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"
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.