During the fourth week of March 2009, the RCMP will focus on pyramid and ponzi schemes.
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.
Typical warning signs include:
• 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.
Potential investors should always make appropriate inquires before they invest, in order to ensure that the claims made about the investment are true and legitimate.
Cpl. Chris Lambert
Winnipeg RCMP
Commercial Crime Section
(204) 984-1168
