Calgary RCMP charged four Alberta residents after an investigation into what police say is a $60-million Ponzi scheme.
Police said more than 1,000 people across North America were taken in by the offer, putting more than $60-million into various investment plans offered by a company called HMS Financial.
HMS was offering investment vehicles that promised to pay returns of between 8 and 12 per cent without any financial risk, police said Monday.
The police investigation, which was launched just as the scheme was collapsing in 2004, has taken more than five years, a fact that baffled a lawyer closely tied to the alleged scam.
“We've been Rip Van Winkle here, sleeping for six years waiting for this tiger to wake up,” said lawyer Thomas Matkin, of Cardston, Alta., who represented an elderly woman who invested $35,000 (U.S.) in the scheme.
Mr. Matkin sat down with one of the men arrested, Robert Fyn, who called himself a colonel. “Apparently he's an auctioneering colonel,” the lawyer said, referring to the honorary title bestowed by auctioneering groups.
Mr. Matkin recorded his conversation with the man and, through a lawsuit on behalf of his client, gained access to e-mails sent by the alleged principals in the scheme.
Police also arrested Murray Stark, 73, and Garth Bailey, 57, who along with Mr. Fyn, 62, were charged with fraud over $5,000 and conspiracy to commit fraud. The three men and Katherine Rodrique Bailey, 53, were also charged with laundering the proceeds of crime and conspiracy to launder the proceeds of crime.
RCMP say the alleged scheme spread by word through “affinity groups,” which included families, friends and church acquaintances telling each other of the extraordinary money-making possibility. Those selling the plan were vague on details, promising the investment could generate extraordinary profit through difficult-to-understand financial transactions.
“In the earlier phases it was a joint venture with a European company; some people thought it was in foreign exchange,” said RCMP Staff Sergeant Dale Glydon.
“Other people thought it was in leveraged trading. But there was no documentation ever, like a prospectus that you would normally get.”
Police do not believe the accused led an extravagant lifestyle with the proceeds of investors' money, but said there is none left to recover for investors. Securities authorities first moved against the scheme in 2001; Staff-Sgt. Glydon blamed the length of the investigation in part on the difficulties in finding victims willing to speak.
According to Mr. Matkin's calculations, the alleged scheme's promised return on investment in 25 years was ridiculously high. “It was more money than there is in the world,” the lawyer said.
The four accused are to appear in provincial court in Drumheller on April 16.
With files from CPReport Typo/Error