Calgarians jailed 12 years in Ponzi scheme
No remorse for gold fraud that cost investors hundreds of millions over a decade
CALGARY — The effects on investors in a greed-motivated, multimillion-dollar Ponzi scheme orchestrated by Calgarians Gary Sorenson and Milowe Brost were devastating, a judge said in sentencing the pair to 12 years in prison on Tuesday.
“A review of the victim impact statements shows the devastating loss to investors,” said Court of Queen’s Bench Justice Robert Hall, alluding to the bogus gold mining operation, primarily in Honduras between 1999 and 2008, that is recognized as one of the largest frauds in Canadian history.
“There was an abandonment of lifestyle, some had to return to work, some were homeless, many suffered shame and embarrassment, it eroded oncehappy marriages, some considered suicide.”
Hall found that Sorenson and Brost bilked investors of between $120 million and $200 million on one phase of the fraud involving Syndicated Gold Depositories and $36 million on another involving Strategic Metals, initiated to support the first phase.
The average lost investment among 477 investors in the second phase was $77,000, he said. It’s unclear how much was lost in the first phase as there are no records of how much was returned in the Ponzi setup.
He cited the sheer magnitude of the fraud, the large number of investors and adverse effect on them, length of time over which the fraud occurred and large amount of money involved as significant aggravating factors.
“These companies were set up to facilitate the fraud being carried out,” he said. “The second fraud was motivated by greed from the first fraud. Family and friends of victims were also encouraged to invest.
“Nether of the accused has expressed any remorse.”
Hall also gave Brost five years to be served concurrently for money laundering. He did not order restitution, saying it was unclear exactly who lost what amount, and left it to the civil courts to sort out.
Carole Knopp of Enderby, B.C., one investor who lost $130,000, said she does not expect to get anything back but added, “it would be a bonus.… Seeing them (perpetrators) in court, they look like hollow, empty people. They are sociopaths or psychopaths to not have any response.”
Nearly 600 victims filed impact statements with the court and 74 indicated they wanted to read them aloud but only Knopp showed up to do so during sentencing arguments.
Neither Sorenson, 71, nor Brost, 61, made any comment when given the opportunity by the judge. Brost only said, “On advice of my counsel, no.”
Crown prosecutors Brian Holtby and Iwona Kuklicz had asked for the maximum 14 years allowable under the Criminal Code, but were pleased with the judge’s ruling.
Kuklicz had argued the two offenders’ actions cried out for an extreme denunciatory sentence. “If there was ever a case of fraud that justified the maximum sentence, this case is the one,” she told Hall. “If there is a fraud case that was more planned and more deliberate, I couldn’t find one ... it’s not just the likely and actual harm to the victims, but to society.”
Sorenson’s lawyer Steve Bitzer noted his client’s age and said the maximum could essentially be a life sentence for him.
“The whole point in asking and trying to get jail time is to deter other people and to isolate these ones from more potential victims,” Holtby said outside court. “So, hopefully, the 12 years will deter others and for a long period of time Brost and Sorenson will be away from society and not victimizing others.
“It was important for us that the judge found it was pure greed with no legitimate business purpose from Day 1. They were dishonest and they were greedy and really this dishonesty and greed hurt hundreds of people.”
Court heard previously that the Investors Recovery Pool, which represents 3,130 victims who have signed papers seeking returns of their losses, are seeking up to $410 million in restitution — depending on the exchange rate, as many clients invested in U.S. dollars.