Canadian police bust alleged Ponzi scheme

Mon Sep 14, 2009 5:44pm EDT
 
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VANCOUVER, British Columbia (Reuters) - Two Canadian men have been charged with fraud for running what police alleged on Monday was a Ponzi-type scheme that bilked investors in several countries out of more than C$100 million ($93 million).

Milowe Brost and Gary Sorenson targeted investors with promises of high returns and convinced them to put money into offshore shell companies they secretly controlled, according to the Royal Canadian Mounted Police.

Brost, 55, of Chestermere, Alberta, has been arrested, but Sorenson, 66, of Calgary, Alberta, is still at large and believed to be living outside Canada, police said.

Investigators say the men took investors money by operating several companies, including Syndicated Gold Depository SA, Merendon Mining Corp Ltd, and the Institute for Financial Learning.

Officials in at least two Canadian provinces and the United States have investigated the men for several years and they have been subject to a variety of civil disciplinary actions, according to government documents.

In a Ponzi scheme, money from new investors is used to pay off old ones, with the operators taking much of the cash. The old con game gained new notoriety following last year's arrest of U.S. financier Bernard Madoff.

(Reporting by Allan Dowd; editing by Rob Wilson)