Beware of money frauds

The con artists are hard at work these days, and a lot of people are being hurt as a result. The latest story involves an estimated 10,000 people in Ontario and Quebec who were caught up in what amounts to an RRSP fraud.The perpetrators took advantage of a rule that allows you to swap assets held outside a retirement plan for assets within the plan. That’s perfectly legal – as long as all the assets are of equal value.

In this case, they weren’t. For a fee, the con artists offered shares in private companies which were then swapped for cash in an RRSP. The pitch was that this is a legitimate way to get money out of a plan without paying tax.

High losses
It would have been okay if the shares that were swapped into the plan had real value, corresponding to the amount of cash withdrawn. But they didn’t. When the Canada Customs and Revenue Agency got wind of what was going on, they reassessed the taxpayers involved.

The net result was that the victims of this scam paid a hefty fee to the promoters and then got socked with taxes on top of that.

The losses have been estimated to be as high as $100 million.

<strngOffshore scam
This is just one of many financial scams I’ve heard about recently.

  • Another one that’s making the rounds is the offshore investment deal, in which people are told that they can earn big returns on their money, tax-free, by putting it into a fund based on some Caribbean island.

Investors are told everything must be kept confidential to avoid detection. They are allowed to tell friends and relatives who might also join in, however.

Now I don’t want to imply that all offshore investments are scams. But some of them are, and you should be very cautious about any proposals from organizations you aren’t familiar with.

Nigerian swindle

  • An old scam that has gone high tech is the Nigerian swindle. This one has been around for several years, but they’ve recently taken it to the Internet. I received an e-mail solicitation from these folks the other day.

The message purports to come from a senior government official who, with some colleagues, wants to move several million dollars out of the country. They want to use your bank account to transfer the money abroad, and they’re willing to pay you a fat fee for this service. In the case of the e-mail I received, the offer was $6 million U.S. That will tempt a lot of people.

All they want from you is the relevant information about your account – your bank, the account number, passwords, and so on.  You can guess the outcome. You end up with an empty bank account.

This is just the tip of the iceberg. I hear about another new scam almost every day. It has become big business, with millions of dollars involved – possibly your dollars. So be careful. If you’re doubtful about an investment, stay clear.

Adapted from a recent CBC radio commentary.