What is a Ponzi scheme?
A Ponzi scheme, like so many other scams, promises investors high returns with little or no risk, but includes one aspect that makes it distinct. The money collected from investors is misused by the fraudster to pay earlier investors, fund undisclosed investments and for personal gain. The cycle continues until the scheme collapses, typically when new investor money dries up or too many people attempt to cash out.
The “Black Box” Ponzi Scheme in Alberta
On August 28, 2025, the Alberta Securities Commission (ASC) sanctioned Craig Michael Thompson, along with two companies he controlled, Black Box Management Corp. and Invader Management Ltd. for securities misconduct, including fraud. The ASC found that Mr. Thompson defrauded over 1,000 investors across Alberta and the U.S. of approximately $150 million CAD through two elaborate Ponzi schemes involving day trading and invoice factoring. Read the latest news release on Craig Michael Thompson and the Alberta Securities Commission decision.
The Black Box case is a textbook example of how Ponzi schemes operate, so we’ll use it to demonstrate the highly deceptive process. These schemes are hard to spot if you don’t know what to look for.
How Ponzi schemes work
The "story"
How you may be approached with a Ponzi scheme
The key component of any investment scam is the story used by the fraudster to help build credibility and trust with potential investors. These stories often use emotional hooks that help make the person selling the investment feel relatable. The potential investor is inspired and wants to achieve what is being promised. Often the story has exaggerated reports of success and includes testimonials from earlier investors who still believe they are earning real returns. Fraudsters can approach potential victims in various ways, including in person and through social media platforms and online forums, such as Reddit.
Mr. Thompson commonly approached potential investors through personal outreach or referrals from unknowing victims. Starting with introductory phone calls, Mr. Thompson would present himself as a professional day trader who had not experienced a single losing day since 2014. Adding to his story of success, Mr. Thompson would also claim that he was financially responsible for his parents at the age of 12. The story he portrayed to investors was one of a compassionate investing professional with a flawless trading record and the ability to give clients above-average returns with minimal risk of loss.
What should you look out for in any story?
- Unrequested outreach from individuals claiming to be investment professionals
- Lack of registration to offer or sell investments (Check registration)
- Exaggerated claims of success
- Testimonials or recommendations to look trustworthy and credible
The "pitch"
How Ponzi schemes attract investors
With a seemingly believable story of success in hand, fraudsters quickly move to presenting the pitch. These investment opportunities aim to excite the listener with unrealistic investment returns or guaranteed profits, supported by fake performance reports to remove suspicions.
In the Black Box case, Mr. Thompson pitched two complex investment opportunities that he claimed would earn steady weekly returns for his clients in the range of two to three per cent. Investors were also reassured that they could withdraw their funds at any time. He used testimonials from earlier investors, who were unaware that their performance reports were fabricated. Unfortunately, these testimonials lent further credibility to Mr. Thompson’s claims. Potential investors were pitched an investment opportunity that looked legitimate and highly profitable, and investors were told they could withdraw funds at any time.
What should you look out for in any pitch?
- Claims of above-market returns with little to no risk. Outside of guaranteed investment certificates (GICs), there are no guarantees of returns with any investment
- Urgency to invest or threats you will lose out on returns
- Lack of detail on what the investment opportunity is, the risks or formal documentation
- Unverified returns with no third-party audits
- A reliance on endorsements and word-of-mouth
The “proof”
How Ponzi schemes keep victims deceived
Once victims are drawn into the scheme, the fraudster moves into the next step of maintaining the illusion of success to limit suspicions and encourage further deposits of money for “greater returns.” This illusion of success often comes in the form of fake account statements, performance reports and even personal updates that claim steady, if not exceptional growth. With the assistance of artificial intelligence (AI), fraudsters can quickly produce fake trading data, professional-looking performance reports and client return statements.
Victims of Mr. Thompson received weekly emails claiming two-to-three-per cent returns each week. These reports showed updated account balances with considerable growth, which furthered the belief that the investment was credible. In reality, funds were used to invest in undisclosed investments or to pay other investors.
What should you look out for with proof of returns?
- Investment return statements that show steady growth regardless of market conditions
- Refusal to provide access to underlying investment or company details
- Overly personalized updates or messages
- No online portal or dashboard to track your investment in real time
The "crash"
Why Ponzi schemes always collapse
Ponzi schemes can operate for years without victims knowing their money is being misused. Eventually, they will reach a breaking point and collapse. This either comes when investor withdrawals exceed contributions from new investors and the fraudster can no longer keep the deception going, or when securities regulators intervene and take action.
In the Black Box case, Mr. Thompson raised $150 million and the majority of investor funds were misappropriated and used to pay earlier investors their supposed returns. Only a small portion was used for day trading (what they were told the money was being used for) and it generated a total loss of nearly $15 million USD. Eventually, in the fall of 2023, the Black Box Ponzi scheme collapsed, resulting in substantial losses for many of the investors.
What should you look out for when you suspect you may be in a Ponzi scheme?
- Delayed or denied withdrawal requests of your investment returns
- Excuses for missing payments
- Disappearance, abrupt silence or reduced communication from the person you have been in communication with
- Requests for patience or urging “reinvestment” of withdrawal amount for greater returns
Knowing the four stages of a Ponzi scheme can help you recognize, avoid and report the signs of a scam. If you suspect you’ve encountered a fraudulent investment opportunity or lost money to what you believe may be a Ponzi scheme, contact the Alberta Securities Commission Inquiries Office.
Learn more about the Black Box Ponzi scheme in our recent CheckFirst article.
Additional resources
Learn more about recent Ponzi schemes in Alberta and how you can keep yourself and those you care for safe.
Notable Alberta Ponzi schemes:
- ASC sanctions Arnold Breitkruetz, Base Finance and Susan Way for Fraud
- ASC finds that Vernon Ray Fauth perpetrated a fraud on investors
- ASC permanently bans Raymond Cawaling and RTAX Financial Corp. for contravening Alberta securities laws
- ASC issues public interest order against Charles Debono in response to criminal conviction
Tool: Check registration
Resource: The fraudster’s playbook
Interactive infographic: 31 Common investment scams and red flags
Video: Recognize and avoid Ponzi schemes
