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Gary Sorenson and Milowe Brost steal close to $400 million in international Ponzi scheme using 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.

10/15/09 - CALGARY Alberta Canada — Two men accused of creating a Ponzi scheme that allegedly defrauded investors around the world of millions of dollars won't be back in a Calgary court until Dec. 14.

The case was put over Monday because lawyers for the two still need to be found.

Gary Sorenson and Milowe Brost are both charged with fraud and theft over $5,000 in a pyramid scheme. Neither appeared in court.

Police allege thousands of investors in Canada, the United States and overseas were swindled between 1999 and December 2008.

Investigators say the amount of money lost could be close to $400 million.

Don MacLeod, who was acting for Sorenson, said there is a massive amount of material in the case and he will help his client secure another lawyer with time to go through it all.

He said outside court that there was "absolutely nothing unusual" about the accused not appearing in court.

A handful of investors did show up, however.

Doreen Brown said she put "quite a bit" of money into the alleged scheme starting in 2007. She said she was brought in by a friend whom she now sees she trusted blindly.

"I sort of had a lot of faith in her ... I suppose I should have known better, but sometimes you don't," Brown said.

She added she was disappointed the accused didn't appear, saying it was unfair for them to just sit back while investors try to find out what happened to their money.

Sorenson and Brost have been free on bail.

Police have said the pair face up to 14 years in prison if convicted for what is alleged to be "the largest Ponzi-type scheme" in Canadian history.

Brost and Sorenson were charged Sept. 13. Brost was arrested at that time, but Sorenson was still at large and police believed he was living in Honduras.

He was arrested Sept. 29 after stepping off a plane at the Calgary airport. Police say he returned voluntarily after discussions between his lawyer and government officials.

RCMP say the alleged scheme involved the creation of 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.

The perks, police say, were used to entice investors to put their money into offshore shell companies, which were run by handpicked nominees and marketed by Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies Inc., two firms owned by Brost.

The shell companies included Asset Trax Inc., Quatro Communications Corp., Rapid Express Corp., Strategic Metals Corp. and Merendon Mining (Nevada) Inc.

Police said last month they had interviewed about 100 investors, many of whom came forward after the charges were originally laid.

Investors have told stories of dashed retirement dreams and lost homes.

Graham McMillan created a website in 2006 warning against companies allegedly run by Sorenson and Brost after his father invested money. He has said he's heard from people who have had to move in with relatives.

Sorenson is looking forward for the chance to clear his name, MacLeod said.

"From the moment he found out about these charges, (he) was anxious to return to face them. He maintains his innocence and he's now determined to set about charting his course with regard to defence."

http://www.google.com/hostednews/canadi ... 4zxTAFxZ1g

10/07/09 -One of two Alberta men accused of running a Ponzi-style scheme alleged to have scammed Canadian investors out of hundreds of millions of dollars has also attracted the attention of American watchdogs, including the FBI and the IRS.

Milowe Brost is already facing theft and fraud charges in an alleged investment hoax. But court records indicate the Federal Bureau of Investigation, Internal Revenue Service and the U.S. Securities and Exchange Commission are looking into Brost's activities.

http://www.montrealgazette.com/news/can ... story.html

How to avoid getting trapped in a Ponzi scheme

By Paula Arab, Calgary Herald 10/08/09

By now, everyone has probably heard of what's believed to be Canada's biggest Ponzi scheme, allegedly masterminded by two Calgarians. But does the average person understand how an RRSP strip fraud works or whether or not they too could have been duped by such outrageous investment promises?

If it's too good to be true, it probably is, right? Or, it could never happen to me, no? I wonder. Even the most educated investor would have difficulty protecting themselves against outright lies. On the other hand, there had to be red flags that presented themselves as warning signs along the way.

Outright fraud can only be dealt with through better oversight and stiffer penalties for white-collar criminals. Albertans should be pointing to the politicians and demanding a national regulator. Calgary-based financial scams simply occur far too regularly to be acceptable any longer. They are damaging our reputation, and bilking investors of their life savings. The latest one alleges Gary Sorenson of Calgary and Milowe Brost of Chestermere stole from 3,000 Canadians and investors abroad, anywhere from $100 million to as much as $400 million.

Alberta's securities watchdog has conducted probes into a number of homegrown stock market swindles, including Bre-X, VisuaLabs and Golden Rule Resources. The prudent government action would be to support the pooling of resources from across the country, so that investigators could work together to eradicate securities fraud. But while that might be obvious to most of us, the Alberta government is still reluctant to endorse a federal regulator. Officials, including Alberta Justice Minister Alison Redford, insist Albertans are no more vulnerable to fraud than other Canadians.

So we'll set aside the historical pattern of failure in the system for a minute, and look at what investors can do to empower themselves.

Back to RRSP strips, called that because fraudsters promoting these investments typically instruct individuals to "strip" or sell their RRSP investments and divert the funds into a self-directed arrangement with a trustee. Then they are asked "to purchase shares in a specified company controlled by the promoter," says a bulletin issued by the federal tax agency, warning investors of a rise in strip schemes. "The investment is not a 'qualified investment' as defined under the Income Tax Act, even though the promoter may arrange for a lawyer or accountant to 'certify' that the shares are considered a qualified investment. These shares are worth only a fraction, if any amount, of the price paid."

Canada Revenue alleges Sorenson was the "main beneficiary" of an RRSP strip scheme that saw the transfer of RRSP funds into other investment vehicles that were falsely promoted as Registered Retirement Savings Plans or Registered Retirement Income Fund eligible. More than $92 million of investor funds were allegedly funnelled to various companies controlled by Sorenson between 2000 and 2005.

Flag number one. The promises were just too lucrative, and investors should have dug deeper to verify they were transferring their RRSPs into investment vehicles that were in fact RRSP / RRIF eligible. In some cases, investors were given debit cards and told that they could eventually withdraw their money tax free, after it had been funnelled through various channels first. Furthermore, they were promised outrageous rates of returns--three to five per cent per month.

"If someone is promising to give you all of your money back tax-free--that would send up a red flag for me," says Joanne Gorsalitz, the communications manager for Canada Revenue Agency's Calgary tax office.

If there's one thing to take from this, it is to understand there are only two legal ways to withdraw RRSP investments without paying the income tax. You can use the funds to purchase a house, if you are eligible to do so under the homebuyer's plan. Or, you can use it to pay for university, again, if meeting the requirements of the lifelong learning plan.

Otherwise, be prepared to pay income tax when withdrawing RRSP funds.

Promises to the contrary need to be questioned. If in doubt, call up the Canada Revenue Agency and talk to a personal income tax expert or a senior officer. They are readily available to answer such questions. Waiting until the end of the year to file a tax return, is unfortunately too late.

Flag two is the so-called structurists. They are the middlemen recruited to be the brokers, who sell and promote the fraudulent investments. They knowingly or unknowingly sell out their friends and family for a commission. Better to stick with certified financial advisers and brokers who are trained professionals. As for the "friend" who calls up out of the blue with a hard sell offer?Hang up and run.

Other warning signs to watch out for: - Schemes that offer immediate access to assets in "locked-in" RRSPs or RRIFs; - Companies that issue income tax receipts providing deductions of three or more times the amount invested in an RRSP; and - Unrealistic returns on investments.

People work hard for their money. They need to work equally hard to protect it. Otherwise, risk being stripped of your life savings.

http://www.calgaryherald.com/news/avoid ... story.html

Gary Sorenson and Milowe Brost bilked some 3,000 Canadians and investors abroad of $100 million in Calgary Ponzi scheme using Syndicated Gold Depository S.A. for an RRSP strip scheme.

09/29/09 - CALGARY — Gary Sorenson — one of two Canadians police claim masterminded a $100 million Calgary-based Ponzi scheme — has been arrested at the Calgary airport and released on bail, the RCMP reports.

Earlier this month, the RCMP charged Sorenson, 66, and Milowe Brost, 55, with theft and fraud in relation to a complex, Ponzi-like plot alleged to have bilked some 3,000 Canadians and investors abroad of $100 million, and possibly as much as $400 million.

The RCMP now say the scheme "appears to be the largest Ponzi-type scheme" in Canadian history and played out between 1999 and last year.

RCMP would not disclose where Sorenson was travelling from, except to say it was outside Canada. Last week, police said they believed Sorenson was living in Honduras.



RCMP said arrangements had been made so that Sorenson knew he would be arrested as soon as he landed on Canadian soil. Shortly after Tuesday's late-morning arrest was made, Sorenson's criminal lawyer Don MacLeod declined to comment.

"This arrest is an important milestone in our investigation," RCMP Supt. Eric Mattson said in a news release Tuesday. "We worked closely with Alberta Justice's Special Prosecutions and the Public Prosecution Services of Canada in ensuring Sorenson's return to Canada."

Mounties allege that Sorenson and Brost created a business, Syndicated Gold Depository S.A., and then formed an agreement to loan money to Merendon Mining Corp. Ltd. with the promise of a high rate of returns. According to the company's website, Sorenson is the CEO of the company.

Investor money was funnelled through a series of shell companies and much of it ended up in Honduras bank accounts, RCMP allege in court documents.

Brost was arrested on Sept. 13 and is already out on bail. The terms and conditions of Sorenson's bail are similar to those of Brost. Sorenson was released on surety of $300,000 or $150,000 cash, and had to surrender his Canadian passport and other travel documents. He has been ordered to report weekly to the RCMP, remain in Alberta, live at an address approved by the RCMP, and have no communication with a list of names provided by the RCMP.

The Canada Revenue Agency is conducting its own investigation into the case. The agency alleges in court documents that more than $92 million of investor funds were funnelled to various companies controlled by Sorenson between 2000 and 2005.

The federal tax agency alleges Sorenson was the "main beneficiary" of an RRSP strip scheme, a plot where investments are falsely promoted as Registered Retirement Savings Plan or Registered Retirement Income Fund eligible.

High returns of three to five per cent per month, for offshore investments, were also offered to investors.

It is understood that efforts are underway to liquidate various properties believed to be owned by Sorenson, his wife Thelma, or the Merendon companies in Honduras.

http://www.calgaryherald.com/news/Alleg ... story.html

Gary Allen Sorenson - Second Man Arrested for Fraud in Canada’s Biggest Ponzi Scheme

Sept. 30 (Bloomberg) -- An Alberta men charged with diverting as much as C$400 million ($369 million) from Canadian and international investors, in what authorities said is Canada’s largest Ponzi scheme, was arrested yesterday.

Gary Allen Sorenson, 66, was arrested as he stepped off a plane at Calgary International Airport, Canada’s Royal Canadian Mounted Police said in a statement. This month, Sorenson and Milowe Allen Brost, 55, of Chestermere, Alberta, were charged with fraud and theft.

“This arrest is an important milestone in our investigation,” Superintendent Eric Mattson of the RCMP in Calgary said in the statement.

Brost and Sorenson created Syndicated Gold Depository SA, which agreed to lend money to Merendon Mining Corp., with the promise of tax breaks and high rates of return to investors, police said Sept. 14. Initially, the men were alleged to have bilked more than C$100 million from 1999 to Dec. 31, 2008, from investors in Alberta, Canada.

Both men are free on bail and scheduled to appear in court Oct. 19, Mattson said in a phone interview. Mattson declined to say who is representing Sorenson in the case.

http://www.bloomberg.com/apps/news?pid= ... 2Jg80YnRlI

Ponzi scheme suspect arrested at Calgary airport - in puzzling move, Sorenson abandons multimillion-dollar mansion in Honduras to face fraud charges in Canada

09/29/09 - Gary Sorenson left behind a sweeping, multimillion-dollar mansion in the hills of Honduras and boarded a private plane.

When it landed Tuesday morning at the section of the Calgary airport where the city's oil elite meet their sleek jets and skirt security lines, he was greeted by four RCMP members. The alleged mastermind of Canada's largest Ponzi scheme, accused of defrauding $400-million from 4,000 investors, was handcuffed and whisked away to face the charges.

It was a brazen step, even for a man police believe oversaw a scheme that worked to curry investments from professional football players and once advertised on a chuckwagon at the Calgary Stampede.

Why Mr. Sorenson left Honduras – a country that has not signed an extradition treaty with Canada – is a question that even those tasked with bringing the man to justice can't quite answer.

“I was surprised he came back,” said Photini Papadatou, an economic crime prosecutor with Calgary's special prosecutions unit.

She was tipped off to his return by his lawyer, who did not return calls for comment Tuesday. But defence lawyer Don Macleod told CTV News that his client returned voluntarily and plans to mount a “vigorous defence.”

Sixteen days after the arrest of his co-accused, Albertan Milowe Brost, Mr. Sorenson found himself before a justice of the peace in Airdrie, a bedroom community north of Calgary. Both men are charged with fraud over $5,000 and theft over $5,000. In a brief court hearing, Mr. Sorenson was ordered to post a $150,000 cash bail or $300,000 surety and given strict conditions for his life back in Canada.

Like Mr. Brost, he was forced to turn in his passport and other travel documents. He must report to the RCMP every Thursday. He must live at a police-approved address, and he cannot leave Alberta without permission from the courts. He must have no contact with 82 people, including his co-accused and others who could be witnesses at trial.

Both men are scheduled to appear in court Oct. 19 to enter pleas.

“They both will be dealt with under the Canadian judicial system,” Ms. Papadatou said.

There is much speculation about why Mr. Sorenson returned to Canada. But Ms. Papadatou said no legal manoeuvres were under way to bring him back to Canada via the United States, which does have a treaty with Honduras.

She speculated political turmoil resulting from this summer's coup in Honduras might have something to do with his sudden return.

“The government that was in power at the time he was living there is no longer in power,” she said.

RCMP Superintendent Eric Mattson, who leads Alberta's integrated market enforcement team, said: “There's all sorts of reasons why people make those decisions.

“There's more than just where you are and where you live. It's where you want to live.”

Adriano Iovinelli, a criminal lawyer in Calgary, said that aside from rushing back to beat an extradition order, there's one main reason someone returns to face criminal charges.

“That is to clear their name. You would assume that if someone was absolutely guilty of what's being alleged that there would be more of a reluctance for that person to come back willingly,” he said.

Either way, coming forward voluntarily is looked on favourably by judges when making decisions about bail, he said.

Ms. Papadatou said she didn't release Mr. Sorenson's address to the public after watching the fallout of the financial fraud cases of Vincent Lacroix, who pleaded guilty last week to robbing 9,200 investors out of $115-million over a five-year period, and Earl Jones, who faces eight charges of theft and fraud related to the activities of his financial adviser's firm.

“This particular guy has a bad heart and I frankly don't want to be responsible for someone's safety,” Ms. Papadatou said. “… People are mad.”

Mr. Sorenson's return will see him fight charges that have made him and Mr. Brost two of Alberta's most notorious sons. Their alleged fraud has dominated headlines in Calgary, and spurred a flurry of tax and other investigations aimed at untangling the web of business arrangements the two men were involved in.

Those who were ensnared in the scheme say the men used financial education seminars to persuade investors to avoid banks in favour of offshore mining investments. The family of one woman who invested says she committed suicide after losing her savings.

Mr. Sorenson's arrest came as welcome news to Graham McMillan, who has maintained a website dedicated to exposing the scheme.

“It does concern me that I suspect he must think he's got some kind of a rational basis for a defence, or he can lock it up in court,” he said.

“But at this point it's in the hands of the police and I sure would like to think that after three years, they've gathered enough evidence to make a case stand in court. It would astound me if they don't, in the biggest alleged Ponzi scam, as they're now calling it, in Canadian history.”

http://www.theglobeandmail.com/report-o ... le1305989/