The Pigeon King Swindle
Running a family farm is rarely an easy business. A lot of the time, it’s a struggle against elements over which farmers have no control―the vagaries of weather, rising and falling (mostly falling) commodity prices, rising input costs, etc.
In 2017, the group Farm Aid noted that “Since 2013, America’s farmers and ranchers have weathered a 45 percent drop in net farm income, the largest three-year drop since the start of the Great Depression.” Family farmers in Canada have seen similar drops in income.
So, when Arlan Galbraith, a man with a folksy charm and wearing overalls and Wellington boots, arrived in the barnyard with a story of financial salvation many farmers were willing to listen.
Pigeon King International Is Born
Arlan Galbraith had bred and raised pigeons since he was a child. He claimed that through his half century of experience he had bred a superior racing pigeon.
Arlan Galbraith began his pigeon-breeding scheme in 2001. His pitch was simple: “I have a plan to save the family farm.” He said he wanted to put “smiles on people’s faces.”
And, here’s how the smiles would arrive. Farmers were to buy a breeding pair of pigeons at prices that ranged between $100 and $250 a pair. Under a 10-year contract, Galbraith guaranteed to buy back each chick for $10. A pair of pigeons can raise about 10 offspring a year, so within 12 months to 24 months, the farmers would have earned back their investment.
(Various other numbers have been quoted; up to $500 a pair and $50 for the chicks. It seems Galbraith's pricing structure was flexible).
Through ads in farm magazines and mailings he recruited his first investors; many were the Mennonites in Waterloo County, Southern Ontario.
When asked about the end market for the pigeons Galbraith was always cagey. He alluded to a high demand for racing pigeons in the Middle East and Asia, but always kept the details to himself.
He produced a newsletter, aptly entitled Pigeon Post, in which he published glowing testimonials. One was from a family that was enduring the hardship of terribly sick children and a run-down property: “And then came the pigeons. WHAT A BLESSING.”
The business grew and expanded into the United States. The Amish and Mennonite communities in Pennsylvania were eager to get in, as were Hutterites in Manitoba and other farmers in the American Midwest.
Maybe there was no ulterior motive in selling to these communities, but such faith groups live by a creed of trust and forgiveness. Perhaps Arlan reasoned that when everything turned sour they wouldn't testify against him.
First Investors Profit
In December 2007, The Globe and Mail newspaper reported that “In six years, the company has signed up 700 farmers across Canada and the United States. Its network includes around 100,000 birds and the company claims to be the second-largest pigeon breeder in the world.”
People who got into the breeding scheme at the beginning made quite a bit of money. However, what they, and later investors, didn’t know was how Galbraith was making payments to the early adopters. He was operating a classic pyramid scheme.
He was selling on the chicks he bought from breeders to new investors. As long as new farmers came in at the bottom of the pyramid he had enough cash to pay off those higher up. But, as with all pyramid schemes, the base has to get wider and wider to provide the money to pay the older clients.
Ultimately, the scam operator runs out of new investors. That's when most skip town with no forwarding address.
Suspicions About Pigeon King
By 2007, a few people started to develop suspicions about the viability of Pigeon King International (PKI). What exactly was the end market?
Arlan Galbraith changed his story. He dropped the claim that there was a vast market for racing pigeons in the Middle East and Asia. Now, he told his customers he was going to build processing plants to produce pigeon meat for sale.
But, Tom Miller got the idea that PKI was not what it seemed to be. Unfortunately, for Arlan Galbraith, Miller was the Attorney-General of Iowa with the power to launch an investigation, which, of course, is what he did.
In December 2007, his office released a warning statement: “We believe that potential investors/buyers should be very cautious and examine the situation very carefully - especially the question of whether there is a realistic and independent market for pigeons now and in the future.”
The media got wind of a good story, in particular the magazine Better Farming, which ran a series of articles exposing the PKI scheme.
Arlan Galbraith Faces His Accusers
After initially not showing much interest, police started to look into Pigeon King’s business operations. This resulted in Arlan Galbraith appearing before a judge and jury in late 2013 on charges of fraud.
Galbraith ignored the advice that those who represent themselves in court have a fool for a client and an idiot for a lawyer. People who witnessed the trial describe it as bizarre.
Galbraith’s questions to witnesses betrayed his feelings of paranoia and self pity. He was, he told the court, the victim of “a fear-monger’s smear campaign.”
In the guise of questioning another witness he pointed out he only owned one suit, was penniless, and homeless. He never made any money out of PKI and claimed “I was doing the opposite to what a criminal would do.”
The jury deliberated for two days before deciding that Arlan Galbraith was a crook. He was given a prison sentence of seven years and he has never admitted to any wrongdoing nor has he apologized to his victims.
The Blyth Theatre Festival company in southern Ontario has written and performed a play with music about the Pigeon King story.
The Scale of the Fraud
Big pyramid schemes popping up in rural communities are unusual, and Arlan Galbraith’s swindle was big. He had conned nearly 1,000 farmers in 20 states and five provinces.
A forensic accountant told his trial that “He has taken nearly $42 million from farmers and walked away from obligations to buy back $356 million worth of their baby birds, ruining many of those investors” (New York Times).
To pay off all the breeders signed up, Pigeon King International would have had to raise $1.5 billion.
On the other hand, until he declared bankruptcy, Galbraith never missed a payment to his customers and never broke a contract. Many of the people who got in early walked away with six-figure payouts.
The puzzling thought remains that Arlan Galbraith may have been convinced he was running a successful and viable business. On the other hand, he may have known he was running a con. Only he knows.
- Squab is the culinary term for young pigeon. One of Arlan Galbraith’s stories was that the pigeons his breeders produced would be sold into the pigeon meat market. But it’s very limited and it’s difficult to raise squab meat. The pigeons must be slaughtered at about the age of one month, even a few days after that the flesh becomes tough.
- Pigeons usually mate for life and have been known to live for 30 years.
- King George I of England (1660-1727) declared that all pigeon poop belonged to the Crown. This was because the droppings contained saltpetre, an essential ingredient in the making of gunpowder.
- In New York City and many other urban areas pigeons are often referred to, without affection, as “flying rats.”
- “A Looming Crisis on American Farms.” Alicia Harvie, Farmaid.org, April 13, 2017.
- “Pigeon King Ruffles Feathers.” Paul Waldie, Globe and Mail, December 19, 2007
- “Pigeon King Saga Wraps up as Founder Sentenced to Imprisonment.” CTV Kitchener, March 18, 2014.
- “Math Just Didn’t Add up for Pigeon King, Fraud Trial Told.” Brian Caldwell, Waterloo Region Record, November 27, 2013.
- “Birdman.” Jon Mooallem, New York Times Magazine, March 6, 2015.
© 2017 Rupert Taylor