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.
-
Widow’s warning: Are you missing out on up to £11,000 in inherited state pension?If your late spouse built up contributions under the old state pension, you could be entitled to inherit a portion of it. What are the rules and are you eligible?
-
How much should I have in savings? Average savings by ageWe look at how much you should aim to have in your savings at every decade of your life, and how you can go about achieving this.
-
Is Rachel Reeves leading the UK to a spring crisis?Opinion Rachel Reeves is sleepwalking into an economic catastrophe of her own making. Don’t expect a change of direction, says Matthew Lynn
-
Aga Khan, spiritual leader and billionaire investor, dies at 88The Aga Khan was a religious leader to millions of Shia Ismaili Muslims and a billionaire investor with a love of horses. He saw no contradiction in his roles
-
Will Labour rethink the Chagos Islands deal with Mauritius?Labour hailed its agreement to hand control of the Chagos Islands to Mauritius as a diplomatic coup. The reality is more woeful, says Simon Wilson
-
No need to run from the robots: Nobel laureate Daron Acemoglu talks to MoneyWeekInterview Daron Acemoglu, Nobel Prize winner and professor at MIT tells Matthew Partridge why the gains from AI have been overhyped
-
Deepseek's Liang Wenfeng: the maths whizz who shook Big TechFew people had heard of Liang Wenfeng until the launch of his DeepSeek AI chatbot wiped a trillion dollars off US technology stocks. His pivot to AI was of a piece with his past exploits.
-
Donald Trump's tariffs spark a global game of thronesWe don’t know what Donald Trump intends or will do next. That is in itself damaging.
-
RedNote: the rise of the new TikTokRedNote, a Chinese rival to social-media app TikTok, has seen millions of US users flock to it in the wake of the US TikTok ban. That caught the company by surprise. What is RedNote and can its popularity last?
-
Australian tycoon Andrew Forrest battles it out with oil giant ExxonMobilIron ore billionaire Andrew Forrest made billions before committing himself to philanthropy. Now he is preparing for a showdown with ExxonMobil.
