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Newcomers, be wary of investment fraud schemes

If you have been promised big returns for minimal investments, Ontario Provincial Police (OPP) suggest it may be the work of heartless fraud artistes.

There are many qualified professionals who can provide investment and financial advice and recommend suitable investments. Members of the OPP Anti-Rackets Branch know that many people seek out alternative investment products through a variety of investment schemes, often with international connections, that do not have your best interests at heart.

Many of these schemes lure victims by promising high rates of return. The perpetrators are usually vague about the details of where the money is invested. They may tell the potential investor that providing too much information may result in getting undercut and loss of the investment opportunity. In fact, the investor’s money is often not invested, and frequently moved to offshore banks which do not honour Canadian banking regulations or procedures. Usually, the money invested in these schemes is not recoverable.
A well-known example of fraudulent investments is known as a “Ponzi” scheme.

Primary investors are paid exceptional dividends as “interest cheques” or sometimes cash. These unbelievably high returns are not, in fact, actual dividends, but come from the deposits of new investors as they come on board.

The perpetrators of Ponzi schemes can keep them going through a variety of ruses and attracting others until the perpetrator has either accumulated his target amount and flees with the profits, has lost the investors’ money in other business ventures, or is incarcerated for similar crimes. These types of schemes can go on for several years before the investors realize that they have been defrauded.

Investors should always exercise caution and carry out due diligence before making investment decisions. If someone is offering you more than the bank is willing to pay, then there is always a risk. The greater the dividend promised, the greater the risk.

“The harm that can be caused by perpetrators of fraud who prey upon vulnerable people is staggering,” said Deputy Commissioner Scott Tod, OPP Investigations and Organized Crime. “The money taken is often funnelled back into criminal organizations to fuel illegal activities, further victimizing the unsuspecting public.”

“No one is immune to fraud,” cautioned Detective Inspector Bernie Murphy, OPP Anti-Rackets Branch. “Common sense is your best protection. Always do your research, talk to others and never be rushed into making an investment decision. If someone is offering you an investment opportunity that sounds too good to be true, then it probably is.”

For more info on Canadian Anti-Fraud Centre, visit www.anti-fraudcentre.ca and for info on fraud schemes, visit www.ontario. ca/consumerprotection.

Posted: Apr 30, 2011

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