A Toronto pastor and his wife are facing 38 counts of fraud after Toronto police alleged they defrauded members of their congregation out of $8.6-million in a Ponzi scheme, leaving some victims devastated by their financial losses.
Marlon Gary Hibbert, 49, and Verna Hibbert, 48, are accused of running an investment fraud which required parishioners to invest a minimum of $10,000 on the promise Mr. Hibbert would earn them monthly returns of up to 8.5 per cent through foreign exchange trading.
Instead, police allege he made no money on the trading scheme, and instead used funds from later investors to pay investment “returns” to earlier investors.
Police allege “large portions” of victims’ money was shifted to an offshore account in Panama, saying $4-million has not been accounted for. Police allege some of the funds were also used by the Hibberts for personal purposes and some money was used to pay earlier investors. No money has been recovered for investors.
Toronto police Det. Gail Regan of the financial crimes unit said forensic audits show about 200 people were defrauded of a total of $8.6-million, but only 38 have so far come to police with losses of $2.1-million. Police are asking other victims to come forward.
Det. Regan said Mr. Hibbert lived a “luxurious lifestyle,” and had fancy cars and a large house in Toronto’s east end, while his victims were devastated by their losses. Some used their retirement money to invest, and some have lost their homes.
“They are distraught,” Det. Regan said Friday. “They are hurt. They still can’t believe someone like him could have done this to them. They are quite happy [the Hibberts] have been arrested, but for some of them this was their life savings that they have taken out of the bank or their RRSP for retirement.”
Police also charged Lorraine Bahlmann, 47, with fraud, alleging she was an administrative clerk responsible for mailing or e-mailing inaccurate account statements to victims showing they were earning healthy returns on their investments while they were in reality facing large losses.
Det. Regan said the Hibberts and Ms. Bahlmann are all pastors. The alleged fraud occurred between 2005 and 2010 while Mr. Hibbert was running a congregation called the Masonic Church of God in Toronto’s east end.
After members of the congregation began complaining about their investments, that church was disbanded and the Hibberts formed a new church called the Life Centre Word of Faith Ministries, which is still operating in a rented space in a school near the intersection of Victoria Park Ave. and St. Clair Ave. in Toronto.
Det. Regan said she has not heard of any allegations of fraud involving the new congregation.
She said the police are still investigating and “further arrests and charges are anticipated.”
The charges come over two years after the Ontario Securities Commission filed allegations against Mr. Hibbert in the same matter, alleging he committed fraud and improperly distributed securities without being registered to do so while operating a church identified by the OSC as the Dominion World Outreach Ministries. Mr. Hibbert did not appear or defend himself at an OSC hearing in late 2011, and a hearing panel ruled in April, 2012, that he committed fraud.
In a sentencing decision in the case, OSC commissioner James Carnwath said the case was one of the worst frauds he has ever seen.
“In 32 years of adjudication, I have never encountered a more vile, more heinous fraud than that perpetrated by Hibbert on his unsuspecting parishioners,” Mr. Carnwath wrote in his decision.
One of the victims who testified in the OSC case was a stay-at-home mother with two blind children, who said she and her husband lost $60,000 that they had received from her mother-in-law’s estate. At the hearing, the unidentified woman was asked about the impact on her family and replied, “This is where I cry.”
“She described her desire to establish security for her oldest son who would probably never work,” the ruling says. “[She] said she wanted to put an end to Hibbert living off other people’s money.”
The OSC ordered Mr. Hibbert to pay $4.67-million in restitution to investors and fined him a further $750,000. The OSC web site shows none of the money has been paid.
The commission alleged Mr. Hibbert took $673,000 of investor funds for himself and spent it on credit card bills, school fees, hotels, gym memberships, and donations to charities.
Mr. Hibbert was prominent in Toronto’s black community and many of his victims met him through those connections. He was a founder of the Fight for Justice organization, which advocates on behalf of the African-Canadian community in the city.