Victims burned while RCMP fiddled for years with
Alberta Ponzi scheme
BY DAVID BAINES, VANCOUVER SUN SEPTEMBER 18, 2009
It would have been Edna Coulic's 44th birthday today. The Kelowna woman won't be around to
celebrate because she committed suicide last October.
Her sister, Gloria Lozinksi of Calgary, said Coulic became depressed after she realized she had been
duped out of $300,000 in a massive Ponzi scheme perpetrated by Alberta confidence men Milowe
Brost and Gary Sorenson.
Both were charged with fraud by the RCMP Integrated Market Enforcement Team in Calgary earlier
this week. Estimates of total losses range from $100 million to $400 million. Brost is out on bail, and
Sorenson is believed to be hiding in Honduras.
Lozinski figures they should both be charged with murder: "At the end of the day, they pretty much
pulled the trigger," she told the Calgary Sun.
This is the brutal reality of white-collar crime. It is not simply a crime against property, it is a very
personal and debilitating assault against innocent people.
Parliament is beginning to respond. In 2004, the Criminal Code was amended to increase the
maximum sentence for fraud from 10 years to 14 years. Earlier this week, the Conservative
government announced it will introduce further amendments that, among other things, would provide
minimum mandatory sentences for serious frauds.
It is not likely, however, that any of this would have saved Coulic. The damage had already been done.
The key is to detect these schemes at an early stage and prosecute the perpetrators in a timely
manner. The problem is not so much what we do with fraudsters when they get to court, it's getting
them to court. In this regard, Canada is a complete failure.
I first wrote about Brost in December 2002, when he was pitching his investment schemes at T. Harv
Eker's Millionaire School. (Eker is a North Vancouver motivational speaker who has introduced his
devotees to many fraudulent investment schemes. He is, in my view, a public menace.)
At the time, Brost and his company, Capital Alternatives Inc., was promoting a gold investment
scheme, which was based in the Bahamas and operated out of Central and South America. He told
investors the scheme was "backed 100 per cent in gold concentrate and gold bullion", and the
expected return was 20 to 60 per cent.
He was also promoting an investment in "stale credit card debt," which he grandly called the
http://www.vancouversun.com/story_print ... 7&sponsor="Consumer Debt Recovery Program". He claimed thissort of debt could be acquired at a deep discount
and turned into cash at a large premium -- 18 to 54 per cent per year.
In June 2004, I reported that Brost was stumping around B.C. promoting these schemes.
"A few weeks ago, he made a presentation at University College of the Cariboo in Kamloops," I wrote
at the time. "On May 30, there was another meeting at the Radisson Hotel in Burnaby. The pitch
appears to be working. I have been told that one man in his 60s has invested $250,000 of his
retirement money."
I asked Sasha Angus, then the B.C. Securities Commission's enforcement director, whether he knew
about Brost's activities.
"We are aware of the situation and looking at it," Angus told me.
In September 2004, the Alberta Securities Commission issued a cease-trade order against Brost and
his main operating company, the Institute for Financial Learning, forbidding them from selling
investments in the depository and three other schemes.
In October 2005, the Alberta commission issued another notice of hearing alleging that Brost and
Capital Alternatives had induced investors to invest millions of dollars into another scheme called
Strategic Metals Inc.
At that point, the commission referred the file to the RCMP Integrated Market Enforcement Team,
which began an investigation.
In February 2007, the hearing panel found Brost had illegally sold $36.5 million in investments. "Brost
not only does not recognize the seriousness of his misconduct, but he is also prepared to shamelessly
overlook it," the panel noted. It fined him $650,000 and permanently banned him from the Alberta
market.
The B.C. Securities Commission piggy-backed on this order and also issued a permanent ban, but not
until April of this year.
It didn't matter, of course, because Brost ignored every administrative order that was issued against
him. The only thing that would stop him was jail. But the RCMP IMET team in Calgary didn't file
charges and didn't put Brost behind bars until this week -- four years after the Alberta commission had
referred the file to the police.
Why did this take so long? Supt. Eric Mattson, who heads the IMET team, told the Calgary Herald they
"could not act until there was enough evidence. "
"During that time, we didn't want to be seen as market-breakers. We don't want to accuse a group of
http://www.vancouversun.com/story_print ... 7&sponsor=committing crimes and say, 'Don't do this,' because at the end of the investigation perhaps we don't
have sufficient information to lay charges and we'd be open to [civil litigation] as well. We may end up
interfering with what could have been legitimate business."
In my view, these comments are outrageous. This was a patently fraudulent scheme when I ran across
it in 2002. It was a patently fraudulent scheme when the Alberta commission referred it to the RCMP in
2005. Depending which start date you use, it took seven years or four years for the Mounties to shut
this thing down. That is a disgrace. But the real tragedy for Canadians is that this is par for the course.
Two years ago, the Conservative government tried to clean up the mess that is the RCMP IMET
program, but the attempt has utterly failed. Prime Minister Stephen Harper's proposed amendments to
the criminal code will do nothing to solve the problem of timely prosecution.
What we need is a royal commission of inquiry into white-collar crime in Canada. Nothing short of a
complete overhaul can save us from this systemic dysfunction. Let's not allow Edna Coulic to die in
vain.
dbaines@vancouversun.com