A businessman who "swam with the sharks" in a multimillion-dollar international pyramid scheme pleaded guilty in Edmonton Friday to fraud and theft, avoiding prosecution in the United States by doing so.
Michael Ritter, former chief counsel to the Alberta legislature, was shackled at the ankles and wearing a rumpled grey suit jacket as he entered the plea in a packed courtroom that included his parents.
Ritter, 49, admitted he helped keep a $270 million US fraudulent investment scheme alive after U.S. securities regulators shut down the bogus California company in 2002.
In another scam, the Edmontonian admitted he stole $10.5 million US from a bank account set up as a money-laundering venture for a young energy trader with Merrill-Lynch in New York.
Merrill-Lynch has since been reimbursed the entire $43 million US it lost in an elaborate electricity hedging scam run by Dan Gordon, who is now serving a prison term for fraud. Gordon helped police in Canada and the U.S. build their case against Ritter.
Ritter is remorseful: defence
Defence lawyer Robbie Davidson said there's no doubt his client is remorseful, adding he was someone who wanted to swim with the sharks and got in over his head.
He could have faced a life sentence if convicted in the U.S.
"I basically apologized on his behalf for what happened, but I suspect Mr. Ritter will have some words of his own at the time of sentencing," said Davidson.
The pyramid, or Ponzi, scheme was run by JT Wallenbrock & Associates in Pasadena and later Village Capital Trust in Canada. Investors were promised a 20 per cent return every 90 days based on non-existent transactions with latex glove firms in Asia.
A Ponzi scheme is set up so that new investors are lured in to help pay earlier investors until the pyramid collapses.
Nearly 7,000 investors were duped, and the FBI says less than half the money has been recovered. Kingpin Larry Osaki is serving a 20-year prison term in the U.S.
Agreed statement of facts
An agreed statement of facts says Ritter helped keep the scheme alive by setting up a new company in Belize and a call centre in Edmonton to lure new investors, who lost roughly $7 million after he became involved.
The businessman owned Newport Pacific S.A., a small firm in downtown Edmonton that specialized in helping set up off-shore investments and trust accounts.
The prosecution says Ritter wasn't initially aware that the people he was dealing with were crooks, but was driven by greed and ego to join the criminal activities.
A California woman, Valerie Kjellberg, read a victim impact statement over the phone during Friday's proceedings.
Kjellberg described how she and her husband lost all of their savings and retirement money, leaving them destitute after a crippling car accident.
She said Ritter appeared to be a "genius" at financial matters and "always had an answer" when she inquired about her investments. But all attempts to recover her money were rejected by the phoney company, she said.
Alberta's largest fraud scheme: prosecutor
Prosecutor Greg Lepp called the investment scheme a "Byzantine" plot that together with the theft from the money-laundering account adds up to the largest fraud scheme in Alberta history.
Both the Crown and defence have made a joint submission for a 10-year sentence for Ritter. Judge Elizabeth Johnson is to hand down a sentence Tuesday.
The deal to dismiss fraud charges against Ritter in the U.S. includes provisions that he help recover up to $2 million that remains in a branch of the Anglo Irish Bank in Austria.
Otherwise, the charges can be renewed.
Ritter has sold an Edmonton condominium and two aircraft he bought with the proceeds of his crime. The $471,000 he got from the sales will be split among the thousands of investors who lost money.
In August, Ritter was sentenced to six months in jail after he was found guilty of trying to obtain a Belizean passport under another name.
He has already spent more than a year in jail, but the joint sentencing submission gives no credit for time already spent in custody.
Related
Internal Links
More Money Headlines »
- U.S. economic growth slows as new housing slumps
- The U.S. Commerce Department reported Friday that the economy grew at a pace of just 1.6 per cent in the quarter due to weakness in the housing market.
- SEC asks for more information from RIM about option grants
- The U.S. SEC has sent an informal inquiry to Research in Motion, asking for more information about its probe of stock option grants, the company announced Friday.
- Celestica shares tumble on weak outlook
- Shares of contract electronics manufacturer Celestica took their biggest dive in more than a year Friday as the firm released a financial outlook that disappointed analysts.
- Sask. government to lower PST to 5%
- Flush with cash and an election on the horizon, the Saskatchewan government is lowering its provincial sales tax to five per cent from seven per cent.
- Edmonton businessman pleads guilty to international fraud
- The former chief counsel for the Alberta legislature has pleaded guilty to fraud and theft in two multimillion-dollar international scams.
