CEF advertised investments for loans to build churches and schools but placed the money in speculative seniors-related developments and a business. According to the Task Force Report they also used new depositor investments to make interest payments which is a typical element of a ponzi scheme.
To me this article sounds awfully familiar.
You can read the hearing transcript this article is based on here.
By SAMMY HUDES Updated: March 6, 2018
Alberta’s securities regulator has determined that the owner of a mortgage company and its office administrator breached provincial securities laws by operating a Ponzi scheme and deceiving investors.
In a decision issued Tuesday, the Alberta Securities Commission found that Arnold Breitkreutz, of Calgary, his company, Base Finance, and its office administrator, Susan Elizabeth Way, committed a fraud on investors by operating a Ponzi scheme that recirculated investors’ funds to pay purported returns to existing investors.
Breitkreutz, Way and Base Finance deceived investors into thinking they were putting their money into mortgages held by the company, rather than in a loan to an undisclosed entrepreneur involved in U.S. oil and gas developments, according to the regulator panel’s decision.
They raised more than $137 million from upwards of 250 investors between 2004 and September 2015.
The regulator’s panel considered communication patterns with investors that “were carefully tailored to maintain a facade that they were investing in first mortgages in real estate and not in oil and gas plays” in the U.S., according to the decision.
A Ponzi scheme entails new investors being constantly recruited to refresh the pool of money used to provide returns to earlier investors, under the illusion of a legitimate business.
Breitkreutz, Way and the company, along with staff investigators, were ordered to contact the regulator by March 19 to set a date for the second phase of the hearing, which would address possible sanctions and costs they would potentially have to pay.
An interim cease trade order issued by the securities regulator in November 2015 remains in effect.