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SEC Charges Phony Western Gold Sales Team in $300 Million Ponzi Case

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In a fraud case that sounds like it came straight out of the Wild Wild West, the Securities and Exchange Commission (SEC) charged Friday, June 11, that a group of swindlers persuaded more than 3,000 U.S. and Canadian investors to put their savings, retirement funds, and home equity into a $300 million Ponzi scheme for a phony gold-mining operation.

The SEC charges that as “primary architects” of the scam, Milowe Allen Brost and Gary Allen Sorenson of Calgary, Alberta, put together a sales team posing as an independent financial education firm that had discovered profitable investment opportunities with companies involved in gold mining.

“They held seminars where they promised investors they could earn 18% to 36% annual returns by investing with these companies, and they claimed the investments were fully collateralized by gold,” the SEC charged in its litigation release.

The complaint names four other individuals and four companies in the securities fraud: Larry Lee Adair, of Fort Lauderdale, Florida; Ward K. Capstick, a Canadian citizen living in Snohomish, Washington; Bradley Dean Regier, also of Calgary; Martin M. Werner, of Boca Raton, Florida; Syndicated Gold Depository; Merendon Mining Corp. Ltd.; Merendon Mining (Nevada) Inc.; and the Institute for Financial Learning Group of Companies Inc.

Sorenson allegedly hosted tours by potential investors at his Honduran refinery and demonstrated the pouring of gold bars while making false claims about the profitability of his company. Brost and Sorenson concealed their ownership and control of SGD by using personal aliases, corporate entities and trust agreements with nominee shareholders. Brost and his sales team, calling themselves “Structurists,” sold investors shares in shell companies and then put their money through a “structuring” process that culminated with the transfer of funds from Syndicated Gold Depository to Merendon Mining.

“Unbeknownst to investors, they were actually investing in shell companies owned or controlled by Brost or Sorenson,” according to the SEC’s injunctive action taken in U.S. District Court for the Western District of Washington. “Investor funds were often transferred multiple times through numerous bank accounts held as far away as Asia, Europe and South America, and then ultimately used to make ‘interest payments’ to investors, fund the few unprofitable companies that actually had operations, and personally enrich Brost, Sorenson and others involved in the scheme.”

Brost and Sorenson apparently spent millions of dollars to buy and renovate extravagant homes, ranches, and recreational vehicles. Sorenson also purchased and outfitted a luxury fishing resort in South America. His wife and daughter are named as relief defendants in the case in order to recover investor assets now in their possession.

Read a story about the Kenneth Starr Ponzi scheme from the archives of


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