BULLETIN: Alberta Securities Commission Orders $2 Million Penalty Against ‘Lord’ David Greene And John Jenkins In Gold Quest International Ponzi Case

After determining in January that Gold Quest International (GQI) was a “sham” operating as both a Ponzi and a pyramid scheme, the Alberta Securities Commission (ASC) now has doled out the penalties.

David Michael Greene, also known as “Lord” David Greene, and John Jenkins were ordered to pay an “administrative penalty” of $2 million, ASC said today. Greene and Jenkins were GQI’s operators, according to the agency.

Michael McGee, described by ASC as having played “a lesser but still considerable role” in the scheme, was ordered to pay an administrative penalty of $100,000. ASC further determined that McGee claimed that a case against him filed by the U.S. Securities and Exchange Commission had been “dismissed” when it had not.

In fact, ASC said, the SEC case had resulted in a judgment of more than $8.5 million against McGee, but that the judgment is not being enforced because of McGee’s professed inability to pay.

If the case involving GQI was not one of the strangest in Canadian history, it almost certainly is one of the strangest in U.S. history.

Part of the money in the case is tied up in a California homicide investigation in which the operator of the E-Bullion payment processor was charged with murdering his wife.

During the SEC litigation, the purported “attorney general” of a purported “sovereign” Indian tribe tried unsuccessfully to sue the SEC for the spectacular sum $1.7 trillion, claiming GQI was immune from U.S. securities laws.

Read this story for more background on GQI.

Penalties doled out by ASC were less severe on GQI President Delroy Atwood. He was not assessed a financial penalty other than a share of litigation costs of $49,700, but was “prohibited from acting as a director or officer of any issuer for five years,” ASC said.

Greene and Jenkins were banned from the Alberta capital markets for life.  McGee was banned for 10 years.

“In the Merits Decision, we found that Greene created Gold-Quest and the Gold-Quest Offering,” ASC said. “Greene and Jenkins ran Gold-Quest’s operations, with some assistance from McGee.

“Gold-Quest and Greene lured investors by touting investments in the Gold-Quest Offering as safe and secure or guaranteed and by promising 87.5% annual returns,” ASC continued. “These statements about the investments were misrepresentations. The Gold-Quest Offering, purportedly involving investment in foreign currency trading, was in fact a sham.

“On the evidence, we were satisfied that, during the relevant period, Gold-Quest itself did not open any foreign currency trading account, receive income from any currency trading, have an active currency trading program or any actual currency traders in its employ, or place investors’ money with external foreign currency traders,” ASC said.  “Rather, the evidence was that any foreign currency trading had been done through foreign currency trading accounts opened in the names of Greene and Jenkins, had been minimal and had resulted in heavy losses.”

The scheme gathered $29 million, ASC said.