Canadian Man Sentenced to 6 Years in Prison for $37 Million Ponzi Scheme

A Calgary man was sentenced to six years in prison for his role in a Ponzi scheme that defrauded its victims out of over $37 million.  Murray Harold Stark, 74, received the sentence after pleading guilty to one count of fraud over $5,000.  Provincial court Judge Mike Dinkel defended concerns that the sentence was too light in relation to the severity of the crime, stating that the six years Stark would spend in prison could likely be a death sentence. Judge Dinkel also declined to impose a restitution order, on the basis that many of the investors have filed a class-action suit in the hope of recovering some assets from Stark.

The scheme allegedly began in November 2000, when Stark and Robert Fyn commenced a joint investment program under the name HMS Financial ("HMS").  HMS solicited investors in Canada and North America, promising returns of eight to twelve percent a month, compounded quarterly.  Investors were told that their investments were protected by a $30 million bond held by a lawyer friend of Fyn's.  In actuality, no such bond or trust account holding such a bond existed.  Additionally, multiple banking accounts of HMS were closed or suspended due to suspicious trading activity.  Instead of making legitimate investments, investor principal and interest payments were made using funds belonging to new and existing investors.  In total, investors sustained losses exceeding $30 million.  Fyn is expected to plead guilty next month to his role in the fraud, and is facing an estimated eight-year sentence.  

The ruling comes weeks after the enactment of stricter penalties dealing with financial crimes.  Bill C-21, titled "The Standing Up For Victims of White Collar Crime Act" (the "Bill"), took effect on November 1st, and imposes mandatory minimum sentences of two years for fraud over $1 million along with the addition of aggravating factors available for the court to consider in imposing a tougher sentence.  Additionally, the Bill requires judges to consider the imposition of restitution - which Stark did not receive in this case.  One of the statutory equivalents in the United States, the Mandatory Victim Restitution Act, forbids sentencing judges from taking into account the existence of civil litigation in crafting an order of restitution.