The Canadian Press

Nevada-based Gold-Quest International Corp. has been accused by the Alberta Securities Commission of illegally raising about US$29 million in a “classic Ponzi scheme.”

The provincial regulator said Thursday that the money had been raised from some 2,940 investors, including more than 400 in Alberta, “through a sham investment scheme that was both a classic Ponzi scheme and a classic pyramid scheme.”

The regulator accused Gold-Quest of enticing investors with promises of 87.5% returns from foreign currency trading, as well as promises of referral payments for the recruitment of new investors.

However, an ASC panel determined that Gold-Quest International depended on the influx of new investors’ money to make payments to existing investors, the commission said in a news release.

The ASC panel also noted that millions of dollars of Gold-Quest International investors’ money made their way to promoters of Gold-Quest International and “were apparently used to pay their personal expenses.”

The panel also ruled that Gold-Quest and four named individuals, David Michael Greene, John Jenkins, Michael McGee and Delroy Atwood illegally distributed securities in Alberta.

Gold-Quest and Greene were further accused of making “misleading and untrue statements about the anticipated returns and the safety of investments in Gold-Quest International, and that Jenkins, McGee and Atwood authorized, permitted or acquiesced in such misconduct by Gold-Quest International.”

The ASC panel set a deadline of March 5 for the filing of written submissions regarding sanctioning, and the parties have until March 10 to indicate if they wish to make oral submissions, the commission said.