Last week, the United States Securities and Exchange Commission ("SEC") filed a complaint against several individuals charging that they perpetrated a $300 million Ponzi scheme, selling promissory notes to over 3,000 investors in the United States and Canada which were allegedly being used to fund gold mining operations. The defendants in the case are four Canadian men (the main perpetrators, Milowe Allen Brost and Gary Allen Sorenson, along with Ward K. Capstick and Bradley Dean Regier) and two others living in Florida (Larry Lee Adair and Martin W. Werner), as well as several of their companies.The SEC alleges that from 1999 to 2008, the defendants sold promissory notes issued by Syndicated Gold Depository, Inc. and several other "select" companies. They presented themselves as an independent financial education firm that had discovered profitable investment opportunities with companies involved in gold mining. However, all of these companies were managed by the defendants, contrary to their representations as being independent. Investments were pitched by the defendants at seminars, where they promised investors returns of between 18 and 100 percent and claimed that the investments were fully collateralized by gold.The elaborate scheme used more than eighty entities to conceal the movement of investor funds among more than eighty bank accounts, located throughout the world. To further hide their involvement in the scheme, several of the defendants used personal aliases to form and manage these entities. In classic Ponzi scheme fashion, unbeknownst to investors, their funds were being used to make "interest payments" to other, earlier investors, fund the few unprofitable companies that actually had operations, and personally finance the extravagant lifestyles of the defendants and others involved in the scheme.
