Repeat Step 2 as long as possible. The scheme will sustain itself so long as a) it continues to grow quickly so there are enough new investors to pay the old, and/or few investors actually demand payment of their principal and income.
Step 4: Since there is no profitable company and therefore no money underlying these false promises, when growth slows and /or investors demand their money, the fraud cannot sustain itself. Promoters freeze payment to investors and begin stalling for time by any number of excuses, hoping the authorities step in and shut them down.
Step 5: There are laws against frauds, but not against business failures. So scam artists create a planned business failure "due to unforeseen circumstances."
Step 6: Take ill-gotten gains and flee to country with no extradition treaty with Canada.
Calgary-area scam allegedly takes $100M
Two Calgary-area men have been charged with syphoning as much as $100 million from unsuspecting investors.
"As a result of a 3 ½ year investigation, the RCMP’s Integrated Market Enforcement Team (IMET) in Calgary yesterday charged two Alberta men for allegedly diverting money from thousands of investors between 1999 and December 31, 2008, in a Ponzi-type scheme that raised in excess of $100 million from investors in Alberta, Canada, the United States and internationally," said Mounties in a statement.
Milowe Allen Brost, 55, of Chestermere, has been arrested, while Gary Allen Sorenson, 66, of Calgary, is still at large and believed to be out of the country, said investigators.
Both men are charged with fraud over $5,000 (Section 380(1)(a) of the Criminal Code of Canada) and theft over $5,000 (Section 334(a) of the Criminal Code of Canada).
"These individuals created a business, Syndicated Gold Depository S.A. and based it on a popular commodity, gold," the RCMP said.
"Syndicated Gold Depository S.A. then formed an agreement to loan money to Merendon Mining
Corporation Ltd. for the promise of a high rate of return.
"This high rate of return, along with promises of tax advantages, was used to entice investors into placing their money by investing in offshore shell companies such as: Asset Trax Inc., Quatro Communications Corp., Rapid Express Corporation, Strategic Metals Corp., and Merendon Mining
(Nevada) Inc.
"Nominees were put in place by Brost and Sorenson to run the shell companies which were then marketed by Brost's companies, Capital Alternatives Inc. and The Institute for Financial Learning (IFFL), Group of Companies Inc."
Brost appeared in a Calgary court room where he was given bail.
Are you a victim of of this alleged scam? Please contact us here.
Two Men Charged in $100M Fraud Case
Seven former and current NFL players are among the 3,000 investors who were allegedly duped into investing roughly $100-million in an Alberta-based Ponzi-type scheme -- a pyramid allegedly run by two men who had prior dustups with the law.
Milowe Allen Brost and Gary Allen Sorenson, both charged with fraud over $5,000 and theft over $5,000, ran the fraudulent scheme between 1999 and 2008, the RCMP's white-collar crime squad said yesterday.
The scam is alleged to have continued even after Mr. Brost was slapped with the largest individual fine -- $650,000 -- handed down by the Alberta Securities Commission in July 2007. The case started in October 2005 and involved some of the companies tied to Mr. Brost-- who is on probation after an Ontario conviction for possession of stolen property-- and Mr. Sorenson's alleged scam.
Further, the U. S. Justice Department in February 2008 filed two lawsuits against two U. S. accountants who pitched investments tied to Mr. Brost's Institute for Financial Learning, the umbrella company of the alleged pyramid.
"Ponzis are not that unusual. Ones of this size are," said Eric Mattson, the officer in charge of the RCMP's Alberta branch of the Integrated Market Enforcement Team. "They were very, very out there publicly. You couldn't get much more public. ... They had a [sponsorship] tarp [on a chuckwagon] at the Calgary Stampede a few years ago."
Graham McMillan launched a website warning against the Institute for Financial Learning in 2006, after his elderly parents invested.
His parents, who live in Brandon, Man., attended IFFL seminars in which Mr. Brost gave reasons why traditional investme nts such as the stock market are terrible. Then he pitched a gold company, Merendon Mining Corp., as a place where investors could pocket returns between 30% and 40% per year by loaning the company money, Mr. Mc-Millan said.
Mr. Brost would tell audiences banks would love to loan Merendon money, but he wanted nothing to do with the "evil" institutions and wanted to give regular investors a chance to share in the riches, Mr. McMillan said.
Against his advice, Mr. McMillan's parents invested. He was, however, able to get their money back by threatening to make the company look bad.
"They were happy to pay me off and make me go away," he said.
But Mr. McMillan did not entirely disappear. He reported Mr. Brost to the Federal Bureau of Investigation, the U. S. Securities and Exchange Commission, the RCMP, and other authorities like the Alberta Securities Commission. Mr. McMillan said the SEC is also investigating this alleged heist, but an SEC spokesperson said the regulator does not confirm whether it is working on a particular case.
This is the first time the Alberta branch of the RCMP's Integrated Market Enforcement Team has laid any charges. The ASC referred the case to the RCMP in October 2005.
Mr. Brost was granted bail, but his passport has been confiscated; he can not travel outside of Alberta without advising a Calgary-based RCMP officer; he is subject to weekly reporting conditions; and he provided a $100,000 surety, the RCMP's Mr. Mattson said.
Mr. Brost, who did not return a message seeking comment, is scheduled to be in court Oct. 19
Mr. Sorenson is in Honduras, which does not have an extradition treaty with Canada, Mr. Mattson added.
The Alberta charges follow Quebec's allegations against Earl Jones, accused of running a $50-million Ponzi setup.
The U. S.'s Bernie Madoff, however, remains the world's most vilified fraudster, and was sentenced to 150 years in jail for running a Ponzi scheme some estimate touched more than US$50-billion.
"Canadian sentencing is not quite as harsh as U. S. sentencing," said John Coffee, the Adolf A. Berle professor at Columbia Law School.
Two Albertans accused of $100-million Ponzi scheme
CALGARY -- Seven former and current NFL players are among the 3,000 investors who were allegedly duped into investing roughly $100-million in an Alberta-based Ponzi-type scheme - a pyramid allegedly run by two men who had prior dustups with the law.
Milowe Allen Brost and Gary Allen Sorenson, both charged with fraud over $5,000 and theft over $5,000, ran the alleged fraudulent scheme between 1999 and 2008, the RCMP's white-collar crime squad said yesterday.
The scam is alleged to have continued even after Mr. Brost was slapped with the largest individual fine - $650,000 - handed down by the Alberta Securities Commission in July 2007. The case started in October 2005 and involved some of the companies tied to Mr. Brost - who is on probation after an Ontario conviction for possession of stolen property - and Mr. Sorenson's alleged scam.
Further, the U.S. Justice Department in February 2008 filed two lawsuits against two U.S. accountants who pitched investments tied to Mr. Brost's Institute for Financial Learning, the umbrella company of the alleged pyramid.
"Ponzis are not that unusual. Ones of this size are," said Eric Mattson, the officer in charge of the RCMP's Alberta branch of the Integrated Market Enforcement Team. "They were very, very out there publicly. You couldn't get much more public.... They had a [sponsorship] tarp [on a chuckwagon] at the Calgary Stampede a few years ago."
Graham McMillan launched a website warning against the Institute for Financial Learning in 2006, after his elderly parents invested.
His parents, who live in Brandon, Man., attended IFFL seminars in which Mr. Brost gave reasons why traditional investments such as the stock market are terrible. Then he pitched a gold company, Merendon Mining Corp., as a place where investors could pocket returns between 30% and 40% per year by loaning the company money, Mr. McMillan said.
Mr. Brost would tell audiences banks would love to loan Merendon money, but he wanted nothing to do with the "evil" institutions and wanted to give regular investors a chance to share in the riches, Mr. McMillan said.
Against his advice, Mr. McMillan's parents invested. He was, however, able to get their money back by threatening to make the company look bad.
"They were happy to pay me off and make me go away," he said.
But Mr. McMillan did not entirely disappear. He reported Mr. Brost to the Federal Bureau of Investigation, the U.S. Securities and Exchange Commission, the RCMP, and other authorities like the Alberta Securities Commission. Mr. McMillan said the SEC is also investigating this alleged heist, but an SEC spokesperson said the regulator does not confirm whether it is working on a particular case.
This is the first time the Alberta branch of the RCMP's Integrated Market Enforcement Team has laid any charges. The ASC referred the case to the RCMP in October 2005.
Mr. Brost was granted bail, but his passport has been confiscated; he can not travel outside of Alberta without advising a Calgary-based RCMP officer; he is subject to weekly reporting conditions; and he provided a $100,000 surety, the RCMP's Mr. Mattson said. Mr. Brost, who did not return a message seeking comment, is scheduled to be in court on Oct. 19.
Mounties charge man in $100M alleged Ponzi scheme targeting investors worldwide
CALGARY - One Alberta man is under arrest and another is believed to be at large in Honduras after the Mounties say they broke up a "significant" Ponzi scheme that they allege bilked thousands of investors worldwide out of $100 million.
The RCMP arrested and laid fraud charges against Milowe Allen Brost, 55, on Sunday after a three-and-a-half year investigation.
Charges have also been laid against another suspect - Gary Allen Sorenson, 66 - who is believed to be out of the country. Both men are charged with fraud over $5,000 and theft over $5,000.
Supt. Eric Mattson, with the RCMP's Integrated Market Enforcement Team in Calgary, said the two allegedly bilked 3,000 people out of $100 million.
"That's a minimum," he said. "That's probably very much on the low side of what we believe this is. It's a very large one. It's very significant."
Police say the two men allegedly took money from thousands of investors in Canada, the United States and overseas between 1999 and December 2008. RCMP allege that the pair set up Syndicated Gold Depository S.A., which was supposed to lend money to Merendon Mining Corporation Ltd., with the promise of a high rate of return and tax advantages.
These perks were used to entice investors into investing in offshore shell companies which were run by handpicked nominees and marketed by Brost's firms Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies Inc., police said.
The shell companies included Asset Trax Inc., Quatro Communications Corp., Rapid Express Corporation, Strategic Metals Corp., and Merendon Mining (Nevada) Inc.
"Investors wished to make investments in companies - offshore - to get high rates of return and some tax advantages," Mattson said. "Funds were sent offshore but they did not end up with their returns and they did not get what they thought they were going to get."
Merendon Mining Corporation's website lists Gary Sorenson as CEO. The site says the company is no longer based in Canada, but operates in Belize and has its headquarters in Honduras.
That's where police believe Sorenson now lives.
"Canada doesn't have an extradition treaty with Honduras so that certainly complicates the situation," Mattson said.
A note signed by Sorenson on the website's main page said the company is not involved in any illegal activity. The note added that the company has never used the Merendon name in the United States.
Investors in "the US Merendon Companies may have been victims of fraud," but the Merendon Mining Corporation is not involved, the site said.
"Any person who has received such a false representation should contact their local authorities and report the matter," the note said, adding Merendon Mining Corporation Ltd. won't be refunding money to people who invested in U.S. Merendon companies.
Alberta RCMP are asking anyone who was victimized by the alleged scheme to come forward with information.
Brost has already been sanctioned by the Alberta Securities Commission.
In 2007, the commission ordered a lifetime market ban and fined Brost $650,000 for "fraud on investors." The securities panel said Brost was "at the centre of this fraudulent scheme" to lure public investors into putting money into a shell company which the panel said was intended to finance Sorenson's offshore mining ventures.
At the time of its decision, the panel said, "Brost not only does not recognize the seriousness of his misconduct, but is also prepared shamelessly to overlook it."
The alleged scheme should be a warning to other potential investors, Mattson said. Just doing a few minutes of research into the proposed investment could save you thousands of dollars, he said.
"People take so much more time actually buying a car than they do putting a couple thousand dollars into something like this," Mattson said. "People should really look at what's available before they make those rash judgements."
Allegations over ponzi schemes have been making headlines lately.
In Montreal late last week, police had to be called to deal with angry pensioners who came out to see money manager Earl Jones evicted from his waterfront condominium.
So far 151 people have filed claims that they were defrauded or owed money by Jones, representing a total of $74.5 million.
Jones is free on bail after being charged with four counts of fraud and four of theft, and he returns to court on Sept. 28 on the criminal charges.
They're also seeking Milowe Allen Brost's alleged accomplice, Calgarian Gary Allen Sorenson, 66, in a Ponzi scheme that spanned continents and ensnared as many 4,000 victims, with half from Calgary and Edmonton.
The two are accused of running a series of phony companies to which an international collection of investors loaned money with the promise of a lofty rate of return in the gold market, swindling at least $100 million, said RCMP Supt. Eric Mattson, though court documents allege it's as high as $400 million.
"They were all shell companies, there was no publicly traded company involved," said Mattson.
"I've been at this for a long time and this is certainly the largest I've ever seen ... $100 million is a conservative figure."
In a document sworn by an investigator in order to seize phone records, it was suggested one company controlled by Milowe Brost owed shareholders $1.25 billion. The document sworn by RCMP Sgt. Scott Fuller last Nov. 21, said one witness provided a statement claiming Brost's son Casey indicated Syndicated Gold Depository raised "approximately $400 million."
"I believe ... (Milowe) Brost rapidly became the controlling mind behind SGD slowly removing (other participants)," Fuller said.
"SGD under Brost's stewardship raised money with the intention of loaning the funds to (other Brost interests)," Fuller said.
The affidavit was sworn to get phone records for a number used by an M.B. Gonne, an alias used by Brost, the officer said.
Fuller alleged Brost used $19 million in investor cash in one company to pay off SGD investors. Working as a centrepiece front company in the scheme was an entity called Merendon Mining Corp. Ltd., which was allegedly promoted by the accused pair through firms called Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies.
Brost was yesterday given bail conditions that included a $100,000 surety and a ban from travelling outside the province. Sorenson is believed to be in Honduras, which does not have an extradition agreement with Canada.
Each has been charged with theft over $5,000 and fraud over $5,000.
HOW PONZI SCHEMES ARE RUN
Step 1: Invent a "business" and convince people it will be profitable. Induce a few people to invest by promising huge returns and complete safety of investment.
Step 2: Pay early investors huge returns, as promised. They become excited and invest more, and tell their friends and associates, who also invest. Use the funds from later investors to pay returns to early investors. Convince most investors to leave all their money in the scheme allowing it to compound, rather than receiving a regular payment.
Step 3: Repeat Step 2 as long as possible. The scheme will sustain itself so long as a) it continues to grow quickly so there are enough new investors to pay the old, and/or few investors actually demand payment of their principal and income.
Step 4: Since there is no profitable company and therefore no money underlying these false promises, when growth slows and /or investors demand their money, the fraud cannot sustain itself. Promoters freeze payment to investors and begin stalling for time by any number of excuses, hoping the authorities step in and shut them down.
Step 5: There are laws against frauds, but not against business failures. So scam artists create a planned business failure "due to unforeseen circumstances."
Step 6: Take ill-gotten gains and flee to country with no extradition treaty with Canada.
Calgary-area scam allegedly takes $100M
Two Calgary-area men have been charged with syphoning as much as $100 million from unsuspecting investors.
"As a result of a 3 ½ year investigation, the RCMP’s Integrated Market Enforcement Team (IMET) in Calgary yesterday charged two Alberta men for allegedly diverting money from thousands of investors between 1999 and December 31, 2008, in a Ponzi-type scheme that raised in excess of $100 million from investors in Alberta, Canada, the United States and internationally," said Mounties in a statement.
Milowe Allen Brost, 55, of Chestermere, has been arrested, while Gary Allen Sorenson, 66, of Calgary, is still at large and believed to be out of the country, said investigators.
Both men are charged with fraud over $5,000 (Section 380(1)(a) of the Criminal Code of Canada) and theft over $5,000 (Section 334(a) of the Criminal Code of Canada).
"These individuals created a business, Syndicated Gold Depository S.A. and based it on a popular commodity, gold," the RCMP said.
"Syndicated Gold Depository S.A. then formed an agreement to loan money to Merendon Mining
Corporation Ltd. for the promise of a high rate of return.
"This high rate of return, along with promises of tax advantages, was used to entice investors into placing their money by investing in offshore shell companies such as: Asset Trax Inc., Quatro Communications Corp., Rapid Express Corporation, Strategic Metals Corp., and Merendon Mining
(Nevada) Inc.
"Nominees were put in place by Brost and Sorenson to run the shell companies which were then marketed by Brost's companies, Capital Alternatives Inc. and The Institute for Financial Learning (IFFL), Group of Companies Inc."
Brost appeared in a Calgary court room where he was given bail.
Are you a victim of of this alleged scam? Please contact us here.
Two Men Charged in $100M Fraud Case
Seven former and current NFL players are among the 3,000 investors who were allegedly duped into investing roughly $100-million in an Alberta-based Ponzi-type scheme -- a pyramid allegedly run by two men who had prior dustups with the law.
Milowe Allen Brost and Gary Allen Sorenson, both charged with fraud over $5,000 and theft over $5,000, ran the fraudulent scheme between 1999 and 2008, the RCMP's white-collar crime squad said yesterday.
The scam is alleged to have continued even after Mr. Brost was slapped with the largest individual fine -- $650,000 -- handed down by the Alberta Securities Commission in July 2007. The case started in October 2005 and involved some of the companies tied to Mr. Brost-- who is on probation after an Ontario conviction for possession of stolen property-- and Mr. Sorenson's alleged scam.
Further, the U. S. Justice Department in February 2008 filed two lawsuits against two U. S. accountants who pitched investments tied to Mr. Brost's Institute for Financial Learning, the umbrella company of the alleged pyramid.
"Ponzis are not that unusual. Ones of this size are," said Eric Mattson, the officer in charge of the RCMP's Alberta branch of the Integrated Market Enforcement Team. "They were very, very out there publicly. You couldn't get much more public. ... They had a [sponsorship] tarp [on a chuckwagon] at the Calgary Stampede a few years ago."
Graham McMillan launched a website warning against the Institute for Financial Learning in 2006, after his elderly parents invested.
His parents, who live in Brandon, Man., attended IFFL seminars in which Mr. Brost gave reasons why traditional investme nts such as the stock market are terrible. Then he pitched a gold company, Merendon Mining Corp., as a place where investors could pocket returns between 30% and 40% per year by loaning the company money, Mr. Mc-Millan said.
Mr. Brost would tell audiences banks would love to loan Merendon money, but he wanted nothing to do with the "evil" institutions and wanted to give regular investors a chance to share in the riches, Mr. McMillan said.
Against his advice, Mr. McMillan's parents invested. He was, however, able to get their money back by threatening to make the company look bad.
"They were happy to pay me off and make me go away," he said.
But Mr. McMillan did not entirely disappear. He reported Mr. Brost to the Federal Bureau of Investigation, the U. S. Securities and Exchange Commission, the RCMP, and other authorities like the Alberta Securities Commission. Mr. McMillan said the SEC is also investigating this alleged heist, but an SEC spokesperson said the regulator does not confirm whether it is working on a particular case.
This is the first time the Alberta branch of the RCMP's Integrated Market Enforcement Team has laid any charges. The ASC referred the case to the RCMP in October 2005.
Mr. Brost was granted bail, but his passport has been confiscated; he can not travel outside of Alberta without advising a Calgary-based RCMP officer; he is subject to weekly reporting conditions; and he provided a $100,000 surety, the RCMP's Mr. Mattson said.
Mr. Brost, who did not return a message seeking comment, is scheduled to be in court Oct. 19
Mr. Sorenson is in Honduras, which does not have an extradition treaty with Canada, Mr. Mattson added.
The Alberta charges follow Quebec's allegations against Earl Jones, accused of running a $50-million Ponzi setup.
The U. S.'s Bernie Madoff, however, remains the world's most vilified fraudster, and was sentenced to 150 years in jail for running a Ponzi scheme some estimate touched more than US$50-billion.
"Canadian sentencing is not quite as harsh as U. S. sentencing," said John Coffee, the Adolf A. Berle professor at Columbia Law School.
Two Albertans accused of $100-million Ponzi scheme
CALGARY -- Seven former and current NFL players are among the 3,000 investors who were allegedly duped into investing roughly $100-million in an Alberta-based Ponzi-type scheme - a pyramid allegedly run by two men who had prior dustups with the law.
Milowe Allen Brost and Gary Allen Sorenson, both charged with fraud over $5,000 and theft over $5,000, ran the alleged fraudulent scheme between 1999 and 2008, the RCMP's white-collar crime squad said yesterday.
The scam is alleged to have continued even after Mr. Brost was slapped with the largest individual fine - $650,000 - handed down by the Alberta Securities Commission in July 2007. The case started in October 2005 and involved some of the companies tied to Mr. Brost - who is on probation after an Ontario conviction for possession of stolen property - and Mr. Sorenson's alleged scam.
Further, the U.S. Justice Department in February 2008 filed two lawsuits against two U.S. accountants who pitched investments tied to Mr. Brost's Institute for Financial Learning, the umbrella company of the alleged pyramid.
"Ponzis are not that unusual. Ones of this size are," said Eric Mattson, the officer in charge of the RCMP's Alberta branch of the Integrated Market Enforcement Team. "They were very, very out there publicly. You couldn't get much more public.... They had a [sponsorship] tarp [on a chuckwagon] at the Calgary Stampede a few years ago."
Graham McMillan launched a website warning against the Institute for Financial Learning in 2006, after his elderly parents invested.
His parents, who live in Brandon, Man., attended IFFL seminars in which Mr. Brost gave reasons why traditional investments such as the stock market are terrible. Then he pitched a gold company, Merendon Mining Corp., as a place where investors could pocket returns between 30% and 40% per year by loaning the company money, Mr. McMillan said.
Mr. Brost would tell audiences banks would love to loan Merendon money, but he wanted nothing to do with the "evil" institutions and wanted to give regular investors a chance to share in the riches, Mr. McMillan said.
Against his advice, Mr. McMillan's parents invested. He was, however, able to get their money back by threatening to make the company look bad.
"They were happy to pay me off and make me go away," he said.
But Mr. McMillan did not entirely disappear. He reported Mr. Brost to the Federal Bureau of Investigation, the U.S. Securities and Exchange Commission, the RCMP, and other authorities like the Alberta Securities Commission. Mr. McMillan said the SEC is also investigating this alleged heist, but an SEC spokesperson said the regulator does not confirm whether it is working on a particular case.
This is the first time the Alberta branch of the RCMP's Integrated Market Enforcement Team has laid any charges. The ASC referred the case to the RCMP in October 2005.
Mr. Brost was granted bail, but his passport has been confiscated; he can not travel outside of Alberta without advising a Calgary-based RCMP officer; he is subject to weekly reporting conditions; and he provided a $100,000 surety, the RCMP's Mr. Mattson said. Mr. Brost, who did not return a message seeking comment, is scheduled to be in court on Oct. 19.
Mounties charge man in $100M alleged Ponzi scheme targeting investors worldwide
CALGARY - One Alberta man is under arrest and another is believed to be at large in Honduras after the Mounties say they broke up a "significant" Ponzi scheme that they allege bilked thousands of investors worldwide out of $100 million.
The RCMP arrested and laid fraud charges against Milowe Allen Brost, 55, on Sunday after a three-and-a-half year investigation.
Charges have also been laid against another suspect - Gary Allen Sorenson, 66 - who is believed to be out of the country. Both men are charged with fraud over $5,000 and theft over $5,000.
Supt. Eric Mattson, with the RCMP's Integrated Market Enforcement Team in Calgary, said the two allegedly bilked 3,000 people out of $100 million.
"That's a minimum," he said. "That's probably very much on the low side of what we believe this is. It's a very large one. It's very significant."
Police say the two men allegedly took money from thousands of investors in Canada, the United States and overseas between 1999 and December 2008. RCMP allege that the pair set up Syndicated Gold Depository S.A., which was supposed to lend money to Merendon Mining Corporation Ltd., with the promise of a high rate of return and tax advantages.
These perks were used to entice investors into investing in offshore shell companies which were run by handpicked nominees and marketed by Brost's firms Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies Inc., police said.
The shell companies included Asset Trax Inc., Quatro Communications Corp., Rapid Express Corporation, Strategic Metals Corp., and Merendon Mining (Nevada) Inc.
"Investors wished to make investments in companies - offshore - to get high rates of return and some tax advantages," Mattson said. "Funds were sent offshore but they did not end up with their returns and they did not get what they thought they were going to get."
Merendon Mining Corporation's website lists Gary Sorenson as CEO. The site says the company is no longer based in Canada, but operates in Belize and has its headquarters in Honduras.
That's where police believe Sorenson now lives.
"Canada doesn't have an extradition treaty with Honduras so that certainly complicates the situation," Mattson said.
A note signed by Sorenson on the website's main page said the company is not involved in any illegal activity. The note added that the company has never used the Merendon name in the United States.
Investors in "the US Merendon Companies may have been victims of fraud," but the Merendon Mining Corporation is not involved, the site said.
"Any person who has received such a false representation should contact their local authorities and report the matter," the note said, adding Merendon Mining Corporation Ltd. won't be refunding money to people who invested in U.S. Merendon companies.
Alberta RCMP are asking anyone who was victimized by the alleged scheme to come forward with information.
Brost has already been sanctioned by the Alberta Securities Commission.
In 2007, the commission ordered a lifetime market ban and fined Brost $650,000 for "fraud on investors." The securities panel said Brost was "at the centre of this fraudulent scheme" to lure public investors into putting money into a shell company which the panel said was intended to finance Sorenson's offshore mining ventures.
At the time of its decision, the panel said, "Brost not only does not recognize the seriousness of his misconduct, but is also prepared shamelessly to overlook it."
The alleged scheme should be a warning to other potential investors, Mattson said. Just doing a few minutes of research into the proposed investment could save you thousands of dollars, he said.
"People take so much more time actually buying a car than they do putting a couple thousand dollars into something like this," Mattson said. "People should really look at what's available before they make those rash judgements."
Allegations over ponzi schemes have been making headlines lately.
In Montreal late last week, police had to be called to deal with angry pensioners who came out to see money manager Earl Jones evicted from his waterfront condominium.
So far 151 people have filed claims that they were defrauded or owed money by Jones, representing a total of $74.5 million.
Jones is free on bail after being charged with four counts of fraud and four of theft, and he returns to court on Sept. 28 on the criminal charges.
-By Chinta Puxley in Winnipeg
posted by Anonymous @ Tuesday, September 15, 2009
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