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 of more than $5,000 and theft of more than $5,000 in connection with the activities of a company called Base Finance Ltd.
Calgary police were notified of the illegal activities following a tip-off from the Alberta Securities Commission (ASC).
A criminal investigation determined that Breitkreutz, along with partner Susan Way, raised more than $27 million from hundreds of Albertans, disguising it as home loans, but instead used the money to pay off other investors.
Breitkreutz was convicted earlier this year of fraud in connection with the incident.
During court proceedings on Wednesday, the Crown presented a sentence of 10 to 12 years for the older man, with credit for time served since June 29, the day he was sentenced.
Prosecutors are also asking him to pay $3.1 million in restitution and asking that he be banned from dealing in financial matters for life under Penal Code section 380(2).
Breitkreutz’s defense suggested a sentence of between five and eight years.
Way was sentenced to three years in prison last year, but victims told CTV News that she is now on parole.
‘IT’S HEART BREAKING’: VICTIM SPEAKS BEFORE SENTENCE
Sara Drabinsky was only 16 years old when she first gave money to Breitkreutz, thinking she was investing in a legitimate mortgage company. She lost more than $665,000 over the next four decades.
“We had been investing for years and years, we knew it was all legit, we ended up with no T5 tickets, government paperwork, all of that and it was fine for years,” he said.
However, in 2015, Drabinsky received a letter from Base Finance saying that something had gone wrong and that the company was being investigated by the ASC.
“We found out that it was all a scheme, that he had stolen millions and millions of dollars over the last 40 years from more than 400 investors.”
“My entire family has lost just under $2 million. My life savings were basically wasted on this supposedly legitimate company. From periods of depression to just plain financial ruin, it’s heartbreaking.”
BREITKREUTZ APOLOGIZES IN COURT
Breitkreutz was given the opportunity to make his own statement in court on Wednesday, at which point he apologized to several of his victims who were present.
“To the victims, I can feel your loss and for that I am incredibly and indescribably sorry,” he said.
“That was not my intention. When I accepted your money, I put your money in the same place I put mine. Nonetheless, I feel for you as much as I can and I’m sorry.”
Drabinsky called the apology very “phony” and remorseless.
“His attorney just tried to get him out and he thought of every angle to try to shorten his sentence, so he knew he needed to apologize,” Drabinsky said.
“The only thing he regrets is that he got caught. The last hope is that he gets the maximum sentence.”
THE ‘MOST GRATEFUL’ MISCONDUCT
According to an ASC decision published in February 2019, the agency said “there was little evidence” to support the fact that Breitkreutz and Way were operating a “legitimate home-lending business.”
“Transactions in Base Finance’s bank accounts did not show significant sources of trading income during the relevant time, and investor funds were pooled and used primarily to make payments to other investors, apparently as principal repayments and interest payments. “, the ASC wrote.
He also suggested that the extent of the fraud far exceeded what was discovered during the police investigation.
“Base Finance’s operating bank account was subject to a freezing order in September 2015 and a trustee (the Receiver) was appointed over Base Finance and Base Mortgage in October 2015. According to the Receiver, Base Finance, since August 2004 , had raised approximately $137 million from hundreds of investors, who were collectively owed more than $122 million at the time of the Base Finance receivership.”
The ASC says its findings place Breitkreutz’s misconduct “among the most egregious known in the capital market” and rank it “among the worst fraud perpetrated in Alberta.”
“The fraud he orchestrated occurred over many years, during which he raised more than $137 million and left hundreds of investors with little or no recovery.
“We find that Breitkreutz’s lack of knowledge of the seriousness of its actions and the harm caused to its investors is shallow, false and overshadowed by self-pity. It still believes it did nothing wrong and is a victim of the bank, the Trustee, and the ASC. At no time did he acknowledge or accept that he could have been the author of his own destiny.”
The ASC’s decision also included bans on both Breitkreutz and Way to “protect investors and the Alberta capital market” from future fraud.
Nearly 30 victim impact statements were filed with the court on Wednesday.
Judge Feasby suspended the proceedings and is expected to issue his decision on Friday.