Canadian who allegedly bilked $70M warned clients about outlandish boasts

EAST ST. LOUIS, Ill. — A Canadian national accused by the U.S. government of swindling $70 million from 40,000 investors on six continents carried out the same kind of Ponzi scheme he mocked and warned clients away from on his website, federal investigators allege.

EAST ST. LOUIS, Ill. — A Canadian national accused by the U.S. government of swindling $70 million from 40,000 investors on six continents carried out the same kind of Ponzi scheme he mocked and warned clients away from on his website, federal investigators allege.

Nicholas Smirnow warned clients of his online business, “Pathway to Prosperity,” to stay away from high-yield investment programs that often boast of unrealistic returns for little or no risk. Yet a federal criminal complaint alleges that he promised “outlandish” return rates — investigators say anywhere from 546 per cent to 17,000 per cent — with no explanation of his methodology or his identity.

Smirnow, 53, also hid an extensive criminal past that included convictions for burglary and drug trafficking in Canada, according to the documents.

“He warned: ’The bigger the return on offer, the louder the warning bells should sound,”’ alleges the complaint, dated Friday and obtained Monday by The Associated Press.

“Investors, however, did not heed the ’warning bells’ of Smirnow’s ridiculous claims of unrealistic rates of return and instead invested by the thousands.”

Prosecutors believe Smirnow lives in the Philippines, though his whereabouts Monday were unclear. He has been charged with conspiracy and securities, mail and wire fraud. Some of the charges carry up to 20 years in prison and $250,000 in fines.

Interpol, the Paris-based international police intelligence-sharing association, declined to disclose Monday whether it was involved and deferred questions to Filipino authorities.

The case is being handled by the U.S. Attorney for southern Illinois in part because the assigned prosecutor has expertise in such investment cases. Smirnow’s alleged swindle also claimed victims in half of the 38 counties making up that jurisdiction’s turf.

Smirnow lured investors despite keeping his identity hidden, suggesting through his online enterprise — also known as “P-2-P” and “P-2-P Network” — that other securities pitchmen did not share his “strong moral foundation,” according to the complaint. He said keeping his identity masked protected his safety and ensured his program’s success.

His website created “the false appearance that he was a sophisticated and legitimate international financier,” the court documents said. His aliases included Nicoloy Smirnow, Alexander Judizcev, Nicholas Kachura and Jeff Prozorowiczm.

According to the complaint and reports in southwestern Ontario’s Sarnia Observer newspaper, Smirnow never let on that he was a lookout during a Canadian bank robbery in 2000 and was sentenced to four years in prison. At the time, he was a construction worker contracted to do sewer work.

Smirnow also has convictions, some dating to 1979, of burglary, drug trafficking and possessing stolen property in Canada, the complaint said.

He told an employee that he was involved in a double homicide in Ontario and had organized crime ties there, according to an affidavit written by Jacob Gholson, a U.S. Postal Inspection Service inspector who investigated Smirnow’s alleged scheme leading to Friday’s charges. The affidavit was filed with the federal complaint.

Using investors’ funds, Smirnow at one point bought a $315,000 house in Ontario, Gholson wrote.

Prosecutors believe Smirnow concocted the scheme in 2007, initially running it out of his rental home in Baysville, Ont., north of Toronto in the heart of cottage country. By the time it unravelled last year, it had attracted victims from every U.S. state except Maine and Vermont, the U.S. government says.

Smirnow’s investors were offered their choice of seven-, 15-, 30- and 60-day plans with varying rates of return, offering the average person investment opportunities generally only available to the very rich, prosecutors said. Some of Smirnow’s earliest clients made substantial returns, but most investors lost everything, authorities said.

The complaint concluded: “Pathway to Prosperity was a massive Ponzi scheme.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Finance Minister Chrystia Freeland, centre, tables the federal budget in the House of Commons in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
ATB Financial: Five things to know about the federal budget

Five things stand out above the rest in the federal government’s budget,… Continue reading

House sales remain hot in central Alberta with first-quarter sales nearly double last year’s numbers. Photo by PAUL COWLEY/Advocate staff
Central Alberta real estate market hot in 2021

Residential sales nearly double 2020 in first quarter

Red Deer Mayor Tara Veer gave an update on Olymel's COVID-19 situation on Wednesday. (File photo by Advocate staff).
Veer addresses rising COVID-19 cases in Red Deer

Red Deer has added nearly 200 cases of active COVID-19 cases in past week

Alberta’s chief medical officer of health Dr. Deena Hinshaw and Premier Jason Kenney say the province would look at adding additional COVID-19 measures in the coming weeks if the virus continues to spread. (Photo by Government of Alberta)
Walk-in COVID-19 vaccination clinic to open in Red Deer

Alberta adds 1,345 new cases of the virus

Innisfail RCMP are investigating a single-vehicle crash that happened west of Bowden on March 21, 2021. (File photo by Advocate staff)
RCMP investigate culturally insensitive graffiti at Sylvan Lake school

Sylvan Lake RCMP is investigating a vandalism incident. On April 17 around… Continue reading

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

Gwynne Dyer
Bolsonaro: Suicide by COVID

‘Rounding into the home stretch, it’s Italy by a full length, then… Continue reading

Queen Elizabeth II during her visit to Red Deer, June 28, 1990. (File photo by Advocate staff)
Red Deer and the Royal Family

The recent passing and funeral of Prince Philip, Duke of Edinburgh, in… Continue reading

Vancouver Canucks' Tanner Pearson, right, celebrates after scoring against Toronto Maple Leafs goalie David Rittich during the third period of an NHL hockey game in Vancouver, on Tuesday, April 20, 2021. THE CANADIAN PRESS/Darryl Dyck
Pearson, Sutter each score twice as Canucks dump Leafs 6-3

Pearson, Sutter each score twice as Canucks dump Leafs 6-3

Everton's Gylfi Sigurdsson celebrates with teammates after scoring his side's second goal during the English Premier League soccer match between Everton and Tottenham Hotspur at Goodison Park in Liverpool, England, Friday, April 16, 2021. (Peter Powell/Pool via AP)
Super League collapses after the 6 English clubs withdraw

Super League collapses after the 6 English clubs withdraw

Boston Red Sox starting pitcher Eduardo Rodriguez delivers against the Toronto Blue Jays during the first inning of a baseball game Tuesday, April 20, 2021, at Fenway Park in Boston. (AP Photo/Winslow Townson)
Bogaerts’ 3-run HR, Rodriguez lift BoSox over Blue Jays 4-2

Bogaerts’ 3-run HR, Rodriguez lift BoSox over Blue Jays 4-2

Pound says Olympic qualifying issues a concern to IOC

Pound says Olympic qualifying issues a concern to IOC

Former University of Victoria rowing coach Barney Williams is photographed in the stands during the Greater Victoria Invitational at CARSA Performance Gym at the University of Victoria in Victoria, B.C., on Friday, November 29, 2019. THE CANADIAN PRESS/Chad Hipolito
Rowing Canada sanctions former head coach of B.C. varsity women’s team

Rowing Canada sanctions former head coach of B.C. varsity women’s team

Ontario Hockey League cancels 2020-21 season as COVID-19 cases surge in province

Ontario Hockey League cancels 2020-21 season as COVID-19 cases surge in province

Most Read