Ponzi Scheme Rats in Canada

Like rats and cockroaches, investment Ponzi scheme vermin will always be with us here in Canada.

If it seems like there are a ton of investment scams and schemes around suddenly, you’re mistaken. Bad and outright fraudulent investments have been around since people first started handing over their money to other people with the hope of making a profit. It’s just that the economic downturn that took down some of the biggest investment houses in the world has also shaken out many of these bad investments. Pyramid Ponzi schemes like the Earl Jones debacle in Montreal, or Alberta’s Institute of Financial Learning, which snared several BC residents, are out and out criminal enterprises that wear a more trusted face. But they’re not the norm. More common are investment clubs, partnerships, and other investment mechanisms that are aimed at naïve investors desperate to make some big money. Invariably, these schemes, while legal, are enormously risky. Yet “investors” are drawn to them like flies to rotting meat. And almost always, when the plans go wrong, they’re described as “victims”. I don’t want to appear harsh, but these people are not victims, except perhaps of their own desires. As a financial writer, I used to see these investment schemes regularly. Invariably they were supported by people who had thrown far too much money into them with the belief that somehow they were going to make some outsized return – and beat the taxman at the same time. Also, almost always these people were older and had amassed a sizeable stake through saving, business, or real estate ownership. They thought that their ability to amass money made them good investors. But it doesn’t. It just means that they know how to make good salaries, operate a business, or ride some trend to become wealthy. With intelligence, discipline, enough time and some luck anybody can do that. Investment takes more than time and intelligence, however. It requires an understanding of markets, a healthy assessment of business potential, and a strong ability to calculate risk and return. That’s why it’s usually done by professionals, who don’t always get it right either. Most of these “victims” were in fact naïve but mildly wealthy amateurs driven by a desire to make more money even though they didn’t really need it. With that attitude, they become marks for every smooth talking investment shark out there.