Maryland alleges pigeon fraud

Tuesday, June 3, 2008

© AgMedia Inc.

by BETTER FARMING STAFF

On May 19, the Security Division issued an order “to show cause against Pigeon King International Inc., based on its sales in Maryland,” said Dale Cantone, the state’s assistant attorney general. On Wednesday he confirmed that his state had taken the legal action. The state has “alleged that they violated a registration disclosure and many fraud provisions in our Business Opportunities Act,” he said.
 
The company, based in Waterloo, has 15 days to respond after receiving the order, which Cantone estimated would have taken two days to reach its offices by mail. But as of Wednesday he had received no word from the company, which would need to respond before the end of this week to meet the deadline.

If the company doesn’t respond the order becomes final “for them to cease and desist offering business opportunities and permanently barring them from engaging in the offer and sale in Maryland in future,” Cantone said.
 
Arlan Galbraith, the company’s owner, said he had already responded to the order: “Basically what I told them is I’m not interested in Maryland so they can do what they like.”

Galbraith said he contacted the state with a registered letter after it had contacted him with its intent to file the order. (The state typically will contact a business before initiating legal action, Cantone said).
 
Galbraith said even if the order becomes final it would be business as usual for the state’s sole contract holder. “We will still buy birds from him,” he said. “We don’t care if we sell any birds in Maryland – we didn’t even care if we sold him any, but he was anxious to do it, so.”

Maryland is the fourth state to take action against Pigeon King International, which offers farmers various types of pigeon breeding contracts that include a guaranteed buy back provision.
 
Last month, Washington State’s Department of Financial Institutions Securities Division entered into an agreement with Pigeon King International that prevents the company from doing business within that state’s borders.
 
Late last year, the State of Iowa took similar action, issuing a civil investigative demand that required Pigeon King International to cease its operations there and deliver proof it had “a legitimate independent business purpose” other than “providing inventory for new growers in furtherance of a ‘Ponzi’ type of investment scheme.”
 
Correspondence between the State of South Dakota and Pigeon King International has also resulted in the company voluntarily stopping its activities in that state.
 
Galbraith said he found it “unusual” that legal actions are coming from states that his company’s “not even interested in.”  When asked how he thought the legal activity affected the risk to new investors, he said, “it doesn’t affect them at all. It doesn’t affect me either.”

During a May 5 interview, Galbraith said that his business had “a perfect track record for almost eight years now, for buying pigeons under contract, paying for them – in full.” He also claimed “everybody that’s involved with me is very successful and very happy.”

On Wednesday, he noted that the company is constantly “bombarded” by people in Iowa “who would like to raise pigeons for us and we tell them no.” He claimed people have complained to the state’s attorney general about its decision to limit the company’s activity there.

He said the company had supplied the information requested by Iowa’s attorney general and that Pigeon King International had voluntarily agreed that it would not do more business there. Now, “unless I get something in writing from the state saying that they welcome me to the state, I’m not going to do any business there.”

Cantone would not say what sparked Maryland’s investigation into the company, explaining sources are kept confidential. In previous interviews and reports, Galbraith has blamed “fear mongering” for stirring the states to action.

“The only person that ever complains about my business is somebody that’s got absolutely nothing to do with it,” he said on May 5. “They’re jealous people, and they’re not necessarily jealous of me; a lot of them are jealous of people that raise pigeons for me. Because we have a lot of very successful people, ok? That have contracts with us. And those people, those successful people have a lot of neighbours, a lot of friends and a lot of relatives. And some of them get very jealous of their success.”
 
Cantone said the state planned to post its order on its website on Wednesday. BF