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.

This article has 10 comments

  1. Fraud based on Family or Affinity is utterly devastating. If the initiating member had any idea the harm they causing by understanding the disease they are about to pass on they would have immediately balked at the idea.

  2. Boy oh boy, what a lot of lives ruined. Very sad.

  3. High return investments are so tempting to elderly people. If they haven’t saved enough they may not enough to maintain their homes or other expenses. No one wants to be able to go to their children for money. I tell my parents regularly that they had better not leave us a cent when they die and I ask how they are doing financially. It really is a taboo subject most of the time but I figure if we can get over that they will be comfortable talking about it if something comes up.

  4. Yep – definitely a crime. However, I disagree with “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.” Sure, but the scammers behind bars for a while – but in the end it should be buyer beware.

    I also don’t equate losing a lot of money with “devastating peoples lives”. Your standard of living might go down, but there hasn’t been any loss of life or limb.

    • Canadian Capitalist

      @DividendMan: I disagree. In financial frauds such as this, victims are overwhelmingly elderly people. They invest their life savings, move their retirement accounts and leverage their home equity to buy into this fraud. At least, one victim is said to have committed suicide. Personally, I think 20 years or so of hard time is appropriate.

  5. I had heard another unique feature of this scam. Apparently, the IFL would lead members to believe that Revenue Canada was out to get them, and while they were not doing anything illegal, the government wanted to collect taxes from ‘the little guy’ that the wealthy did not pay.
    This had the effect of freezing out investigators. It took years to gather evidence, as ‘facilitators’ would not talk. Given that the whole fraud was predicated on the idea that the rich had secrets to wealth, it is not surprising that victims also fell for the evil government line as well.
    No doubt it was a maliciously clever group.

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  7. Not wanting to sound too harsh, but I have to ask – “What is it with the ‘elderly’ continuing to fall for these types of too good to be true frauds?”

    These people built the country, ran our companies, etc, etc. they can’t all be stupid.

    A previous post may have inadvertently hit upon a reason for this:

    “If they haven’t saved enough they may not enough to maintain their homes or other expenses.”

    If that’s accurately reflects the mindset and financial situation of these people then that’s not an ‘elderly’ issue – it’s a run of the mill ‘greed’ problem.

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