Two suspects turned themselves in this week in connection with a $7.8M real estate Ponzi scheme operating in BC, Alberta, the US, and Australia.
On Wednesday, the Edmonton Police Service (EPS) announced that Kathleen Theresa Treadgold and Curtis Gordon Quigley had turned themselves in and been jointly charged with 80 counts of fraud over $5,000 and one count of money laundering.
According to the EPS, Treadgold and Quigley began operating under a company named Group Venture Inc. around October 2008 and continued up until December 2020.
Treadgold and Quigley were primarily operating out of Kelowna, British Columbia, but also Edmonton, Alberta, and targeted investors in both provinces and beyond, with victims as far away as Nevada and Australia, according to the EPS. Treadgold named Quiqley as her partner in a 2017 interview. She is also the owner of Glow Juicery in Kelowna.
"The two suspects were allegedly offering securities in the form of promissory notes to guarantee investors a set return on their investment, which was often presented as a real estate 'flip,'" said the EPS.
A promissory note is a written promise that the issuer will pay back the other party at a later date.
A Ponzi scheme is a form of financial fraud where money received from investors is used to pay back earlier investors while presenting the payment as a return on their investment and diverting some of the funds for personal gain. The form of fraud is named after Charles Ponzi, an Italian man who ran such a scheme in the 1920s.
"In most Ponzi schemes, some initial investors will receive a full return on their investments, and the fraudster then uses those individuals as references to convince the more skeptical investors to buy in," the EPS said.
Investigators believe that there may be other victims who have yet to come forward and are encouraging them to contact the EPS.
Also involved in the investigation are the RCMP, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the Canada Revenue Agency (CRA), and the Alberta Securities Commission (ASC).
It's unclear why Treadgold and Quigley decided to turn themselves in this week, but signs of financial malfeasance appeared as early as 2020, when a woman named Stephanie Rottacker filed an application with the Supreme Court of British Columbia seeking a bankruptcy order on Curtis Gordon Quigley.
Rottacker's application was originally filed in April 2020, but the judge on the case said they were unable to proceed due to "jurisdictional grounds" and the case was brought to a different judge in June.
Rottacker said that she had provided Quigley with a series of unsecured loans that Quigley failed to pay back and that she was owed $1.59M.
At a hearing for the case, Quigley said that he does not contest the fact that he owes money to Rottacker, but asked to be given seven days before the bankruptcy order comes into effect so he can pay off the amounts he owes.
However, there were no signs that Quigley had the ability to do so.
'There is no evidence before me as to what is actually happening with Mr. Quigley," said Justice Shelley Fitzpatrick. "His one and only affidavit does not include a description to any degree about his business activities, other than some reference to an investment program regarding the purchase of houses. I have no information before me about what assets he owns. I have no information about what liquid assets he has in terms of paying any creditors. Essentially, all I have before me is Mr. Quigley's bare assertion that he intends to pay everyone."
The allusion to an "investment program regarding the purchase of homes" now sounds like the core scheme the Edmonton Police Service described this week.
Rottacker's counsel noted that other creditors were also starting to take action against Quigley and that her case could be jeopardized if no bankruptcy order was granted. Typically, when a bankruptcy order is given for an entity, a trustee takes possession of the entity's properties and an investigation is commenced into what assets are available and the true extent of the debts.
Justice Fitzpatrick granted Rottacker's bankruptcy order application and the subsequent investigation is likely what resulted in Quigley and Treadgold being charged this week.