SEC Investigates $300M Gold-Mining Taxation Ponzi Scheme

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"The scheme was exposed with the help of a former con man turned pastor. . ."

An elaborate $300M Ponzi scheme involving a gold-mining taxation scam that bilked 3,000 investors, including the elderly and seven current or former NFL football players, has now incurred the wrath of the SEC.

In a complaint filed with the U.S. District Court for the Western District of Washington, the SEC sought an injunction against four Canadians, two Florida men and four companies, charging them with securities fraud.

Interestingly, the whole scheme was exposed with the help of a former con man turned church pastor who went undercover for the FBI as it investigated two gold companies without any real gold assets that were linked to the fraud.

Milowe Brost, 56, and Gary Sorenson, 66, both of Calgary, Alberta, were reportedly the primary architects and beneficiaries of the scheme that convinced more than 3,000 investors across the U.S. and Canada to invest their savings, retirement funds and even home equity, the SEC said in a filing Thursday.

The agency said the investors were actually investing in shell companies owned or controlled by Brost or Sorenson.

Both men were arrested by the Royal Canadian Mounted Police and are out on bond awaiting trial in Alberta in connection with the reported fraud schemes.

The SEC said Brost and Sorenson "diverted investor funds to their personal benefit, using millions of dollars to purchase and renovate extravagant homes, ranches and recreational vehicles. Sorenson also purchased and outfitted a luxury fishing resort in South America."

From at least 1999 to 2008, Sorenson and Brost allegedly told investors that the independent company Syndicated Gold Repository (now named as a defendant in the SEC action) pooled investors' funds and loaned the money to defendant Mere don Mining Corp. Ltd. "to purchase gold concentrate to process in its refinery in Honduras."

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