Pigeon King International (PKI) has filed for bankruptcy, leaving over 50 people without a job, hundreds of thousands of pigeons in limbo, and some investors wondering if they will lose their farms.
“It’s closed for good. It’s finished,” former employee Bill Top, who lives in the Drayton area, said in an interview on June 18.
News broke that morning the multi-million dollar company – which may have as many as 1,000 pigeon breeders throughout Canada and the United States, including many in Wellington County – had closed the doors of its offices in Moorefield and Waterloo.
Last week at the Moorefield office, the doors were locked, no one was answering the phone, and the company’s voice mailbox was full. In Waterloo, no one was returning the calls of those lucky enough to leave a message before that voice mailbox was also full.
A letter to breeders from owner Arlan Galbraith said the move to declare bankruptcy was motivated by several factors, including:
– rising fuel and feed prices;
– a slumping economy;
– attempts by the government to track down unpaid taxes from which he feels the company should be exempt; and
– a spiteful campaign organized by his critics.
The letter also stated Galbraith has Hodgkins Lymphoma, a form of cancer.
No sign of owner
Art Nieuwland, who acts as landlord at the Moorefield building occupied by PKI, said on June 19 he has not been contacted by Galbraith or anyone else from the company.
“We haven’t heard a word,” Nieuwland said, adding PKI does not owe any money on its lease.
Calls to the home of Galbraith and other Pigeon King employees last week went unanswered and messages were not returned.
Police investigation likely
Galbraith has been accused of operating a Ponzi scheme by at least one U.S. attorney general’s office and the website Crime Busters Now, among others, although Constable Mark Cloes said the Wellington County OPP has not received any complaints or accusations to that effect.
“I’m not aware of any complaints against Pigeon King,” Cloes said.
He noted the OPP does regularly cover Ponzi schemes in its fraud prevention presentations, but again stressed there is no local investigation, of which he is aware, against PKI.
Sergeant Robert Zensner, of the Waterloo Regional Police, said last week his office has received “a few” complaints about Pigeon King.
However, he said other media reports indicating the department was already investigating the company were inaccurate.
While he did acknowledge a fraud investigation is “likely,” police at that time were simply collecting statements and other information from complainants, Zensner said.
Named after Italian-American Charles Ponzi, who died in 1949, Ponzi schemes are defined as fraudulent investment operations that involve paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.
The PKI ‘scheme’
PKI, which has several holding barns throughout central and northern Wellington County, would charge independent breeders up to $500 for a pair of breeding pigeons in return for a guarantee to buy
back all their offspring for 10 years for about $50 each.
Many investors would buy 200 pairs of pigeons or more at a time, for a total investment upwards of $100,000. And some, impressed by an operation that appeared to be far more lucrative than traditional poultry sales, even transformed parts of their farm operation in order to breed pigeons.
PKI specialized in several different types of pigeons, including breeds designed for racing, showing, and even eating – known as squab and considered by some to be a delicacy.
Galbraith often claimed, as he does on the PKI website, the goal was to “offer quality squab at a very affordable price on a massive scale,” which he said had never been done before.
He also predicted avian influenza would destroy the North American chicken industry, and pigeons, being very resistant to most strains of avian flu, would take over the market.
Banned in United States
Within the last six months, PKI was banned from conducting business in Washington, Maryland, and Iowa, and had agreed with a South Dakota state attorney to stop its activities in that state as well.
State officials, including Iowa Attorney-General Tom Miller, have questioned the validity of PKI’s business, specifically “whether there is a realistic and independent market for pigeons now and in the future.”
Many Amish affected
A common element of most Ponzi schemes is deceiving and preying on the naivete of investors.
Top said Galbraith billed himself as a family man and touted his pigeon breeding company as a way to “save” family farms that were in financial trouble. The company had many Amish farmers in the U.S. and southern Ontario as investors, Top said, some of whom contacted him within the last few months after his name and number were printed in the Amish paper Plain Interests.
“I received hundreds of calls from Amish people crying on the phone because they’re worried about losing their farm,” he said, noting the issue has divided many of those families.
Employee got suspicious
Now a long-distance trucker, Top said he quit his PKI position as a U.S. salesman in February of 2006 after he became suspicious about the abnormal growth of the company and its number of breeders.
In just six months Top said he helped PKI grow from just seven U.S. breeders to about 135. He took great pride in his role in that growth, but said he began to wonder about the actual market demand for the pigeons. After repeated attempts to get an answer from Galbraith, Top said his boss finally came clean.
“I sat down with Arlan one day and he actually said, ‘I’m in the business of selling breeders,’” Top recalled.
Top resigned shortly thereafter and remained silent for some time, largely due to what he called “intimidating” threats of a lawsuit should he speak poorly of the company.
But having had his own family lose its farm under other circumstances, Top said he had to speak out with the hope of saving other families from the same fate.
Tried to warn farmers
In an attempt to prevent others from investing with PKI he lobbied provincial and federal politicians – including Wellington-Halton MP Michael Chong and Perth-Wellington MPP John Wilkinson – and met with various authorities, although his efforts had little effect.
However, Top said current and prospective investors eventually started to listen to him, particularly within the last six months, after the scheme was first profiled in several on-line and magazine articles by Better Farming staff.
“The final nail in the [PKI] coffin” came in the last two weeks, Top added. That’s when many PKI investors opted out after talking to him – which he estimated could have cost the now-defunct company upwards of $1.5-million.
“I’m just glad it’s over,” Top said. “The truth always comes out in the end.”
And now hundreds of farmers are wondering what to do with their stock.
Ministry says cull likely
Brent Ross, spokesman for the Ontario Ministry of Agriculture, Food and Rural Affairs said in an interview last week breeders should definitely not let their birds free.
“Our primary concern is that farmers continue to treat the birds humanely until we can find a final solution,” Ross said.
That could include finding a market for the birds, but Ross conceded euthanizing the pigeons is a more likely final outcome. He said it’s difficult to tell because the government does not have access to PKI records, but he estimated there are 150 to 250 farms in Ontario involved, holding a total of at least 200,000 to 400,000 pigeons.
Ross said attempts to release the birds will likely be futile anyhow, because pigeons tend to stay close to their home.
“We’re asking producers to be patient and feed their flocks as usual,” he said. “We are moving forward as quickly as possible, but this is a complex issue and it will take some time to address.”
He said anyone with PKI pigeons should call the agriculture information centre at 1-888-424-1300. And farmers left with a debt because of PKI’s collapse can contact the farm debt mediation hotline at 1-866-452-5556. Those dealing with emotional issues can call the Farmline at 1-888-451-2903.
* * *
Although OMAFRA has stated a cull is likely, many breeders attended a meeting last Saturday to discuss the possibility of selling their birds on the squab market.