The pitch sounded great: acres and acres of land in the heart of Alberta’s booming real estate market. Sure it was just raw farmland, but just imagine all those fields filled with residential communities and retail developments and even hotels and golf courses. And with a profit to investors after only five years -- with a rate of return of 6 or 7 per cent -- who wouldn’t buy in?
And thousands did just that. Promoters raised almost a quarter of a billion dollars. Some of it came from people like Wanda Anderson who borrowed the money to do it. “We were so encouraged to. It was pay out your mortgage and have a nest egg to retire on and everything was going to be beautiful.”
Many other investors in the projects used up the money that was in their RRSP accounts. Kres Slattery was one of them, putting up everything he had -- $25,000 in RRSP savings. “We thought we were doing the right thing. We were investing in Alberta, in homes, in real estate,” he told W5.
It took Slattery eight years to save up the money he invested, but it took only four years to see it disappear. “We were supposed to get it all in the end with the interest, and now we don’t even have that,” he said
Even though plans for the numerous projects started back in 2006 -- to date nothing has been built. And now, the companies are in court protection from their creditors -- primarily the investors -- and many don’t think they’ll ever see their money again.
The man behind all those failed investments is Ron Aitkens -- and he blames the economy for what went wrong. “There was a thing called the great recession, there was over 400 banks in the U.S. that closed down and there’s no way that we as a small company in the whole scheme of things could withstand the downward market pressure in the economy.”
But critics like the former CEO of Aitkens’ companies claim that while the economy didn’t help, the real problem was the way Aitkens’ structured the investments. Frank Lonardelli was hired on to help restructure Aitkens’ companies and said he quickly realized the investors would not make the profits they expected.
“The investments were built to fail,” Lonardelli told W5. “I’m not suggesting in any way, shape, or form, that Ron built them to fail, but I can tell you based on the instrument, the timeline, the requirement to drive that much profit in that short of a period of time to pay the monies back, is highly unlikely.”
Aitkens disagrees and says that the investors just need to give the projects even more time. He said that the land is still there and ready to be developed.
“I guess Ron is correct in saying that the lands are still there, and the lands have always been there,” said Lonardelli. “The issue is what happened to the investment, and most of that investment is gone.”
And for investors like Deb Brogden, that financial loss has been devastating. “We’re fighting to get our RRSPs built back up. So we have something to retire on.”
UPDATE:
It now seems that someone was listening to Slattery, Lonardelli, and the investors. On October 1, 2013, the Alberta Securities Commission (ASC) announced it had laid five charges against Ron Aitkensin Alberta Provincial Court. The ASC alleges that Aitkens breached Alberta securities law by trading in securities without registration; distributing securities without a prospectus; making false or misleading statements in an Offering Memorandum; and perpetrating a fraud on his investors.
