Originally posted 6/20/2008 at 11:20 a.m. EST:
SALEM, Ohio — What once looked like a high-flying and profitable opportunity — a business sold under the promise to save family farms — has crashed to the ground.
Arlan Galbraith filed for bankruptcy on his Pigeon King International pigeon breeding business June 17.
The voice mail box at Pigeon King headquarters in Waterloo, Ontario, was full the morning of June 19 and not accepting messages. Communications manager Shelley Mason did not return messages left on her cell phone.
In a letter dated June 17, Galbraith blamed fear mongers for the business’ collapse and had this message for breeders who worked for him:
“Recently, there has been more money going out of the bank than coming in, and there is nothing left. I have had to retain the services of a bankruptcy trustee to take over the affairs of the company. This means my hands are now tied and the trustee is responsible for everything.”
In the letter, Galbraith mentioned he was suffering from Hodgkin’s lymphoma and that “battling the vicious, rabid fear mongers has proven much more difficult” than fighting the cancer.
Galbraith blamed those outsiders for “[eradicating] the confidence of everyone contemplating doing business with PKI” and said widespread negativity in the media have prevented him from borrowing money or selling the business.
Galbraith called his business “dead in the water” and “reduced to ashes by fear.”
Galbraith called his business “dead in the water” and “reduced to ashes by fear.”
Pigeon King International Inc., which billed itself as the world’s second-largest pigeon breeder, is based in Waterloo, Ontario.
The company, owned and operated by Arlan Galbraith, invited investors and buyers to pay as much as $50,000 to $100,000 or more to buy hundreds of pigeon breeding pairs.
Growers entered contracts that promised a guaranteed selling price and market for the birds’ offspring. Galbraith repeatedly told breeders the birds were to be sold to new investors or on the market for meat or as pets.
According to the company Web site, Galbraith also had plans to eventually offer pigeon as an alternative to chicken on the global market and was “developing a special line of squabbling meat pigeons.”
Many criticized the business venture, claiming it a fraud or a Ponzi scheme.
A Ponzi scheme is defined as an investment fraud in which early investors are paid with money obtained from later ones in order to create the illusion of profitability.
Since December 2007, Iowa, Washington and Maryland have investigated and then filed cease and desist orders against Galbraith’s company and ordered him to stop doing business or soliciting growers in those states.
Galbraith told Farm and Dairy in a May 12 phone interview he had also voluntarily agreed not to do business in South Dakota.
In one paragraph of his two-page letter, Galbraith mentioned overall costs of doing business as a factor in the business’ collapse.
He attributed cash shortfalls to costs incurred in holding barns, feed, fuel, and the weakening U.S. and Canadian economies.
Galbraith also said the Canadian government wants him “to pay hundreds of thousands of dollars in back [Goods and Services Tax],” which he did not collect from his breeders in Canada.
“In order to pay this huge amount I will have to sell my home,” he wrote.
Ohio breeders involved in the collapse are expressing a variety of reactions.
Rudy Gingerich, who bred pigeons on his Pigeon Paradise Farm in Knox County, was the first in the U.S. to go into business with Galbraith.
After a visit to Canada in late 2004 — where he recalls a friendly Galbraith picking him up at the bus depot and taking him for tours of Canadian operations — Gingerich ordered 300 pairs of the breeders.
Seven months later, Galbraith visited Ohio and told the Amishman how quickly PKI was expanding. Galbraith needed a holding barn in the states, he said.
He cut Gingerich a $20,000 check on the spot to pay for concrete for that barn, eventually paid for five more just like it on Gingerich’s property and even shared plans for a Canadian pigeon processing plant with the man.
“I took him for an honest guy, but I guess not,” Gingerich said June 19.
Gingerich, who was recruited as an agent for Galbraith, would pick up about 3,000 young birds Ohio breeders were selling back to Galbraith each month.
Those young birds were housed in holding barns on Gingerich’s farm until he got word of a new contract from Galbraith, at which time he’d deliver pairs of birds to the new breeder.
Gingerich said he had “no idea for sure how many” pigeons he had in each of the six holding barns on his farm, but could say that he has about 8,000 ‘homers’ in his own grower barn.
With two varieties of pigeons in his barns — high flyers, which are a crossbred, smaller pigeon, and homers, which are more of a meat-type bird — he’s got to find something to do with the birds, and quickly.
He’s not alone in it, either: Gingerich estimated that there are 70 pigeon breeders in Ohio affiliated with Galbraith who must now sell their flocks.
Last week, before Galbraith pulled the plug, Gingerich brought in 50 tons of feed for the birds, he said. Under contract, Galbraith used to pay for the feed costs Gingerich had as an expense for ‘warehousing’ birds.
The morning after the collapse, Gingerich paid $10,000 of his own savings to the feed mill in an attempt to save his own name and reputation, and to not hurt the feed business.
“I feel bad about it. I told the guy I’m going to pay for [the feed.] But I’m not going to buy any more.”
“I have no idea how I’m going to get rid of the birds. It’s sad.”
Galbraith wrote in his letter that breeders were free to dispose of the birds as they see fit.
“You can sell them for whatever price you want to whomever you want. You can auction them off. You can let them free fly [sic] and forage in the fields with the wild pigeons. You can gas them and bury them on your farm. The choice is yours.”
Gingerich, who said he feels let down, is trying to find a silver lining in the situation.
He said he plans to continue feeding the homers and is working with Case Farms as an outlet for the birds.
“There’s still a ‘maybe’ for me. Others are losing serious money. That’s what hurts me.”
Tim and Lucy Burkholder, who own 220 breeding pairs and about 800 young pigeons on their Richland County farm, were optimistic about their future.
The family had been raising pigeons nearly three years and are “not quite sure” what will happen now, Lucy Burkholder said.
“Tim always wondered how long it would last. Of course it was a shock to hear, but we didn’t think it couldn’t happen,” she said.
“It sucks. Something good was going and all of a sudden it’s not going at all anymore,” Tim Burkholder said, noting the pigeon contracts weren’t his main income.
Burkholder, who declined to say whether he had made back his initial investment, pointed out that while many people will be upset with the bankruptcy news, nobody has proven Galbraith did anything illegal.
“They have nothing to pin him down on. He’ll leave a lot of people sitting, but nobody could take that false pressure as long as he did,” Burkholder said of media and outsiders’ criticism of the business.
“It’s not all the media’s fault, but it’s not all his fault, either.”
The Burkholders had already put the wheels in motion June 19 to find another market for the pigeons they’ve got.
Tim Burkholder said he’s looking into plans to “hook up” with a squab processor, which would allow him to sell 4-week-old birds on the meat market.
He acknowledged the price he’d receive for the young birds would be less than what Galbraith was paying him, but pointed out he’d have less feed expense to help balance the payout.
The Burkholders, and numerous other Midwest breeders involved in the business, were previously selling pigeons to Galbraith at 24 weeks of age.
“All I need is a market now. I don’t need to panic. There’s not going to be as much money, but I’m not sitting bankrupt,” Burkholder said.
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Galbraith’s letter to breeders
Following is the exact text of the letter Arlan Galbraith issued to growers and breeders following the collapse of his Pigeon King International business:
Effective June 17, 2008, Pigeon King International Inc. and Benn Contracting Inc. have been destroyed by FEAR MONGERS.
My heart is breaking as I write this letter. During the past few years I have been fighting a battle with a serious type of Cancer called Hodgkin’s Lymphoma. I was motivated to beat this Demon Cancer, by a strong desire to continue to build my company for the benefit of all involved, so I poured my heart and soul into it.
However, battling the vicious, rabid FEAR MONGERS has proven much more difficult compared to my episode with Cancer.
PKI records prove how well the company was doing prior to the onslaught of jealous protesters bent on destroying me, my company and everyone associated with the company. In fiscal year 2007 PKI paid out over (12,000,000.00) Twelve Million Dollars to purchase pigeons from North American Farmers.
You all know who the fear mongers are and you know their RING LEADER. You also know how they used the internet, email, phone, mail, fax and the media to spread their hateful attack and poison the minds of the public. The FEAR MONGERS have been able to eradicate the confidence of everyone contemplating doing business with PKI. Potential clients have adopted a wait and see attitude. Bankers have been adversely influenced against PKI and are discouraging their clients from doing business with us. Because of widespread negativity in the media PKI cannot borrow money or sell the business. Government regulators have become nervous because of the media coverage against us. The FEAR MONGERS have targeted a wonderful business with a proven track record and outstanding business model, and undermined it to the point where it is dead in the water. During the past several months, we have lost hundreds of deals, costing us millions of dollars, all because of the FEAR MONGERS. In the past week alone we lost several very large deals we were counting on. Had it not been for these multi million dollar losses, we would be in the same strong position we were in prior to the Fear Mongers attacking us on every front.
Other contributing factors have also worked against us at the same time. The need for and cost of establishing, maintaining and operating holding barns has sky rocketed. Our overall feed costs have gone through the roof. In addition, fuel costs are rising rapidly with no end in sight. The USA economy and our own Canadian economy are weakening, which has a negative impact on the confidence of our customers.
However, had the FEAR MONGERS not targeted us, we would still be a thriving company establishing the first of several squab processing plants. Instead we have been reduced to ashes by FEAR. Fear is the strongest weapon in the world and it has been used since the beginning of time to manipulate and control people.
To make matters worse, in the early years, we did not charge GST (Goods and Services Tax) on our Canadian sales of breeding stock to farmers. I believe that pigeon breeding stock was no different than poultry (where there is no GST payable). However the government ruled that they wanted GST on pigeons but not poultry. Now the government wants me to pay hundreds of thousands of dollars in back GST which I did not collect from my breeders in Canada. In order to pay this huge amount I will have to sell my home.
Recently, there has been more money going out of the bank than coming in, , and there is nothing left. I have had to retain the services of a Bankruptcy Trustee to take over the affairs of the company. This means my hands are now tied and the Trustee is responsible for everything.
All breeders and landlords will be receiving written notice from the Trustee in the next few days, which will explain the role of the Trustee in this matter. Farmers with the free $8.00 contracts and Benn Contracting free contracts, and landlords/caretakers of company owned flocks, plus all holding barn landlords are free to deal with the pigeons in their barns in any way they choose. You can sell them for whatever price you want to whomever you want. You can auction them off. You can let them free fly and forage in the fields with the wild pigeons. You can gas them and bury them on your farm. The choice is yours. When your inventory of feed is used up, PKI or the trustee cannot supply more feed. Our staff is unemployed June 20, 2008.
Some of you may feel better if you have someone to blame for what is happening. In that case, blame the FEAR MONGERS AND ESPECIALLY THEIR RING LEADER. They have obliterated an awesome company with a great staff, and they did their evil deed with no regard for the employees, contractors, landlords and all the fine family farmers involved with the company.
Because of the horrendous stress I am under, my Cancer will very likely flare up again. I am sure these horrible FEAR MONGERS are proud of what they have done, and will likely brag about how they brought down The Pigeon King.
My heart goes out to all who are associated in any way with me and my companies.
Yours Very Truly,
President of Pigeon King International Inc. and
Benn Contracting Inc.