Good afternoon Miss Teetaert and fellow classmates. As we know, after exams we have began to learn about the topic of GDP. Gross Domestic Product. As we know, the formula by which to measure GDP is GDP=C+I+G+(X-M). I know that we all know what each letter stands for but for reviewing purposes we'll go over what each letter stands for. C for consumption. I for investment. G for government. X for exports, and M for imports. The topic that I'd like to talk about today would have affected the GDP because individuals had more money to spend, for a time, which increased consumption and also related to investments.
The topic that I'd like to cover is what is being considered to be the largest ponzi scheme in Canadian history. A trial that has concluded yesterday after 6 long years of being in the criminal justice system. However, before we dive into the topic, I'd like to cover what a ponzi scheme really is, as maybe some of you may not know (I personally didn't know exactly what it was before this post). Below is a video that briefly and effectively describes what a ponzi scheme is.
Now that we have that background information, we'll talk about the topic further. This past Saturday, February 14th, one of the longest trials in Calgary history came to an end. An 11-member jury found Milowe Brost and Gary Sorenson (Calgary businessmen) guilty on 2 counts of fraud, and 2 counts of theft. They are facing up to 14 years in jail.
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| Milowe Brost, 61 & Gary Sorenson, 71 |
After
five months of trial and three days of deliberation, the two men arrested in
2009 were found guilty for their crimes. Police said investors around the world
lost between $100 million and $400 million in the scheme. The Crown says many
lost their life savings, retirement plans, even equity in their homes. Some even
took their own lives because of the massive financial burden the Ponzi scheme
left behind.
The
price of crude was climbing toward $100 a barrel in Alberta in the early 2000s
and Albertans had more spare cash than ever. The deal they were offered was too
good to pass up. They were promised a 34 per cent annual return on an
investment of $99,000 which was supposed to grow to $1,035,000 within eight
years.
Their scheme took place from 1999 to 2008 and involved companies
named Syndicated Gold Depository SA, Base Metals Corporation LLC, Bahama
Resource Alliance Ltd., Merendon Mining Corporation Ltd. and Strategic Metals
Corp. Investors were told that the business involved selling gold for refining
and that the deal was “low risk.” However, it was quite the opposite. The companies were really just fronts to funnel cash to the two men.
Most of
the $300-million has never been found and it probably won’t be, because it’s
hidden offshore, paid out to early investors or spent by the pair on lavish
lifestyles, including a massive ranch in Honduras, a luxury bass-fishing lodge
and flights on private jets. Financial records were moved to Belize, and both
men claim they are now broke, in Canada at least.
This, overall would affect Canada's GDP negatively since the people affected lost a lot of money, money that they would have otherwise spent (consumption).
I understand that sometimes investments don't work out, but I feel awful for the people who fell victim to these horrible people. Some people no longer have pensions, others no longer have family members. I just don't think that 14 years maximum jail time is enough. chances are they'll get paroled and promptly follow their massive amounts of money out of Canada.
Works Cited
“How A Ponzi Scheme Works” Youtube. 2 May 2012. Epipheo.
<https://www.youtube.com/watch?v=VXRkfqw67GE>
16 Feb. 2015.
Graveland, Bill. “Jury finds
Calgary men guilty in multi-million dollar ponzi scheme”. The Globe and Mail. 14 Feb.
2015. The Canadian Press. <http://www.theglobeandmail.com/news/alberta/jury-finds-calgary-men-guilty-in-multi-million-dollar-ponzi-scheme/article23004620/>
. 16 Feb. 2015
Throwing money cartoon.
Cartoon. n.d. throwing money cartoon Cartoons. Cartoon a Day. 16 Feb. 2015.
