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Can Pigeon King Investors Recover some of their Money?

Better Farming, who has done a terrific job writing about the Pigeon King ponzi scheme stumbled at bit in writing about some methods investors can recover their money.

"Jim Patterson, who leads the Toronto-based law firm Bennett Jones LLP's fraud law practice group, told Better Farming earlier this week that he is not currently informed enough about the PKI situation to comment specifically, but will look into it.

Speaking in general terms about Ponzis, Patterson, who has dealt with 20 to 30 Ponzis over 15 years, describes the U.S. approach as "the way to go" for victims looking to recover money lost. The approach involves a court-appointed receiver recovering the gains made by all participants in the scheme and then administering the monies among all of the victims.

A receiver can tackle fund recovery for a scheme that was operated by either an individual or a business, Patterson says. Two or more people who have lost money consult a lawyer and determine whether they could apply to a court to have a receiver appointed."

Patterson should have been informed that there already was a trustee in bankruptcy in place - that would have changed his recommendations.

In a Court appointed receivership, the question of whether the pigeon contracts are debts owed by PKI or evidence of investment contracts is not that important.

However, in a bankruptcy it is critical. If the trustee decides that the pigeon contracts with breeders are really investment contracts in PKI, that is the breeders are stockholders of PKI, then they have no votes at the creditor meetings.

More importantly, as a group the would not be able to go after those breeders who got paid -and there appears to be a lot of them- from Galbraith's scheme.

The trustee appears to have tipped their hand - the breeder contracts are not going to be honoured as Pigeon King debt.

Be on your toes here.

Related articles by Zemanta

• Bankruptcy filing says Pigeon King owed $23 million
• Police get calls after pigeon-breeder goes under
• Police get calls after pigeon breeder goes under
• Ontario facing massive cull of pigeons

Full post as published by Misleading Advertising Law on July 11, 2008 (boomark / email).