In a previous post, we reported on a then-ongoing Calgary trial involving an alleged $300 million Ponzi scheme affecting as many as 2,000 people, many of them Canadian. The fraud represents one of the largest Ponzi schemes in Canadian history. The accused individuals had already been sanctioned by the U.S. Securities and Exchange Commission and the Alberta Securities Commission.
A Calgary trial is nearing conclusion on criminal charges against Gary Allen Sorenson (“Sorenson”) and Milowe Brost (“Brost”) relating to an alleged $300 million Ponzi scheme that operated between 1999 to 2008 with money from thousands of investors across the United States and Canada. The alleged scheme was orchestrated utilizing the sale of promissory notes issued by Syndicated Gold Depository, Inc. (“SGD”), an entity formed in 1999 by Sorenson and Brost. The two men were arrested in 2009 for what police called “the largest Ponzi-type scheme” in Canadian history.
The Ontario Securities Commission (“OSC”) has almost completed its case in the high-profile Sino-Forest Corporation (“SFC”) hearing that began on September 2, 2014. SFC and certain of its former executives are alleged to have engaged in widespread fraud relating to its public financial disclosure. Specific allegations involve the fabrication or overestimation of revenue and assets, falsified evidence of ownership, backdated contracts, and undisclosed control over particular customers and suppliers. The hearing is presently on a brief hiatus, with the respondents expected to begin their defence in late March of this year.
A panel of the British Columbia Securities Commission has imposed an administrative penalty of $33 million against Rashida Samji for committing a $100 million fraud on at least 200 investors in its recent sanction decision. The scheme which the panel determined was a Ponzi scheme earned her the nickname the ‘magic lady’. The panel also ordered that Samji be permanently banned from participating in B.C.’s capital markets and ordered disgorgement of aproximately $10.8 million. This was the difference between the monies deposited by the investors pursuant to the fraud and the monies paid out to them.
On September 2, 2014, the Ontario Securities Commission commenced its high-profile hearing in the case of the Sino-Forest Corporation (“SFC“). SFC is alleged to have engaged in widespread fraud relating to its public financial disclosure. The specific allegations involve the fabrication or overestimation of revenue and assets, falsified evidence of ownership, backdated contracts, and undisclosed control over particular customers and suppliers.
On May 30, 2014, Mr. Justice Richard Danyliuk of the Saskatchewan Queen’s Bench sentenced Ronald Fast to seven years in prison for fraud and ordered him to pay restitution of $16.7 million. Fast’s daughter, Danielle Fast-Carlson, was sentenced to 30 months in prison and ordered to pay $1 million in restitution arising out of the same circumstances.
As reported by the Globe and Mail, CBC and other sources, the RCMP has charged two people after at least 160 investors were allegedly defrauded of more than $21-million. The RCMP has reported that from 2006 to 2010 investors were led to believe they could obtain substantial returns on their investments through day trading and resort and development properties. The RCMP say the majority of the money was not invested by the accused persons as represented and was instead re-directed to…
Our team has been monitoring some key developments that could soon impact US and Canadian companies that list shares on US exchanges. One of 2014’s most important legal developments is likely to flow from the US Supreme Court’s ruling on “fraud on the market” theory, to be rendered in Halliburton Co. v. Erica P. John Fund Inc. (“Haliburton”). Oral argument in Halliburton took place on March 5, 2014.
In Halliburton, the US Supreme Court has been asked whether “it should overrule or substantially modify the holding in Basic v. Levinson, 485 U.S. 224 (1988) … to the extent that it recognizes a presumption of class-wide reliance derived from the fraud on the market theory.” The decision in Halliburton is expected to be of importance given that in Amgen Inc. v. Connecticut Retirement Plans, a case decided in early 2013, members of the Supreme Court expressed concern with respect to the fraud on the market theory.
The RCMP’s Greater Toronto Area Financial Crime team has arrested and charged six people in an alleged fraudulent investment scheme. The RCMP has reported that the alleged fraud worked by enticing investors to purchase business tax losses valued far in excess of their investments. The companies used by the accused included: Integrated Business Concepts (IBC), Synergy Group 2000, Cason Global Wealth Association (CGWA) and IBCA 2009.
When a Ponzi scheme collapses, as with musical chairs, there will be some investors with a place to sit, while others are bereft of such comfort. Unlike musical chairs, the first time the music stops for most Ponzi schemes, the majority of the participants are on the losing end. A recent British Columbia decision in the Bankruptcy of Rashida Abdulrasul Samji explored what happens when some of the fortunate few “winners” in an alleged Ponzi scheme negotiate a resolution with a bankruptcy trustee responsible for making decisions in the best interests of all the creditors of the bankrupt entity at the centre of the alleged scheme.