By the time Arlan Galbraith declared bankruptcy in June, 2008, his Pigeon King International had signed contracts to buy $350 million worth of pigeons, crown attorney Lynne Robinson told a Kitchener court Tuesday.
Galbraith is on jury trial on one count of fraud and four counts of violating the Bankruptcy Act.
In her opening statement at a trial expected to last until Christmas, Robinson described Pigeon King as a Ponzi scheme that would inevitably collapse when it could no longer find more people to buy a breeding pair of pigeons for $500 on the basis that they would have a contract to sell the offspring at profitable prices back to Pigeon King.
Robinson said in the beginning, investors were told the offspring had a keen demand from people who keep pigeons as a hobby or race them.
Later he said there would be a market for meat, known as squab, and touted his plans to build processing plants.
In the six years he was in business, Robinson estimates Galbraith garnered $40 million in revenues.
But salesman Bill Top of Drayton testified that he smelled a rat when he went to a meeting of people who keep pigeons as a hobby and found they had never heard of Galbraith or Pigeon King. He quit, but not until he had sold breeding pairs and contracts to about 100 Amish and Mennonite farmers in Pennsylvania.
Robinson also said the company accountant concluded the business was illegal and left a year before the bankruptcy.