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By Bill Graveland in Calgary
The Crown on Wednesday sought a 10 to 12 year sentence for a Calgary man who defrauded customers of millions in a Ponzi scheme.
Arnold Breitkreutz, 74, was found guilty on June 29 of fraud over $5,000 in what the Crown described as a multi-million dollar scheme in which investors believed they were putting money into secure first mortgages.
The court heard that money from his company, Base Financial, was instead loaned to an energy developer and used in a risky oil game in Texas, secured by leases and oil and gas equipment.
“The Crown argues that it was in fact a trust situation,” said Crown prosecutor Shelley Smith, who told the court that Breitkreutz was held in “high regard” by many clients after he successfully ran a mortgage brokerage business for years.
Smith said that during the period of the breach, between May 1, 2014 and September 30, 2015, investors provided Breitkreutz with more than $21.4 million as a result of his “deception”.
“The scheme was supposed to fall apart at some point, but the fraud persisted for a period of 17 months,” she said.
“Fake contracts were distributed to investors, T5s (investment income tax slips) were also distributed to investors, providing a luster of legality to the scheme. Regarding the large number of victims in this case, 107 people were defrauded.
Smith is also asking that Breitkreutz pay restitution of more than $3.1 million.
The court received 29 victim impact statements. Two of the victims were in court to read them.
William Janman and his wife invested nearly $3 million with Breitkreutz and trusted him so much that they invited him to barbecues and dinners.
“We will never recover from this loss in our lifetime. We find ourselves daily dealing with unparalleled loss instead of enjoying the end of our life and our retirement,” he told the court.
He said he and his wife experienced guilt, shame, self-blame and depression.
“The nightmare continues.”
Another investor, whose identity is protected by a publication ban, said she felt foolish for ignoring her initial hunch after putting her finances and business at risk.
“Who would have thought that ignoring this unpleasant feeling would lead to the near collapse of our business and devastating financial impacts for all of our employees,” she said.
“Please remember all the victims. I ask that you condemn Arnold Breitkreutz to the fullest extent of the law so he can think of all the lives he damaged.
Breitkreutz’s lawyer said his client should serve a sentence of five to eight years and that any longer sentence would be unfair given his age.
Cale Ellis-Toddington said his client’s trades were not complex and well-heeled investors knew what they were getting into.
“It was not a matter of trust. You look at the investor evidence and they said, ‘I don’t really trust Arnold, but the thing is, I was getting a great return on my investment and that’s why I invested,’ he said. he declares.
Ellis-Toddington said his client was not driven by greed but was trying to recover his investor’s money. He said his client’s level of moral culpability was low.
But Queen’s Bench Judge Colin Feasby questioned that argument.
“Isn’t it a breach of trust to raise money on the express and implied representation that you’re a mortgage broker specializing in Alberta mortgages and then bait and switch and put that money in an investment in Texas? He asked.
“Another way to look at it is this: he ran Ponzi schemes and kept kicking the road so he never had a day of reckoning.”
Breitkreutz, who has been in custody since his conviction, issued a brief apology.
“I can feel your loss and for that I am incredibly and indescribably sorry. It was not my intention when I accepted your money,” he said.
“I put your money in the same place I put mine. Nevertheless, I feel deeply for you, as much as I can and I’m sorry.
Feasby is due to serve his sentence on Friday.
This report from The Canadian Press was first published on August 17, 2022.