A Calgary man who helped run a Ponzi scheme that stole more than $27 million from multiple investors between 2014 and 2015 is expected to learn his sentence later this week.
Arnold Breitkreutz was charged in May 2018 with fraud over $5,000 and theft over $5,000 in connection with the activities of a company called Base Finance Ltd.
Calgary police were notified about the illegal activities following a tip from the Alberta Securities Commission (ASC).
A criminal investigation determined that Breitkreutz, along with his partner Susan Way, raised more than $27 million from hundreds of Albertans, disguising it as mortgage lending but instead used the money to pay off other investors.
Breitkreutz was convicted earlier this year for fraud in connection with the incident.
During Wednesday’s court proceedings, the Crown submitted a sentence of 10 to 12 years for the senior, with credit for time served since June 29 – the day he was convicted.
Prosecutors are also asking for him to pay $3.1 million in restitution and request he has a lifetime ban from trading in financial matters under section 380(2) of the Criminal Code.
Breitkreutz’s defence suggested a sentence of between five to eight years.
Way was sentenced to three years in prison last year but victims tell CTV News she is now out on parole.
‘MOST EGREGIOUS’ MISCONDUCT
According to an ASC decision released in February 2019, the agency said “there was little evidence” to support the fact that Breitkreutz and Way were operating a “legitimate mortgage-lending business.”
“Transactions in Base Finance’s bank accounts showed no significant sources of business revenue throughout the relevant time, and that investors’ funds were pooled together and mostly used to make payments to other investors ostensibly as principal repayments and interest payments,” the ASC wrote.
It also suggested that the breadth of the fraud far exceeded what was discovered during the police investigation.
“Base Finance’s operating bank account was subject to a freeze order in September 2015 and a receiver (the Receiver) was appointed over Base Finance and Base Mortgage in October 2015. According to the Receiver, Base Finance had, since August 2004, raised approximately $137 million from hundreds of investors, who were collectively owed more than $122 million at the time of Base Finance’s receivership.”
The ASC says its findings place Breitkreutz’s misconduct “among the most egregious known to the capital market” and put it “among the worst frauds perpetrated in Alberta.”
“The fraud he orchestrated occurred over many years, during which time he raised more than $137 million and left hundreds of investors with little or no recovery.
“We find Breitkreutz’s lack of insight into the seriousness of his actions and the harm caused to his investors to be shallow, disingenuous and overshadowed by self-pity. He still believes he did nothing wrong and that he is the victim of the bank, the Receiver, and the ASC. At no point did he acknowledge nor accept that he may have been the author of his own fate.”
The ASC’s decision also included prohibitions on both Breitkreutz and Way to “protect investors and the Alberta capital market” from future instances of fraud.
Almost 30 victim impact statements were submitted to court on Wednesday.
Justice Feasby adjourned the proceedings and is expected to deliver his decision on Friday.
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