An Alberta court has sentenced a convicted fraudster to 10 years in prison and ordered over $3 million in restitution after finding that his scheme defrauded more than 100 investors out of at least $21 million.
In his reasons on sentencing, Justice Colin Feasby of the Court of Queen’s Bench of Alberta cited a series of aggravating factors in the case of Arnold Breitkreutz. These included “the large amount of money involved, the duration of the fraud, the complexity of the scheme, the trust placed in Mr. Breitkreutz by victims, and the significant financial and psychological harm suffered by victims.”
Breitkreutz’s company, Base Finance Ltd., told investors it was using their funds for mortgage lending but diverted the money for other uses, including funding a risky U.S. oil and gas venture and to repay other investors.
Breitkreutz was convicted on June 29 for one count of fraud over $5,000. In 2019, he was banned, fined $1 million and ordered to pay $2.7 million in disgorgement by an Alberta Securities Commission (ASC) hearing panel after it found he defrauded investors.
The court received 29 victim impact statements that revealed the damage wrought on victims beyond the financial consequences.
“A large-scale financial fraud of the type perpetrated by Mr. Breitkreutz is pernicious. Not only does it result in financial loss, but it often has significant secondary effects that reverberate through the victims’ lives,” the court said, noting that the victims were primarily retirees who lost some or all of their retirement savings.
“Many victims reported suffering anxiety, depression, and sleep disorders,” it said, adding that some victims also reported physical effects, including a severe stroke and a premature death.
The fraud, which spread largely by word of mouth, also harmed victims’ social standing.
“Many victims reported feeling enormous guilt for being responsible for introducing their friends and family to something that caused them to lose significant amounts of money and, in some cases, their life savings. The damage to victims’ relationships with friends and family caused by the fraud cannot be measured,” the court noted.
While the court declined to consider Breitkreutz’s age as a mitigating factor in sentencing, it did cite data on life expectancy to conclude that the upper limit on the range of sentence that can be imposed on Breitkreutz should be 10.2 years, based on average male life expectancy of 10.2 years from age 75.
According to the court’s ruling, prosecutors sought a sentence of 10 to 12 years, while the defence argued that five to eight years was more appropriate.
The court settled on a 10-year sentence plus $3.1 million in restitution, which represents two-thirds of the “readily ascertainable loss” during the period covered by the charge against him (May 1, 2014 to September 30, 2015).
The court noted that this amount, “is significantly less than the over $21 million invested in Base Finance Ltd and lost during the charge period presumably because some victims did not work with the Crown.”
Along with the prison term and restitution order, Breitkreutz was also banned for life from working or volunteering in any role that involves holding a position of financial authority.