A regulatory hearing panel ordered almost $9 million in disgorgement and penalties against the perpetrator of a Ponzi scheme that took in $150 million from investors.
The Alberta Securities Commission (ASC) issued sanctions against Craig Michael Thompson and his companies, Black Box Management Corp. and Invader Management Ltd., after finding they engaged in fraud and unregistered trading.
According to an agreed statement of facts, between 2020 and 2023, Thompson and his companies raised $150 million from investors in the U.S. and Canada for a pair of ventures — a day-trading scheme and a factor-investing scheme — which were actually Ponzi schemes.
“The vast majority” of investor funds were misappropriated, commingled in Black Box bank accounts and used to carry out a large-scale Ponzi scheme, the panel said in its decision.
Approximately $21 million of investors’ money was used for the day-trading scheme, but that activity was not profitable. Almost $15 million was lost on that trading. Another $52.8 million in fake trading profits was paid to investors, along with $51 million used to repay investors’ capital.
Only about $365,000 of investors’ money was used for invoice factoring, but almost $3.5 million was paid out as fake profits or repayment of principal.
ASC staff alleged $767,494 of investors’ money went to Thompson’s personal use, and that he lost another US$5.55 million ($7.4 million) in an investment scheme with another company, Dean Global Industries LLC. That firm allegedly promised a return of more than US$30 million by the end of 2023 in exchange for the US$5.55 million investment to help close a purported jet fuel sale. None of that money has been repaid, the panel noted.
While most of the misconduct was admitted in the agreed statement of facts, it was up to the hearing panel to determine which violations of securities law occurred and to impose sanctions.
The panel concluded Thompson and his companies engaged in fraud, and that Thompson and Black Box engaged in unregistered trading. It permanently banned them from the markets and issued joint monetary sanctions requiring $8.2 million in disgorgement, a penalty of $750,000, and $14,000 in costs.
The panel sided with ASC staff on disgorgement. Staff sought $8.2 million, representing the amount of investor money Thompson used for his personal benefit, including the $7.4 million transferred to the Dean Global companies. Thompson argued he took just over $100,000 of investors’ money for his own use.
However, when it came to penalties, the panel sided with Thompson. ASC staff asked for a $2 million penalty, while Thompson argued a penalty of $750,000 to $1 million would be more appropriate.
In setting the penalty at the low end of that range, the panel said: “We conclude that an administrative penalty of $750,000 is warranted in the public interest; it reflects appropriate sanction moderation, while still sending a strong message to others that they will not profit from similar misconduct.”
“This case involved a classic Ponzi scheme dressed up as a modern trading success story. This individual exploited investor trust by falsely portraying himself as a successful day trader — a tactic we’re seeing more frequently, especially as AI tools make these fabrications appear more credible,” said Cynthia Campbell, director of enforcement at the ASC, in a release.