Calgary man implicated in Ponzi scheme must pay millions in penalties

A Calgary resident has incurred penalties from the Alberta Securities Commission due to a securities fraud investigation that revealed the man defrauded investors of millions of dollars through a Ponzi scheme, marking one of the largest schemes in the province’s history.

Craig Michael Thompson has been mandated to pay around $8.1 million in disgorgement, along with an administrative penalty of $750,000 and costs amounting to $14,000. Additionally, Thompson faces a permanent prohibition from trading securities.

Cynthia Campbell, the director of enforcement at the Alberta Securities Commission, commented that Ponzi schemes of this scale were uncommon in Alberta. Thompson misled individuals by claiming to be a successful day trader with vast experience, despite lacking financial or investment training.

A financial institution first raised the alarm about Ponzi-like activities in a client account, leading to the launch of an investigation by the commission. The probe uncovered a three-year Ponzi scheme operated by Thompson and his companies, Black Box Management Corp. and Invader Management Ltd., with $150 million siphoned from over 1,000 investors in the United States and Alberta.

One case highlighted in the report involved an Alberta client who initially invested $6,000 with Thompson. Subsequently, upon inheriting a substantial amount, the client poured an additional $25.5 million into Thompson’s companies over 12 months for trading purposes. Unfortunately, the funds were redirected to pay off other investors, resulting in the loss of the individual’s entire life savings and inheritance.

Over the course of the scheme from 2020 to 2023, Thompson misappropriated funds, cycling investor money back to others as purported returns. The report underlined that such schemes had significant personal consequences for investors, leading to market distortions and a loss of public trust in Alberta’s capital market.

To maintain the illusion of profitability, Thompson, aged 47 according to the report, sent detailed yet mostly fabricated weekly reports to investors, falsely portraying positive trading outcomes. Despite incurring nearly $15 million in net losses from unsuccessful day trading activities, Thompson kept the scheme afloat by deceiving investors.

The investigation disclosed that Thompson diverted over $767,000 for personal gain, shedding light on the self-serving and ego-driven nature of Ponzi schemes beyond mere financial motivation. Campbell warned that technology and artificial intelligence could facilitate the proliferation of similar schemes and advised people to verify financial advisors’ registration on the regulator’s website to avoid falling victim to scams.

Lawyer Cory Wilson indicated that Thompson is reviewing the commission’s decision in the aftermath of the sanctions. The investigation findings have been forwarded to the RCMP for further action, underscoring the seriousness of securities fraud and Ponzi schemes in the financial landscape.