Owner of defunct Base Finance found guilty in massive mortgage fraud
‘(Proven) investor losses … are less than $100 million, but still substantial’
Calgary senior Arnold Breitkreutz was ordered into custody Wednesday after a city judge found him guilty in connection with a multimillion-dollar fraud scheme.
Breitkreutz, 74, showed no outward emotion as Justice Colin Feasby found him guilty of fraud over dealings with investors in his company, Base Finance Ltd.
Feasby then accepted an application by Crown prosecutor Brian Holtby to revoke Breitkreutz’s bail pending a sentencing hearing, likely in August.
Holtby noted the offender was facing a lengthy prison term in a federal penitentiary, noting the range of sentences for similar fraud cases is between seven and 12 years.
Feasby, in a lengthy decision, found Breitkreutz intentionally deceived investors into believing they were putting their money into safe investments secured by first mortgages when in fact he diverted the cash to risky and ultimately failed deals.
The Court of Queen’s Bench noted the charges against Breitkreutz of fraud and theft were narrowed down to the time span of May 1, 2014, to Sept. 30, 2015, but his criminal behaviour occurred over a longer period.
“The narrow temporal scope of the charges and the limited number of witnesses and documents presented to the court during trial means that these reasons do not, indeed they cannot, tell the whole story of the failure of Base Finance and of Mr. Breitkreutz’s fraud,” Feasby said.
“The only financial evidence before the court, much of it from Base Finance’s Royal Bank of Canada bank account, relates to the relevant period. While total investor losses in Base Finance are said to be more than $100 million, this estimate cannot be verified because the estimate includes losses on investments made before May 1, 2014,” he said.
“Investor losses from investing activity in the relevant period are less than $100 million, but still substantial.”
Feasby rejected Breit
kreutz’s claim he didn’t intentionally mislead those who poured money into Base Finance, believing their investments were safe and secure.
“Defence counsel submits that if Mr. Breitkreutz misrepresented the nature of the Base Finance business or specific investment opportunities, he did so unintentionally. That is, Mr. Breitkreutz’s misrepresentations are said to be careless or negligent, not fraudulent,” the judge noted.
“I reject this submission. Mr. Breitkreutz’s representations were not one-offs or slips; they were part of a longstanding effort to construct the image of Base Finance as a safe place where investors could obtain attractive returns,” Feasby said.
“The evidence proves beyond a reasonable doubt that Mr. Breitkreutz knew he was deceiving investors.”
The case returns to court July 22 to confirm a date for sentencing submissions.
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