November 27, 2010
$400M ponzi scheme suspect arrested
CALGARY - One of two men accused of running an alleged $400 million ponzi scheme is back behind bars, this time facing unrelated charges for allegedly forging a cheque.
Milowe Brost, 57, was arrested Thursday on charges of possession of stolen property and uttering a forged document, the result of an RCMP investigation into the passing of a cheque worth about $34,000.
He was ordered detained without bail during a court hearing in Calgary on Friday.
"It has to do with a cheque we are alleging is forged in some way," said RCMP spokesman Sgt. Patrick Webb.
"This came from a complaint to our (Integrated Market Enforcement Team) unit."
Brost and Gary Sorenson were arrested in September 2009, accused of bilking as many as 4,000 investors out of some $400 million through investments in a series of allegedly phony companies.
RCMP investigators have called it the biggest-ever scam in Alberta.
Both men are still awaiting disclosure and have not entered pleas.
On. Nov. 18, American regulators froze the assets of several companies linked to Brost and Sorenson, the same day the Securities Exchange Commission levied $311 million in fines against them along with lifetime bans from serving as officers and directors of public companies with securities registered with the SEC.
In 2007, Brost was found guilty of fraud by Alberta securities regulators, resulting in a lifetime ban on trading securities and a $650,000 fine.
In court, Crown prosecutor Andrew Koeman successfully argued Brost posed a risk to reoffend, based on the allegations against him and his financial history.
Koeman told provincial court Judge George Gaschler that Brost has been sanctioned by both the Alberta and Saskatchewan securities commissions, and is subject to ongoing no-trade orders from both.
He was also found to have unlawfully converted funds to his own use in a 1996 civil case, Koeman said.
Defence counsel Richard Glenn, who sought Brost's continued freedom pending trial, noted none of those incidents involved criminal charges.
"It is not evidence of criminal behaviour, if it was there would be charges forthcoming," Glenn told Gaschler.
But the judge said even though Brost has no prior criminal convictions, his past financial dealings were enough of a concern to find he poses a risk to commit further offences.