Be wary of offshore schemes

Investors have been cautioned to be wary of an offshore investment scheme being sold under the names Alpha Project or the Flat Electronic Data Interchange (FEDI). Here’s how the Ontario Securities Commission describes them:

The schemes supposedly involve investment in a desk or a seat in FEDI, which is claimed to be ‘equivalent to owning a seat on the Chicago Mercantile (Commodity) Exchange or a seat on the New York City Stock Exchange’.  Potential investors, who are asked to sign confidentiality agreements before they are given any information about the purported investment schemes, are being pressured to invest US$125,000 on an urgent basis. Under the schemes, investors’ money is said to be sent and managed offshore.

The schemes appears to incorporate many elements about which investors should be wary, including confidentiality agreements, funds being sent offshore, an ill-defined ownership structure, mysterious foreign millionaires, very high returns, guarantees of no risk and assurances of full insurance of funds, in this case by organizations that do not actually insure investments.