Court documents detail alleged Ponzi scheme by B.C. couple facing fraud charges in Edmonton

Kathleen Treadgold and Curtis Quigley, jointly charged with 80 counts of fraud over $5,000, are scheduled to appear in court in Edmonton on Oct. 11. (Glow Juicery Kelowna/Instagram – image credit)

Civil actions against a B.C. couple now facing 80 criminal charges in Edmonton detail an alleged Ponzi scheme that tricked hundreds of investors out of millions of dollars in retirement savings.

Curtis Quigley and Kathleen Treadgold, both 56, are jointly charged with 80 counts of fraud over $5,000 after turning themselves in to Edmonton police last month.

They’re also accused of laundering proceeds of crime in what the Edmonton Police Service alleges was a $7.8-million Ponzi scheme ongoing for 12 years.

EPS financial crimes Det. Linda Herczeg said the criminal investigation took three years. Police know of 184 people who invested in the alleged scheme in Alberta and B.C., as well as the U.S. and Australia, Herczeg said.

“This has had the largest flow of money going into a Ponzi scheme that I’ve investigated in my eight years of being in financial crimes,” Herczeg said after the charges were revealed on Aug. 30.

In a Ponzi scheme, people hand over money believing that it will be used in legitimate investments, often with the promise of large returns. Behind the scenes, the money actually goes toward paying other investors who have also been promised profits.

Things fall apart when too many investors demand their money back, and there aren’t enough new funds coming in to repay everyone.

Edmonton Police Service member Detective Linda Herczeg with the economic crimes sections talks about SIM swapping during the final week of Fraud Prevention Month. March 26, 2019.

Edmonton Police Service member Detective Linda Herczeg with the economic crimes sections talks about SIM swapping during the final week of Fraud Prevention Month. March 26, 2019.

EPS Det. Linda Herczeg says the force knows about 200 investors in the alleged Ponzi scheme. (Tricia Kindleman/CBC)

Quigley and Treadgold were based in Kelowna, B.C., but Herczeg said EPS got involved in the investigation because the alleged scheme led investors to believe their funds would go toward purchasing homes in and around Edmonton, and profits would come from real-estate flips.

More than three years of civil filings in the B.C. Supreme Court shed light on the alleged scheme that landed Quigley and Treadgold, his common-law spouse, in legal trouble.

The allegations against Treadgold and Quigley have yet to be proven in court.

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Bankruptcy proceedings

The civil paper trail starts in 2020, when a woman sought a bankruptcy order against Quigley, saying he’d failed to repay about $1.6 million he owed her. Three other creditors also filed affidavits stating Quigley owed them “substantial” sums of money.

Lawyer Geoffrey Dabbs represented the woman through the bankruptcy proceedings.

“Many people were following this,” Dabbs told CBC News.

“Once there were creditors who knew that I was taking this proceeding, I got calls from many lawyers saying, ‘Keep us posted, because if you don’t succeed, we’re going to try.'”

In civil proceedings, liability is decided on a balance of probabilities — that’s different from criminal proceedings, where proof is required beyond a reasonable doubt.

On June 1, 2020, a B.C. Supreme Court judge granted the bankruptcy order against Quigley. Campbell Saunders Ltd. was appointed as an insolvency trustee.

According to documents filed by the trustee, investors in the alleged scheme were told their money would go toward buying homes from seniors in Edmonton.

The sellers were supposedly getting ready to move into care facilities and needed to offload their properties quickly, so the houses could be bought at a low price and flipped for profit.

Less than two months after Quigley was declared bankrupt, 72 creditors filed claims alleging he owed them money, totalling up to nearly $26 million.

“The trustee has seen no evidence that [Quigley] purchased homes with the investment funds,” a November 2020 court document says, adding Quigley appears to have had “little or no source of funds” apart from what investors were giving him.

“Based on the banking records received and reviewed by the trustee to date, funds received from investors were instead used in part to pay prior investors and in part to fund [Quigley] and his spouse’s living and other expenses.”

Subsequent court documents describe how investors were allegedly told they would be paid the profit on their original contribution while the principal was rolled into new investments to generate an even bigger return.

Years-long attempts to get records

The trustee said Quigley reported that he had almost $23 million in unsecured debt.

The trustee also described a meeting with Quigley, shortly after he was declared bankrupt, in which he reportedly claimed $19.2 million would soon be arriving in his lawyer’s trust account.

In the weeks after, the trustee said Quigley continued to repeat that the money was on its way, but it never materialized — and he wouldn’t specify where, exactly, it was.

At that time, the trustee also reported that Quigley said he wanted to keep paying for his three leased vehicles, explaining he could afford it because he had begun working.

“The trustee has significant concerns that [Quigley] is dissipating the funds and/or is in the process of putting the funds further out of the trustee’s reach,” the July 2020 court filing says.

In several court documents, the trustee describes frustrations with efforts to get Quigley’s financial records.

In the summer of 2020, a court order was granted requiring Quigley to sit for an examination under oath. As of May 2023, the trustee said Quigley still hadn’t complied, nor had he handed over relevant documents.

At the end of 2022, the trustee filed in court to get access to documents Edmonton police obtained from a search of Quigley’s home, as well as the results of production orders EPS filed for banking records.

The trustee alleged there was “substantial evidence” of forged or faked banking records. But there wasn’t a complete picture of the situation from “limited” records provided by 11 banks where Quigley had accounts.

Treadgold a ‘salesperson’

In 2021, the bankruptcy trustee also started pursuing Treadgold, who previously ran a juice and raw food bar in Kelowna.

A civil claim against her alleges that Quigley had been operating a Ponzi scheme, and that Treadgold was either “an active participant” or “wilfully blind” to the fraud.

The trustee was preparing to sell the couple’s Kelowna house, and said the equity Treadgold would normally receive should be held in a trust, given her alleged involvement in the scheme.

A July 2021 court document described Treadgold as a “salesperson” for the scheme.

“She encouraged people to ‘invest’ by making representations … that [Quigley] was making friends rich by flipping properties, that only a small group of people were allowed to invest because it was doing so well, that she had sold her business because [Quigley] was making so much money, etc.”

Court filings show that in 2021, TD Bank and the Royal Bank of Canada came after Treadgold, alleging unpaid debts totalling more than $130,000 on a line of credit, business line of credit and a credit card.

In a December 2021 response to the bankruptcy trustee’s claim, Treadgold denied knowing about or taking part in a Ponzi scheme. She also denied being aware of an alleged scheme or having any role in allegedly misappropriating funds.

“While the defendant is the common-law spouse of [Quigley], they maintain an arm’s-length relationship in terms of business, as many couples do,” a response prepared by her lawyer says.

It says she was employed as a small-business owner and wasn’t involved in Quigley’s investment operations, nor did she profit from them.

The house sale was approved in the summer of 2021. Part of the proceeds went to pay the banks that had brought claims against Treadgold. The rest was ordered to be held in trust, pending an agreement or court order.

Treadgold and Quigley are scheduled to appear in court in Edmonton on Oct. 11.

Originally Appeared Here

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