British Columbia Securities Commission

British Columbia Securities Commission

November 21, 2006 13:43 ET

British Columbia Securities Commission: Investors Warned About Suspicious Investment Scheme Operating in Greater Vancouver

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 21, 2006) - The British Columbia Securities Commission is warning people to be on the lookout for a suspicious investment scheme expanding throughout Greater Vancouver that promises investors extraordinary returns and commissions for bringing in new investors.

BCSC staff have received reports that people are being recruited by friends or acquaintances to attend exclusive meetings at which they are pitched a high-return investment requiring potential investors to sign non-disclosure agreements.

"We are concerned that this may be a Ponzi scheme - a scam that pays out current investors with money from new investors," says BCSC Executive Director Brenda Leong. "If it is, then it is only a matter of time before this scheme falls apart with investors losing their money."

While BCSC staff cannot reveal names or specifics yet, says Leong, they have learned that people can only invest with cash, money orders, or bank drafts.

"This cash-only investment criteria is a tell-tale sign that this could be a scam because typically this is used to avoid any incriminating documentation or provide a paper trail," says Leong.

Leong says that the scheme exhibits many of the red flags that signal the investment is too good to be true:

- Promise of high returns

- Great investment opportunity - your friends can't be wrong

- Secrecy - an insider opportunity

- Tax-free investment or use of a structure to evade taxes

- Lack of receipts or documentation about the investment

Leong is warning investors approached about an investment with these characteristics to make sure they do their research before investing. Part of this research is to examine thoroughly the backgrounds of the principals behind the investment deal.

"Investors should be checking to see whether the people selling the investment are registered to sell securities. Do they have a regulatory history, or have they ever run into financial troubles such as bankruptcy? Also, investors should visit the offices of the business to ensure they are operational and not simply a mailbox," Leong says.

For resources on how to conduct background checks or what to watch out for to prevent falling victim to investment fraud or making an unsuitable investment, visit the BCSC's new InvestRight.org website.

"This is the second InvestRight RED ALERT we have issued since announcing in October that we would be stepping up our efforts to intervene as quickly as possible to disrupt, stop and or prevent fraud from happening in BC communities," Leong says.

"These alerts will help us to raise public awareness about suspicious investment activity. We are urging more people to report these activities to us earlier."

InvestRight is a one-stop resource for investors to educate themselves on how to make informed investment decisions. Its comprehensive website at www.InvestRight.org provides a wide range of tools to help investors develop critical thinking skills they need to protect themselves - information such as how to do background checks, investment products, a scam meter and video clips from victims of investment fraud. A RED-FLAGS communications campaign has been launched to alert investors to common sales pitches used by scam artists along with a province-wide seminar program. If you have questions or problems with an investment or a financial adviser, please call 604-899-6854 or 1-800-373-6393 (toll-free in BC & Alberta).

The BC Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.

Contact Information

  • British Columbia Securities Commission
    Andrew Poon
    (604) 899-6880 or (B.C. & Alberta) 1-800-373-6393
    Website: www.bcsc.bc.ca