The RCMP has recently received numerous inquiries as to legality and legitimacy of some advertised investment opportunities. These inquiries, combined with recent media attention regarding investment scams in the US and Canada provides the RCMP with an opportunity to educate the public on signs indicative of illegitimate investments and/or illegal investment schemes.
Generally speaking, the investment schemes that are of concern are those that are variations of the “Pyramid” and “Ponzi” schemes and are promoted under any number of business names. In these schemes, the sale of a product or service is secondary or is not a factor in the generation of returns. The returns, if any, are developed primarily from the recruitment and investments of new members in the lower tiers of the pyramid. By their very nature, these organizational structures cannot support themselves indefinitely and eventually collapse leaving lower-tiered investors without any recourse to recoup their money.
Operation and/or participation in such investment schemes are criminal offenses pursuant to the Competition Act and the Criminal Code of Canada.
Potential Investors should be wary of any investment scheme that includes any of the following aspects:
• High-pressure sales tactics
• Closed-door (secretive) information sessions and/or promotion meetings.
• Emphasis on recruitment rather than the sale of a product or service.
• Very high-yield return within a short period of time.
• Vague or non-specific explanations as to the core nature of the business and exactly how it makes money.
• Word-of-mouth referrals as opposed to public advertising.
The RCMP want to emphasize that potential investors in any type of investment should make appropriate inquires before they invest, in order to ensure that the claims made about the investment are true and legitimate.
How can I protect myself?
It is highly recommended that potential investors conduct inquiries with appropriate agencies such as the:
• Better Business Bureau.
• Manitoba Securities Commission.
• Competition Bureau of Canada.
In addition, seek an independent professional opinion from a(n):
• Financial advisor.
• Accountant or lawyer.
Routine research on the Internet can also provide information relating to potential dangers of particular investments schemes.
Contact:
Cpl. C. R. (Chris) LAMBERT
Winnipeg Commercial Crime Section
(204)984-1168
