FBI, IRS have investigated Calgary man in alleged Ponzi scheme

CALGARY — One of two Alberta men accused of running a Ponzi-style scheme alleged to have scammed Canadian investors out of hundreds of millions of dollars has also attracted the attention of American watchdogs, including the FBI and the IRS.

Milowe Brost, 55, is already facing theft and fraud charges in Calgary in an alleged investment hoax that police say is the biggest of its kind in Canadian history.

But court records indicate the Federal Bureau of Investigation, Internal Revenue Service (IRS) and the U.S. Securities and Exchange Commission (SEC) have also been looking into the activities of Brost, who had a hand in several companies that operated in the U.S. and have been linked to the alleged scheme.

An RCMP court application made last November points out that the Mounties received a package of documents from the FBI to assist with their investigation.

The documents were originally obtained by the IRS during the course of a joint FBI/IRS investigation "into Brost and others," the application states.

The documents are a post-office box application dated July 2000 in Houston, in the name of M.B. Gonne, whom Mounties believe to be Brost.

An FBI investigator contacted by the Calgary Herald on Tuesday declined to comment on the matter, saying he cannot speak about "ongoing investigations."

Suggestions that the SEC — the United States' stock-market watchdog — is looking at Brost comes from concerns raised by the Calgary resident himself.

Court documents filed at Queen's Bench in Calgary last year say that, in 2007, Brost became aware he was the subject of an investigation south of the border by the U.S. securities regulator.

According to the documents, Brost was "concerned" about how the SEC would use his words if he were examined by an investigative accountant with the Alberta Securities Commission, which wanted to speak to him about an investigation into the Institute for Financial Learning Group of Companies, Inc.

The status of the SEC probe is not known, as the investigator on the file could not be reached for comment on Tuesday.

Brost's lawyer on the Canadian theft and fraud charges, Steven Skurka, said he was not aware of the U.S. investigations and declined further comment.

Brost has had previous troubles in the United States, where he ran afoul of regulators in Washington state. Interestingly, investigators in Alberta began watching Brost in 2004 after regulatory officials in that state warned them the Albertan and some of his associates were seeking investors south of the border.

The ASC's director of enforcement, John Petch, said he couldn't speak about specific investigations, but said regulatory bodies on both sides of the border communicate frequently.

"There's probably hardly a month here that goes by that we are not either assisting the SEC or it is assisting us," said Petch.

Canadian regulators at the provincial level also speak regularly with their counterparts at the state level, he added. He said the ASC also dispatches investigators to foreign jurisdictions, when required.

Across Canada, provincial securities administrators have monthly conferences and frequently discuss issues as they arise.

In April, the British Columbia Securities Commission made a reciprocal enforcement order to ban Brost and others from participating in B.C.'s capital markets after the ASC's decision to impose sanctions against them.

In 2007, the ASC handed Brost a $650,000 fine and banned him for life from operating in Alberta's capital markets for his role in a fraud against investors through the company Strategic Metals Corp.