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'Victims' missed message about pigeon scheme meeting

Saturday, July 9, 2011

Editor's Note: This story originally published on Friday has been modified and republished.

by BETTER FARMING STAFF

She would have made the meeting if only she had known.

But Joline Humbert, a former pigeon breeder in the United States trying to recoup losses after the 2008 collapse of Pigeon King International in Waterloo, never received a phone call or an email about a victim’s meeting held in Kitchener last month.

“That’s really frustrating for us here in the States,” says the Republic, Ohio woman of criminal proceedings against the company’s founder, Arlan Galbraith, underway in Kitchener, Ontario. Galbraith faces one count of fraud over $5,000 and four under the Bankruptcy and Insolvency Act. He has not been convicted of any charges. “We’re just as much a victim of it as the next person but yet they don’t take the initiative to so much as send us an email which would cost them nothing except a few minutes of time,” Humbert says.

The Humberts are among 917 people on both sides of the border who filed statements with police about the alleged Ponzi scheme that offered pigeon breeding pairs to investors and bought back offspring. In June, assistant crown attorney Lynn Robinson invited all of the complainants through the media to attend an update in Kitchener. They could visit in person or call in but only 12 out of hundreds participated.  

Cindy Frank, another former PKI investor who farms with her husband Allan, wasn’t contacted either. Even if she had been, she doubts she would have participated.

When Galbraith suddenly shut down his business three years ago, the Franks, who farm outside of Brockville, found themselves housing worthless birds and wondering how they were going to pay a mortgage of more than $100,000 that they had arranged with Toronto-based Merix Financial on the recommendation of former PKI salesman Mark. S. DeWitt.

Frank says she is trying to put the experience behind her.

In June, Robinson blamed the lack of attendance on witness fatigue and timing, noting several members of the surrounding area’s Mennonite community indicated they would be unable to attend because of field work.

Yet Robinson also acknowledged in June that there was no master list of names and phone numbers. The information is buried in the 580,000-page digital Crown brief.

Robinson says the RCMP, which, along with the Waterloo Regional Police’s fraud squad, has investigated complaints, has been asked to make a comprehensive list.

In the meantime, Robinson notes that those who have filed complaints can contact Laurie Black Rooney at 519-741-3300 x2278. “I just want to make sure that everybody affected gets the opportunity to talk to me and to address the court,” Robinson said.

She also noted there may be limited funds available to help with travelling to Kitchener. “We don’t pay the full shot for everybody; there’s certain guidelines,” she said.

During the June meeting, Robinson noted that a forensic audit had determined money from later investors was used to pay earlier investors and the only benefit to Galbraith was about $50,000 a year that he withdrew from the company when it was in full swing. Assets the company helped fund, such as a home in Kitchener and an estate near Cochrane, Ontario, were already seized through bankruptcy actions. Both Galbraith and his business have been declared bankrupt.

Humbert says she’s not surprised that Robinson warned those who attended the meeting there was no money to compensate victims. She was surprised, however, at Robinson’s description of Galbraith’s proceeds from the business as “modest.” Earlier, she had been told by a former employee that $10 million was missing.

Humbert notes that legal action against some Ponzi schemes in the United States have successfully held some investors responsible. She also wonders if some of the company’s staff may have been aware of a problem.

Dale Leifso, a Paisley area farmer who has had to take on a second job to help pay for the $300,000 lost investing in PKI birds, wonders if some staff knew the company was near collapse. In 2007, Leifso signed a contract with PKI that would earn him $250,000 a year for 10 years but the business collapsed before he could send his first shipment.

In the final months, everyone in the office must have known there were financial difficulties, Leifso says. “Every dollar that they took from a new investor was a dollar that they knew that investor would not see again or not get back. And yet they knowingly took new investors’ money for months and months and months” until the company collapsed. “I very much resent that.”

Leifso says he planned to attend the meeting but was detained by a problem on his farm.

Ken Wagler, once a PKI top sales consultant and also an investor, says the June meeting was the first time that he fully considered the possibility that a deception had been intended.

He was motivated to attend because he had been involved in company sales and had given police several statements. “I wanted to hear what they had to say about what they’d uncovered and if anything I had to say had been a help.”

“I don’t know if I really got an answer,” he says. BF
 

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