Ontario’s self-styled Pigeon King is in prison, pending sentencing, after his conviction Thursday for defrauding farmers in a pyramid scheme spanning Canada and the U.S., according to regional media.
Arlan Galbraith, the founder of Pigeon King International at Waterloo, Ont., is due back in Superior Court in Kitchener on Dec. 12 for a hearing on the possibility of bail until the sentencing hearing, reporters wrote.
Sentencing is likely to be in January, at which time Crown prosecutors plan to seek a nine-year prison term for Galbraith, Brian Caldwell wrote Friday for the Kitchener-Waterloo Record.
Galbraith, now 66, was arrested in December 2010 on charges that he defrauded hundreds of Canadian and U.S. farmers between 2004 and PKI’s bankruptcy in 2008.
RCMP and Waterloo Regional Police at that time estimated about 1,000 people invested about $20 million to buy breeding pairs of pigeons, while “allegedly being promised guaranteed financial returns.”
Reports from the trial in Kitchener fleshed out those allegations, explaining how farmers bought breeding stock for up to $500 a pair, signing contracts in which PKI would buy back the offspring.
“Early investors were told the offspring would be sold to pigeon hobbyists interested in them for their flying abilities or appearance,” Caldwell wrote Friday.
Instead, according to a report Thursday from Better Farming magazine, the offspring were sold to new PKI investors in both Canada and the U.S.
As PKI expanded its reach, Ontario farm media and U.S. authorities began publicly sounding alarm bells over the scheme’s viability.
“The supposed purpose of the Waterloo-based business then morphed into squab, or baby pigeon meat, for dinner tables and restaurants, with claims of plans for a processing plant in northern Ontario,” the Record wrote.
PKI provided five- and 10-year contracts to buy back the breeding birds’ offspring at $25 or $50 a bird, the Record wrote. With each pair hatching an expected 10 offspring per year, early investors recouped their investments and then some.
The Record quoted a forensic accountant as estimating PKI had $357 million in obligations to breeders at the time of its bankruptcy. Had PKI brought in enough money to pay those, Jeff Good testified, its outlay to farmers over the following 10 years would have had to rise to over $3 billion.
With no end market in sight for the birds, and revenue coming only from new breeders’ investments, it’s now estimated most of the 900 farmers who bought into the scheme in its last three years wound up losing money, the Record reported.
PKI’s bankruptcy documents from June 2008 showed about $23.5 million owing to the company’s unsecured creditors in Ontario, Manitoba, Saskatchewan and Alberta, and in 18 states across the U.S.
The documents on file with BDO Dunwoody show creditors out tens or hundreds of thousands of dollars each, either for birds produced or for “barn rentals.”
Among all PKI’s unsecured Canadian creditors, producers and unpaid vendors, the largest amount owed was $1.5 million, to an Alberta Hutterite colony.
PKI’s international infamy peaked in 2010 when the U.S. TV newsmagazine 60 Minutes profiled the company as part of a feature on Ponzi schemes and gullibility.
Toronto-born 60 Minutes correspondent Morley Safer, in an essay on CBS News’ website in February that year, described Galbraith as “a plain-faced-salt-of-the-Earth fellow, who favours Iron Boy overalls (and) travelled the breadth of Canada and rural America marketing a scheme that would make hard-pressed farmers rich.”
Reacting Thursday to Galbraith’s conviction, Waterloo Federation of Agriculture vice-president Mark Reusser was quoted on Better Farming’s website describing PKI’s plan as “a pyramid scheme from the start.”
Galbraith, Reusser said, was “taking advantage of people from the beginning and jeopardizing their farms and their ability to make a living” and the Pigeon King’s highly-touted meat bird was “really just an ordinary pigeon.”
According to the Record, Galbraith did not testify in his own defense in court. It took the jury of six men and six women two days of deliberations before reaching a verdict.
Galbraith also represented himself in court, the Record said, despite repeated urgings from Superior Court Justice Gerry Taylor that the defendant should hire a lawyer. — AGCanada.com Network
Don’t turn PKI pigeons loose: Fanciers, June 23, 2008
Pigeon King cooped by personal bankruptcy: reports, Dec. 18, 2009
Pigeon King arrested, charged with fraud, Dec. 2, 2010