Calgary resident Craig Michael Thompson and two of his companies, Black Box Management Corp. and Invader Management Ltd., face $9 million in penalties for securities misconduct including fraud linked to a large Ponzi scheme, the Alberta Securities Commission announced Thursday.
Between 2020 and 2023, the companies raised $150 million from 1,000 investors in the U.S. and Canada, the ASC said in a news release.
Cynthia Campbell, the ASC’s director of enforcement, said this case was a classic Ponzi scheme, disguised as a modern trading success story.
She believes it’s one of the largest Ponzi schemes to occur in Alberta.
“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,” Campbell said. “Investors should be wary of anyone promising guaranteed returns from day trading, and we urge people to contact ASC inquiries if they’re approached or involved with an investment opportunity that promises high returns with minimal risk.”
A decision made by the ASC panel found Thompson and his companies were liable of fraud and unregistered dealing, and issued sanctions against him.
At the beginning of the investigation, Campbell said the ASC had received a referral from another regulatory agency that involved a complaint from an investor.
“We were in the very early stages of opening that investigation, and when we received a phone call from a financial institution, letting our investigative staff know that they had concerns with what they had identified as a potential Ponzi scheme in one of their clients’ accounts,” Campbell said in an interview. “We took action immediately to have that account frozen, issue interim orders against the account holders, and proceed with our investigation.”
The scheme collapsed in the fall of 2023, which led to investors incurring substantial losses.
Most of the funds were collected from investors who believed Thompson would use the money for day trading on the stock market.
Of the 1,000 investors, Campbell said a small percentage were from Alberta while the rest came from the U.S.
In introductory calls with potential investors, Thompson lied about being a successful day trader, saying he would consistently generate quick returns, the ASC found.
After investors would see the success of their investments, word would spread about the financial opportunity and Thompson quickly gained more clients.
Although he would use a small portion of investor funds for day trading, he was unsuccessful and would eventually generate a cumulative net loss of around US$15 million.
The majority of investor funds were misappropriated and used to pay other investors their proposed returns, Campbell said.
“When we took action upon being notified by the financial institution and froze the accounts, that account only had US$300,000 left in it,” she said. “It appears that all of the other funds are gone.”
Investors were not given this information about the true use of their funds because Thompson would email weekly statements to every investor that showed positive and growing balances through the use of artificial intelligence.
In reality, all figures were made up.
“To be able to generate weekly, personalized, and customized statements for each person about their trading results, AI makes that sort of thing much easier to produce in a customized way,” Campbell said. “We’ve all seen AI do some very powerful things, so it seems believable that someone can use it to advance their trading efforts in an astronomical way, yet we know that’s not true.”
The ASC has ordered the companies to pay about $8.1 million in disgorgement due to their non-compliance with Alberta securities laws, an administrative penalty of $750,000, and costs of $14,000.
Thompson is permanently banned from trading or purchasing any securities and is ordered to step down from all positions he may have as a director or officer of any issuer.
Thompson and both companies are subject to an array of permanent market-access bans.
The Ponzi scheme of this scale in Alberta involved Arnold Breitkreutz and Base Finance Ltd., which raised $127 million from investors.
“One of the interesting distinctions, and that speaks to what is happening right now in capital raising, is that in the Base Finance scheme the panel found it took place over 10 years and the criminal decision found that it was in fact going on for over 25 years,” Campbell said. “This case involving Thompson, the Ponzi scheme lasted three-and-a-half years, and so we see a much greater amount of money being cycled and raised through investors in such a short amount of time.”
Campbell said the public should take the time to look for red flags when being approached about any investment opportunities.
Before making any investments, the ASC urges Albertans to visit www.checkfirst.ca to find if the company is registered.
She also advises to remain wary of traders who claim to have continuous and great success.
“The reality is, trading in the market involves ups-and-downs, wins-and-losses,” Campbell said. “Thompson was consistently telling investors that they were seeing positive returns on their investments.
“From my experience, the only traders that always have positive returns in their day trading are fraudsters.”
