WATCH ABOVE: 16×9’s “A Preacher’s Promise”
When people lose money in an investment scheme that goes sour, the temptation is to blame the victims for their credulity. We tend to take a PT Barnum-type view of things: Suckers deserve to be fleeced, they had it coming, if it sounds too to be true, it usually is, a fool and his money etc etc.
There’s very little Christian charity directed at the losers in this game. After all, investors should know they are rolling the dice. They can win big, and they can lose big. Either way, it’s a grown-up contest, and those who wind up at the short end shouldn’t expect our sympathy.
There’s been a lot of that kind of sentiment unfairly directed at the thousands of investors caught in the meltdown of the Harvest Group of Companies in Alberta, headed by Lethbridge ex-preacher Ron Aitkens. Aitkens trumpeted his land development projects as being among the safest investments in the world, and he raised hundreds of millions of dollars—much of it from Mom and Pop investors who went in over their heads.
People who spoke to me on background described Aitkens as one of the most “gifted” salesmen they’d ever come across. “He can convince you of reality or non-reality,” said one former business associate. His sales people were so well primed, “they could present a product that was high risk and have people anxious to invest in it.” The marketing message was simple: There’s a shortage of high-end land—get it quickly or it will be gone.
Aitkens’ best agents, like Olaf Petersen, had prospective investors calling him, begging for a piece of the action. Never mind the risk. Many investors suffered from what one source called “a case of cognitive dissonance”–their thinking muddled by a blind faith in Aitkens’ track record (a record some say was specious) and by the fact that he and his top people were Christian pastors.
To be sure, all the investors put their names to a standard form saying it was a risk, that they could lose all their money. But those who signed on, like Kres Slattery, insist they were swayed by sales agents– including people they knew on a first-name basis—who told them that was only a formality, that they had little or nothing to worry about.
Even when the Harvest Group was collapsing around him, Aitkens remained defiantly Pollyannish. In a statement issued last spring, he said: “All the company projects (are) bona fide real estate projects with real value, and any suggestion to the contrary will be easily proven false in a court of law.”
The courts will soon have their own say in the matter—Aitkens faces a half-billion dollar class action lawsuit from disgruntled investors. But the story of the Harvest Group and its problems is about more than Aitkens’ overpowering personality and the innocence of his investors.
READ MORE: Investors file massive class-action suit against Lethbridge businessman
It also shines a bright light on the regulation (or lack of it) in what some are calling Alberta’s “Wild West” investment environment. Aitkens was operating in what is called the “exempt market”—whereby some small and medium-sized private companies are exempted from the need to issue regular financial statements. Until a couple of years ago, sales agents were not even required to be licensed. A Macleans article last year noted that Alberta has one of the most relaxed regulations for such markets in Canada.
READ MORE: Investors give up fight against Alberta ex-pastor
Alberta’s exempt market is a great way for companies to raise money quickly but, critics say, in some cases, it may also leave investors more vulnerable to unscrupulous pitchmen.
Aitkens, for example, built his marketing strategy around the tapping of the “Alberta Advantage,”—the old political slogan referring to the province’s low-tax business-friendly climate. It asks the question: Why invest anywhere else? But in one project Aitkens quietly lifted more than $4 million in investors’ money and sent it to Panama, for a resort project that hasn’t yet materialized. Many Harvest investors saw this is a very questionable use of their money…
The Alberta Securities Commission says that one Albertan in 12 believes he or she has put money into a fraudulent investment. That’s a strikingly high number. The commission says the best defence against fraud is vigorous self-help—do background checks, consider carefully how much you can invest, and get professional advice. Don’t depend on government regulation.
In other words, keep your wits about you and your hands on your wallet and, in Alberta at least, you shouldn’t put too much faith in a preacher’s promise.
WATCH ABOVE: Producer Claude Adams describes how he and reporter Francis Silvaggio convinced a reluctant and often defensive Ron Aitkens to agree to the interview
Don’t miss 16X9 this Saturday at 7pm.
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