$400M Ponzi scheme trial in Calgary delayed to find new jury members

The trial of two Calgary men accused in a $400-million Ponzi scheme has been delayed while new jurors are selected.

By the trial's second day, four of 16 jurors had already been dismissed.

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Gary Sorensen and Milowe Brost are accused of defrauding hundreds of investors around the world of roughly $400 million in what police have called "the largest Ponzi-type scheme" in Canadian history.

They pleaded not guilty on Monday to two charges each of theft and fraud, while Brost pleaded not guilty to a fifth charge of money laundering.​

Given the trial is expected to last up to six months, there were concerns the jury may eventually end up with an insufficient number of members to proceed.

Only 12 jurors are needed when it comes time for a final verdict, but lawyers are worried the case is vulnerable to mistrial if the jury count drops below 10 members. 

Two new jurors and two alternates will be chosen on Friday and the trial is to start again on Monday.

For the second time, the charges will be read and Judge Robert Hall will instruct the jury and the Crown will deliver its opening statements. Judge Hall apologized to current jurors for the inconvenience.

Case background

Sorensen and Brost were arrested in 2009. The two defendants are being represented by different teams of lawyers.

They sat side by side with their arms crossed and eyes downcast while Justice Robert Hall instructed the jury and Crown to deliver opening statements on Monday, which will be heard again next week. Sorensen and Brost did not make eye contact with one another.

One set of alleged fraud and theft offences took place between 1999 and 2008 and involved companies named Syndicated Gold Depository SA, Base Metals Corporation LLC, Bahama Resource Alliance Ltd., and Merendon Mining Corporation Ltd.

"As a result of that activity, at least 2,000 investors lost tens of million of dollars," Crown lawyer Brian Holtby told the court.

"Some lost savings, some lost their RRSPs, some lost the equity in their homes. Some lost all of these things. The lives of many, many families were irreparably diminished."

Sorenson and Brost also each face a fraud and theft charge related to alleged wrongdoing between 2004 and 2005 related to a company called Strategic Metals Corp. 

Brost's money-laundering charge is connected to that.

Daunting task, says Crown

Throughout the trial about 200 written, video and audio exhibits will be presented to the jury, and dozens of witnesses will be called.

Acknowledging their task will be daunting, Holtby told jurors the case is "simple" at its heart.

"The accused obtained tens of millions of dollars from ordinary people by lying to them directly and indirectly. When they obtained the money, they treated it as their own," Holtby said.

"They paid no regard to the promises they made to investors and lenders. Instead, they lived like royalty and every step of the way, they took steps designed to hide their wrongdoing."

Holtby said victims of the scheme were promised "astounding" returns with "little or no risk."

He said the case involves a mining fraud in addition to a Ponzi scheme, in which funds from new investors are used to pay old ones.

For instance, Holtby said purported Merendon prospects in Honduras, Venezuela, Ecuador and Yukon "produced gold only erratically and in very small amounts" and other holdings in Peru and British Columbia never reached the production stage.

"Merendon's holdings were simply props, cut-outs designed to induce potential investors to part with their money. Whether they generated any income or not was irrelevant," said Holtby.

The Alberta Securities Commission found Brost, Sorenson and Dennis Morice guilty of orchestrating an elaborate Ponzi scheme in 2012 and fined them $54 million.