Arlan Galbraith was born in 1947 in Stouffville, Ontario, in Canada. After dropping out of school he bought a farm with his brother Norman, raising pigs and cattle. By 1980 the brothers declared bankruptcy, forcing Galbraith to turn to farm work to support himself and his family. During this time he acquired a reputation in local pigeon-racing circles, a hobby that he had pursued since he was introduced to the sport as a child. In 2001 he claimed that he had created a new breed of elite pigeon and formed Pigeon King International to exploit it.
What was the scam?
Pigeon King International sold breeding pigeons to investors, particularly Mennonite farmers (because of their reluctance to go to the authorities), in return for promising to buy any offspring at a fixed price for ten years. Since a pigeon typically produces several offspring a year, they would supposedly make their money back in a very short period of time. However, although Galbraith initially claimed the pigeons would be sold on to professional breeders, and later sold as meat, they were instead re-sold to other investors, with the money used to repay the original buyers – turning it into a Ponzi scheme.
What happened next?
The scheme seemed to go well initially, but in 2007 a Mennonite farmer, worried about the impact on the wider farming community, tipped off an online vigilante, who started warning people about the scam. The authorities and many investors initially dismissed the allegations, but when the magazine Better Farming published a detailed exposé in December 2007, the negative publicity drastically reduced the flow of investors. With nowhere to store the tens of thousands of unsold pigeons, and no money to repay investors, Pigeon King declared bankruptcy in 2008. Galbraith was later convicted of fraud in 2012.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
By the time Pigeon King International collapsed, it had obligations of more than C$356m (£205m at current exchange rates) to buy back baby birds, with most investors receiving little or nothing in return. Even if you just count the money paid in, investors suffered net losses amounting to around C$20m (£11.5m). When investing in exotic assets, it’s a good idea to check whether there is enough demand to sustain prices. It’s also a good idea to be sceptical of anyone who insists on unconditional trust, as Galbraith reportedly did, as that usually means that they have something to hide.
-
Is investing in AIM still worth it after IHT clampdown?HMRC expects to rake in £110 million a year from upcoming inheritance tax changes on AIM shares. The tax relief will be cut from April 2026, meaning you could find yourself paying 20% in inheritance tax.
-
AI in finance: how is technology changing financial advice?There are huge opportunities for AI to improve and democratise financial services, particularly financial advice. But is the regulatory environment ready for AI to become mainstream in finance?
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Ben Cohen: The Ben & Jerry’s co-founder who wants to break away from UnileverBen Cohen of Ben & Jerry’s ice cream is seeking to break away from Unilever, the conglomerate he sold out to in 2000. It’s a battle for the soul of the brand synonymous with corporate do-gooding.
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Anne Wojcicki: the 'daring' 23andMe CEO who reached too farProfile Anne Wojcicki dreamed of a revolution in personal genomics and medicine and set up 23andMe in 2006. Its collapse into bankruptcy provides a cautionary tale
-
Why are energy bills so expensive in the UK?Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tigerOpinion Markets are right to ignore talk of Putin invading Europe, says Max King.
-
Why French far-right leader Marine Le Pen has been banned from running for officeMarine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
