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September 16, 2009

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Canada pyramid scheme busted

A CANADIAN man was arrested and another was believed to be at large in Honduras after police said they broke up a pyramid scheme that allegedly bilked thousands of investors worldwide out of at least US$100 million.

The Royal Canadian Mounted Police arrested and laid fraud charges against Milowe Allen Brost, 55, on Sunday after a three-and-a-half year investigation.

Charges have also been laid against another suspect - Gary Allen Sorenson, 66 - who is believed to be in Honduras.

RCMP Superintendent Eric Mattson said on Monday the two allegedly bilked 3,000 investors from Canada, the United States and other countries out of at least US$100 million between 1999 and 2008.

RCMP alleges that the pair set up Syndicated Gold Depository SA, which was supposed to lend money to Merendon Mining Corp Ltd, with the promise of a high rate of return and tax advantages.

These perks were used to entice investors into investing in offshore shell companies which were run by handpicked nominees and marketed by two of Brost's firms, police said.

"Investors wished to make investments in companies - offshore - to get high rates of return and some tax advantages," Mattson said. "Funds were sent offshore but they did not end up with their returns and they did not get what they thought they were going to get."


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