Recently, I read about The Institute for Financial Learning scam which ran what is billed as “Canada’s Largest Ponzi Scheme”. News reports indicate that more than 3,000 investors were duped out of somewhere between $100 and $400 million.
Here’s how the pyramid scheme worked. Potential investors were invited to “Wealth Building Seminars” run by “structurists” (read sales people) by “facilitators” of IFFL, who were often close friends and family. During the seminar, “structurists” would claim to have divined the secret to earn high returns through special opportunities and these opportunities are available exclusively to IFFL members. Seminar participants can become “facilitators” by purchasing membership in IFFL for an upfront fee of $1,600 and annual dues of $400 and earn the right to participate in exclusive opportunities available only through IFFL that earn between 30 and 40 percent. Many seminar participants signed up because, after all, close friends and family can vouch for the spectacular returns they themselves are earning. New members then proceeded to invest their personal and retirement savings and even took out loans against their home equity to invest in IFFL-approved investments — companies that owned gold mines in foreign countries. In reality, authorities allege that IFFL’s exclusive investment opportunities turned out to be shell companies set up abroad that did little or no business. It may all sound bizarre but it seemed to have worked for years until the securities watchdog and the police caught up with the fraud.
Predictably, mostly elderly people seem to have been the biggest victims of this scam and it is outrageous that crimes such as this that are so devastating on so many people does not seem to result in punishment that fits the severity of the crime.