Two Alberta men have been charged with fraud after allegedly running a Ponzi-type scheme that raised more than $100 million from investors around the world.

Gary Sorenson, seen in a photo posted online by the World Investment News, is believed to be living in Honduras.

RCMP arrested a Chestermere-area man on Sunday in the alleged Ponzi scheme — a kind of pyramid sales scam in which the original investors are paid off by new investors. Milowe Allen Brost, 55, is charged with fraud over $5,000 and theft over $5,000.

Police are still looking for Gary Allen Sorensen, 66, a Calgary man who is believed to be in Honduras. He faces the same charges.

Police said the two men created a business, Syndicated Gold Depository S.A., then formed an agreement to lend money to Merendon Mining Corporation Ltd. with a promise of a high rate of return.

"Investors wished to make investments in [offshore] companies to get high rates of return and some tax advantages," said RCMP Supt. Eric Mattson, who works on the integrated market enforcement team in Calgary.

"Funds were sent offshore but they did not end up with their returns and they did not get what they thought they were going to get."

The pair is accused of bilking 3,000 people in Canada, the U.S. and overseas out of $100 million between 1999 and 2008.

"That's a minimum," said Mattson. "That's probably very much on the low side of what we believe this is. It's a very large one. It's very significant."

Lured by the promise of returns, investors were then enticed into offshore shell companies marketed by Brost's firms Capital Alternatives Inc. and Institute for Financial Learning Group of Companies Inc., said the RCMP.

The shell companies included:

• Asset Trax Inc.
• Quatro Communications Corp.
• Rapid Express Corporation.
• Strategic Metals Corp.
• Merendon Mining (Nevada) Inc.

Alberta RCMP are asking anyone who was victimized by the alleged scheme to come forward with information.

'It's been a long time coming'

The charges come after an investigation that spanned more than three years. The Alberta Securities Commission alerted the RCMP about the Ponzi scheme in 2007.

"It's been a long time coming," Graham McMillan, whose parents were caught in the scheme, told CBC News on Monday. "It's been several years in the making and it seemed like there was no forward momentum on the field for a long time coming."

McMillan, who lives in San Diego, said his parents were attracted by the promises of 40 per cent returns and plum tax breaks, and sunk more than $50,000 into the scheme.

He said his parents were fortunate enough to get their money back after threatening legal action.

The alleged scheme should be a warning to other potential investors to do their research, Mattson said.

Fugitive believed to be in Honduras

The Merendon Mining Corporation's website lists Gary Sorenson as CEO and Honduras as the company headquarters.

Police believe Sorenson now lives in Honduras, which does not have an extradition treaty with Canada.

A note signed by Sorenson on the website's main page said the company is not involved in any illegal activity. The note added that the company has never used the Merendon name in the United States.

Investors in "the US Merendon Companies may have been victims of fraud," but the Merendon Mining Corporation is not involved, the site said.

Accused sanctioned by securities panel

The Alberta Securities Commission has already sanctioned Brost.

In 2007, the commission ordered a lifetime market ban and fined Brost $650,000 for "fraud on investors."

The securities panel said Brost was "at the centre of this fraudulent scheme" to lure public investors into putting money into a shell company that the panel said was intended to finance Sorenson's offshore mining ventures.

At the time of its decision, the panel said, "Brost not only does not recognize the seriousness of his misconduct, but is also prepared shamelessly to overlook it."

With files from The Canadian Press