New York Times Story — ‘Birdman[:] The Pigeon King And The Ponzi Scheme That Shook Canada’ — Shatters Myths

recommendedreading1“Birdman[:] The Pigeon King and the Ponzi Scheme That Shook Canada” appears online today at the website of the New York Times Magazine.

The story by Jon Mooallem examines the strange case of Arlan Galbraith, the narratives surrounding his “Pigeon King” scheme, Galbraith’s efforts to serve as his own attorney, how a veteran prosecutor new to fraud cases traced a “whole maze of sensational subplots” and eventually scored a conviction.

Most of all, Mooallem’s story shatters myths that frequently accompany Ponzi schemes.

As longtime PP Blog readers have observed, one Ponzi scheme after another serves up sensational subplots. But in the end, many Ponzi schemes can be viewed as a sort of rolling confessional. Perpetrators feeling the heat from investors or the media may blame “haters” — or, as the Times put it, quoting Galbraith, “fear mongers and envious critics.” At least in the early stages, some investors may side with the perpetrators because the alternative is simply too painful to contemplate.

Can a Ponzi scheme last for years? Certainly. The Times’ story brings home this point, shattering the myth that a lack of police action (or the perception of a lack of such action) means that everything is OK.

Are payments to investors proof no underlying fraud is occurring? No. The Times also drives home this point.

What about a venture that owns property or advances a development plan and perhaps a new product? Are those things proof no scam is occurring?

Of course not, as the Times’ story points out.

One of Galbraith’s victims, an early believer who eventually accepted the reality that she and her husband had been duped, took out a loan for $125,000 to invest in the scheme. This ultimately resulted in a classic confrontation on the witness stand, resulting in a “catharsis” that happened “on both sides.”

The victim is stuck with at least $86,000 in remaining payments on the loan at $1,000 a month, but that’s just part of it from an emotional standpoint.

From Mooallem’s story (italics added):

Officials in Ontario realized they had a potential avian refugee crisis on their hands. Farmers in the province had been left holding an estimated 400,000 pigeons — birds they suddenly had no incentive to keep. There was concern the pigeons could swarm into downtown Toronto like a plague.

The province’s agricultural ministry was inundated with calls. It gave out advice about euthanasia and resources for proper disposal. Then in July, the agency began clearing out some of the largest barns itself. Crews gassed 175,000 pigeons in five weeks, working 16-hour days, six days a week. An internal assessment noted that, in retrospect, it would have been wise to have grief counselors on hand; many breeders had grown attached to their pigeons.

Not all of the pigeons could be gassed because they were kept in barns that could not be sealed. How to dispose of them? The methods, according to Mooallem, included drowning and wringing their necks. Investors horrified by the circumstance in which they found themselves made the call in certain instances.

The scheme gathered about $42 million. When it collapsed, it took with it hundreds of thousands of birds.

Galbraith’s “pigeon” Ponzi scheme involved tales of breeding pigeons for racing and meat. It was not an MLM HYIP scheme, but many of the lessons are the same. He trotted out the “haters” defense, something in common with many Ponzi-board schemes.

At least for a while, even his victims were willing to support him, another thing in common with MLM HYIP scams.

The defenses and support unraveled over time — and there was plenty of time to contemplate events surrounding the Pigeon King scheme. It may take years to bring a case. The case then may be delayed in the courts.

An investigative report by Better Farming magazine helped bring down the scheme, Mooallem reports. So did Plain Interests, an Amish newspaper.

And so did David Thornton, the operator of CrimeBustersNow. (PP Blog note: Thornton wrote about  Pigeon King here in this July 19, 2010, comment.)

Thornton, Mooallem wrote in the Times, was an “eccentric with a bullhorn.”

Read the story.


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One Response to “New York Times Story — ‘Birdman[:] The Pigeon King And The Ponzi Scheme That Shook Canada’ — Shatters Myths”

  1. Another one of Canada’s largest and longest running Ponzi’s IFFL trial just concluded after an almost six-month trial. Milowe Brost and Gary Sorenson were both found guilty. This Ponzi ran from around 1999 until 2008 and took almost 5 years before any charges were filed against the two of them after IFFL shut down in 2008. The Ponzi took in between $200-$300 Million Dollars.

    Sorenson had been living in a palatial estate in Honduras before voluntarily returning to Calgary to stand trial.

    What made this more insidious was that Brost and Sorenson had been found guilty in the $36.5 Million Dollar Strategic Metals fraud. Brost paid a $650,000 fine which was the largest fine in ASC history. So both were known entities to Canadian law enforcement.

    Sentencing was originally set for late February, but a delay was granted since Sorenson hired an attorney for the penalty phase of the trial. The court allowed the new attorney time to get up to speed with sentencing now tentatively set for early June.

    As with every Ponzi that has been either shut down by the authorities or the admin runs with the money, IFFL had one known suicide and it is believed there were three. It is too bad they also could not be charged with manslaughter for what they did.

    My point in mentioning this case is to show how long a Ponzi can run, how long an investigation can take and how long it takes to convict.