ASC makes a statement
Securities commission hands out more in penalties in one day than in all of last year
Associate editor Geoffrey Morgan keeps an ear to the ground for business related fraud in Alberta so you don't have to. Follow him at @geoffreymorgan on Twitter or email him at firstname.lastname@example.org
by Geoffrey Morgan
The Alberta Securities Commission handed out its biggest-ever penalties last Friday, ordering $54 million in fines against Merendon Mining and its executives Milowe Brost, Gary Sorenson and Dennis Morice.
Those penalties are five times larger than the $9.5 million the ASC levied in penalties throughout 2012, and 10 times larger than the $5.6 million against Concrete Equities executives.
The bulk of those penalties ($38 million) went to Merendon Mining, one of several companies controlled by Brost and Sorenson in a “complicated web of domestic and offshore corporate and other entities, bank accounts and offerings.” The next largest penalty ($10 million) went to the Institute for Financial Learning, which Brost allegedly used to find new investors for his false companies, including Arbour Energy.
And while the ASC’s fines set a record, there is no indication how they will be paid. Brost sought legal aid in 2011 to defend himself against fraud charges in provincial court, where he and Sorenson are awaiting trial. The man who the RCMP alleges helped run a $100-million fraud said he couldn’t afford a lawyer.
Alberta Venture’s August 2012 edition contained a short article on Brost ($3 million in penalties) and Sorenson ($2 million in penalties) that generated a lot of interest from readers across the province. Brost and Sorenson allegedly perpetrated a massive fraud on 3,000 investors from Alberta, B.C. the U.S. and elsewhere.
In fact, both the ASC and the American Securities and Exchange Commission have handed Brost and Sorenson penalties in the past. And the RCMP will get its day with Brost and Sorenson in provincial court.
But will the ASC ever collect? Well, in May 2011, Brost was convicted of trying to cash a phoney $34,000 cheque at a MoneyMart in northeast Calgary. That’s not encouraging.