Alberta in the mid-2000s was fertile ground for promoters and salesmen like Gary Sorenson and Milowe Brost.
The price of crude was climbing toward $100 a barrel. A generation of Albertans had more spare cash than ever. Opportunity was everywhere.
On Saturday, a jury in Calgary found Mr. Sorenson, 71, and Mr. Brost, 61, guilty of fraud and theft in what the RCMP has characterized as the largest Ponzi scheme in Canadian history. Their crimes left behind a trail of shattered dreams and lost life savings. As many as 3,000 investors – a third of them Canadian – lost as much as $300-million in a series of affiliated mining and investment companies that prosecutors said were really just fronts to funnel cash to the two businessmen.
"Partly it's the culture in Alberta," Crown prosecutor Brian Holtby said in an interview. "There are times in Alberta when money is freely available, and they were able to take advantage of one of those times."
The case, one of the longest criminal trials in Calgary history, is part of a spate of Ponzi schemes in Canada and the United States that collapsed around the time of the Bernie Madoff scandal as investors tried to cash out during the financial crisis.
The victims weren't so much unsophisticated but they were vulnerable and attracted to unregulated investments, Mr. Holtby said. "There are lots of opportunities for people to find niches where they escape regulation throughout the country, but I think it's more predominant in Alberta than elsewhere."
Mr. Brost, the lead salesman in the stock sale schemes, was adept at convincing middle-aged investors to part with their savings for the lure of big returns in low-risk ventures, supposedly backed by gold deposits.
"They had saved substantial moneys to retire on, but not enough to really put them over the top, to retire comfortably, or as early as they wanted," Mr. Holtby explained. "And that vulnerability was really preyed upon by Brost in particular. He really saw it as a way of persuading them … they deserved this extra boost, and he could deliver it for them."
Prosecutors are seeking the maximum sentence of 14 years for Mr. Sorenson and Mr. Brost, who are now in jail pending sentencing. The pair had been free on bail since being charged in 2009.
Most of the $300-million has never been found and it probably won't be, prosecutors admit, because it's hidden offshore, paid out to early investors or spent by the pair on lavish lifestyles, including a palatial ranch in Honduras, a luxury bass-fishing lodge and flights on private jets. Financial records were moved to Belize, and both men claim they are now broke.
"It cycles into the Ponzi scheme and then out again," Mr. Holtby said of their ill-gotten gains. "If there is money hidden somewhere it will be overseas, and the RCMP were just not successful in locating any large pots."
That's bad news for Genie and Helmut Vollmer of Calgary, who sank $400,000 into companies controlled by Mr. Sorenson and Mr. Brost in the early 2000s, and who still hope to get some of it back.
"This is unreal," said Ms. Vollmer, 76. "I hope they find the money somewhere. It can't disappear."
The Vollmers' ordeal started when they invested some of the proceeds from the sale of their business, a Calgary motel, as well as RRSPs, on the advice of their now-deceased accountant. "It all sounded so good," Ms. Vollmer said. "I'm not a gambler, and I never was in my life … We did it because of our accountant. We knew him for 20 years … We trusted him."
The losses haven't bankrupted the couple, but Ms. Vollmer complained that she's still being pursued by the Canada Revenue Agency because she can't account for where her RRSP went.
Another investor, Edna Coulic of Kelowna, B.C., took her life in 2008, and the Calgary Herald reported she was distraught due to financial trouble.
Mr. Sorenson and Mr. Brost invested in mostly worthless shell companies with names such as Syndicated Gold Depository SA, Base Metals Corp. LLC, and Merendon Mining Corp. Ltd. Investors were wined and dined at conferences across the United States and in the Bahamas, and they were taken on tours of a small gold refining plant, giving the whole scheme an "aura of legitimacy," prosecutors said.
The pair were fined $54-million in a related Alberta Securities Commission case. They've also been pursued by U.S. authorities.
Both men proclaimed their innocence at trial. "I never solicited one single person for one single dollar," Mr. Sorenson, who represented himself, told the court during closing arguments.