ALBERTA

Calgary Ponzi Scheme Convict Could Die In Jail: Lawyer

06/30/2015 02:49 EDT | Updated 06/30/2016 05:59 EDT
Alamy
CALGARY - The lawyer of one of two men convicted in one of the largest Ponzi schemes in Canadian history says his client could end up dying in jail.

Shamsher Kothari, who represents Milowe Brost, said his client has already suffered a stroke, a heart attack and diabetes.

Even if the sentence is less than the 14 years the Crown wants, there is a chance he will die in prison, he told court Tuesday.

"To say the least, he's a man of poor health," Kothari said. "There's a strong possibility he will die in jail during his sentence."

Both Kothari and the lawyer for Gary Sorenson are seeking sentences of between eight to 10 years.

Sorenson, 71, and Brost, who is 61, were found guilty of fraud and theft in February for an elaborate scheme in which investors were promised unrealistic returns. Brost was also found guilty of money laundering.

More than 2,400 investors from around the world lost between $100 million to $400 million in the scheme. Many people lost their life savings.

The court received 600 victim impact statements prior to the sentencing hearing.

Ponzi schemes involve taking funds from new investors and using them to pay old ones.

"This wasn't a pure greed case," said Kothari. "There were some misrepresentations, but this was an actual business."

Court of Queen's Bench Justice Robert Hall questioned Kothari on his assertion.

"If you set up a business for the purpose of fleecing people it's not a legitimate business," said Hall. "It's a scam."

Stephen Bitzer, Sorenson's lawyer, told the hearing Monday that he is worried about his client's long-term prognosis if he is sentenced to a lengthy prison term.

"Ten years is a lengthy sentence for a first-time offender," Bitzer said. "At age 71, it is, in a sense, potentially a life sentence."

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

More wrongdoing took place between 2004 and 2005 with a company called Strategic Metals Corp.

Investors were promised a 34 per cent annual return on an investment of $99,000, which was supposed to grow to just more than $1 million within eight years.

They were told that the business involved selling gold for refining and that it was "low risk.''

The court will still deal with requests for restitution from some of the victims. The Crown said it had received requests from 850 individuals so far.

It is expected Justice Hall will reserve his decision to a later date.

Follow @BillGraveland on Twitter

Also on HuffPost

Ten Common Money Scams