There is little hope that farmers who invested in pigeons will get anything out of the personal bankruptcy of Pigeon King Arlen Galbraith, judging by a preliminary report from Susan Taves of BDO Dunwoody.
Among those creditors are 22 from Manitoba.
About two dozen people showed up for a meeting of creditors here recently and voted to exclude seven media people.
Taves’ preliminary report says she doesn’t know whether contract claims for future production of breeding-stock pigeons will qualify as a claim, nor does she yet know whether the personal contracts Galbraith signed will be rolled into Pigeon King International Inc. If so, there won’t be much, if anything, for the producers because the corporation had virtually no assets and massive liabilities when Galbraith voluntarily put it into bankruptcy more than a year ago.
Counted among those liabilities are unfilled contracts which typically ran for 10 years, and that boosted the total to more than $40 million.
In the case of the personal bankruptcy, Taves wrote that “claims for the future purchase of birds by Mr. Galbraith appear to be contingent and may be disallowed.”
Those claims total $573,525 from 234 Canadians and $122,250 from 185 Americans. There are 11 trade creditors claiming $127,468, including a number of credit card companies claiming a total of about $75,000.
Taves also reports that there are 35 proven claims by Canadian breeders totalling $14,657,614 and six proven claims by American breeders totalling $249,177. Only three trade creditors’ claims are proven for a total of $12,994.
Galbraith values his property in Cochrane at $600,000, but Taves estimates it may be worth only $300,000.
The Waterloo Regional Police have scooped all of the records BDO Dunwoody had gathered from Pigeon King International Inc.
According to a search warrant taken out by the Royal Canadian Mounted Police and a report from police, they believed Galbraith was operating a Ponzi scheme. The joint investigation continues.
The typical investment was $500 per breeding pair of pigeons and a contract to sell back offspring at $50 a pair.
Some of the pigeons produced about 16 offspring per year, but other “breeds” produced fewer offspring. None were from the breeds that commercial producers favour for meat production, known as squab and some were offspring of a previous Galbraith venture with racing pigeons.
Contracts were honoured by using the investment money from newcomers.
Galbraith talked about building pigeon-processing plants in Ontario and the United States to slaughter birds and sell meat, but had not come close to building any of the promised facilities before the business collapsed. There were investors across Canada and the United States left holding contracts for about $40 million worth of pigeons.
The police report also indicates that an international watchdog organization identified two $150,000 money transfers as “suspect.” Taves reported that money flowed into PKI International, then to another Galbraithcontrolled company, then to a third Galbraith-controlled company and then back into PKI. She says she can’t figure out why he did that.
The police report also indicates that they are investigating two loans, one from Hutterites in Alberta for 12 per cent interest and another from an Ontario investor for 18 per cent. Galbraith’s brochures advertised investment opportunities, and that part of his business appears to contravene Ontario regulations which require a licence that Galbraith did not have.
Taves reports that salaries “did not appear to be excessive.” Galbraith took about $400,000 a year from 2006 to 2008 when he declared the company bankrupt.