The Mission RCMP have arrested four people and executed four search warrants in relation to a fraudulent gifting circle.
This is an illegal pyramid scheme that is active across the Lower Mainland.
Insp. Annette Fellner, officer in charge of the Mission detachment, said police began the investigation after Coquitlam RCMP received a complaint on Sept. 25, 2017. The complaint alleged that there were District of Mission employees, contractors and volunteers working within the RCMP detachment running a large-scale gifting circle.
Fellner said Mission RCMP, with assistance from the Federal Serious and Organized Crime Unit (FSOC), executed four search warrants at four locations throughout Mission.
Four people were arrested and have since been released without charges, while the investigation progresses.
Fellner said although police focused on the Mission-based gifting circle. investigators believe that thousands of people may be involved or are being actively recruited across the Lower Mainland.
She said more than 100 gifting circles – or clouds as they are also known – have been identified by police in the Lower Mainland. Similar incidents have occurred across Canada.
New participants are asked to attend meetings and to recruit two people. Once the lowest group of eight people has been filled, each of them is asked to contribute a $5,000 gift to the person at the top of the pyramid, also known as the “birthday spot.”
Participants are advised to use false names and to keep the gifted money in cash form, to avoid drawing suspicion from financial institutions.
“There are virtually no winners in this type of pyramid scheme,” Fellner said.
“People who are involved in this kind of fraud are imaginative. They sound convincing and say the right thing to make you believe it’s perfectly legal when it isn’t.”
Fellner said people should understand that not only could they suffer a personal financial loss for their involvement in gifting circle or similar pyramid schemes, but they could face tax implications through the Canada Revenue Agency and/or criminal charges.
She said up to 11 incidents involving gifting circles have been reported to police in the Lower Mainland in the past two years.
The scheme is generally directed toward law-abiding women who are asked to gift $5,000 to gain entry into the cloud or circle.
The primary means of communication for the people in this scheme is an app called Telegram Messenger.
Participants attempt to legitimize the payment of $5,000 by calling it a gift and falsely claiming it is not taxable.
Information about pyramid schemes and how to avoid them can be found at Canadian Anti-Fraud Centre, toll-free at 1-888-495-8501 or the federal Competition Bureau toll-free at 1-800-348-5358.