Gold stocks scammer bilked pensioners out of $1.1 M, gets 5 years in prison

A con artist who swindled 10 pensioners and others close to retirement out of $1.1 million through a gold stock scam was sentenced to five years in prison and ordered to repay his devastated victims.

Fraudster Carlos Alberto Pavao never had access to the shares of the two gold mining companies, Africo Resources Ltd. and Rubicon Minerals Corp., he purported to sell, wrote Justice Anne Molloy.

Both companies — Rubicon, a publicly-traded company with a northern Ontario gold mine and Africo, which owned Congo property, which was being explored for gold and other minerals, really existed, said Molloy.

Pavao, 58, who duped the innocent, unsophisticated investors into handing over their life savings and monies earmarked for their children’s university education and sold them fictitious shares, must repay the $1.1 million to the victims.

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Victims were lured to buy a “private placement” of shares at a “very advantageous price” that they couldn’t get on the stock market, said Molloy,

“Many of the victims were retired or just about to retire,” said Crown attorney Brigid McCallum, who asked for a five-to-eight-year sentence. “They jumped at the opportunity to hit the jackpot and they were deprived of their life savings.”

Pavao “gambled with the money he took from the victims, investing in high risk stocks in margin trading accounts and lost all of the money,” said Molloy.

Victims placed their investments into what appeared to be a legitimate company, but was actually an account he solely controlled, said Molloy.

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The victims thought they scored healthy profits on their investments as the companies’ share prices in the stock market rose greatly over the years, court heard. The shares once worth 70 cents rose to $9 a piece.

When the victims pressed Pavao to sell their interests so that they could reap their gains, the scam was revealed, court heard.

“That was when the house of cards came tumbling down and Pavao was forced to tell them there were no shares to cash in,” said Molloy.

Pavao blamed it on his employee who “had taken all their money,” but the employee was neither tried nor charged in the crimes.

“He was motivated by greed, seeking to sustain his own lavish lifestyle by defrauding people of their life savings,” said Molloy, adding Pavao ripped off his victims between 2005 and 2008 and lobbied them to invest more money after their initial, substantial payments.

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Source:: Toronto Sun – Movies