Ponzi victims in Abbotsford face financial ruin

An Abbotsford, B.C., couple says they've been wiped out financially in an alleged Ponzi scheme that promised lucrative returns on investments in the gold market.

Police have charged two Alberta men in connection, alleging the scheme involved a company called Syndicated Gold Depository S.A. that agreed to lend money to Merendon Mining Corporation Ltd. Police allege the men bilked 3,000 people in Canada, the U.S. and overseas out of $100 million between 1999 and 2008.

"I would not wish this on my worst enemy — unless it's the people who got us into this in the first place," said Raylene Moorthy, an elementary school teacher.

They remortgaged their house to come up with the money to invest, said Moorthy's husband, Dave.

"We've lost well over $150,000," Dave Moorthy said.

The scheme allegedly channelled funds through a highly complicated series of companies and promised annual returns of as much as 40 per cent.

A Ponzi scheme is usually structured as an investment opportunity that promises high returns. People who buy into the scheme early are paid apparent dividends that increase confidence in the scheme.

The returns are not actually from successful investments, but from money put into the scheme by people who become involved later. Eventually, the phony enterprise collapses.

'Everything he told us was false.' —Dave Moorthy

The couple first learned of the gold market investment from the husband of a fellow school teacher, a neighbour who lived near them.

"He had a very good presentation and on several occasions I asked him, 'Are our funds safe?' and he said, 'Most definitely,'" said Moorthy.

"He says, 'This is a great deal. Look, I've got this supporting documents.' Now we find out that everything he told us was false," Moorthy said.

The man earned a hefty commission for his efforts and then vanished, Moorthy said.

That's when the couple figured out their investment was in trouble. An elementary school principal, Moorthy said he feels especially bad that he brought another couple into the investment, and said they lost about $85,000.

Police said it is too early to know if any of the victims' investments will ever be recovered.

Milowe Allen Brost, 55, of Chestermere, Alta., is charged with fraud over $5,000 and theft over $5,000.

Police are still looking for Gary Allen Sorensen, 66, a Calgary man who is believed to be in Honduras. He faces the same charges.