Mission RCMP have shut down a fraudulent gifting circle with alleged links to its own detachment, resulting in four arrests after four separate raids in the Fraser Valley city.
“There are virtually no winners in this type of pyramid scheme,” Mission RCMP Insp. Annette Fellner said in a news release.
Coverage of Ponzi schemes on Globalnews.ca:
A criminal investigation was launched after a complaint was made to Coquitlam RCMP in September 2017.
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The complaint alleged that District of Mission employees, contractors and volunteers working within the Mission RCMP detachment were running a large-scale gifting circle.
Police said over 100 gifting circles have been spotted across the Lower Mainland. Thousands of people may be involved.
READ MORE: ‘Gifting Circle’ scam could cost women thousands
A gifting circle works like this: recruits are asked to come to meetings and bring along two other individuals.
A group of eight people fills a group, and each of them are asked to give $5,000 to an individual at the top of the scheme, police noted.
Recruits are recommended to use fake names and bring the money in cash so that they won’t be tracked by financial institutions.
“These gifting circles are made to feel that they are very legitimate and very above board or sometimes helping local families in need in other parts of the world in troubled regions. You are made to feel like you are gifting this money,” said Evan Kelly with the Better Business Bureau (BBB).
The BBB has described gifting circles as illegal pyramid or Ponzi schemes because they bring people in but exchange no services or products.
“It’s like any pyramid scheme, the people at the top get the money and as the base widens out it gets very unstable and a lot of other people lose their money,” he said.
The RCMP said the scheme is generally directed toward women. Participants largely communicate through an app known as “Telegram Messenger.”
“This scheme, like all pyramid schemes, is illegal,” police noted.
For more information on pyramid schemes, go to the Canadian Anti-Fraud Centre.