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Pyramid Scheme Alert (PSA) provides current and historical news items that are of interest to our members and visitors. None of the reports or commentaries is intended to imply that any of the referenced companies have been charged or convicted as illegal pyramid schemes.

What's the Matter with Canada?

Canada: Land of Ponzis and Pyramid Selling Schemes

See a Canadian Television News Report on the Pigeon King Scheme.

Read an in-depth Analysis by Canadian Attorney, Michael Webster, on the Pigeon King Scheme.

Canada as Global Incubator and Protector of Ponzi Schemes?
Canadian MLM, Business in Motion, (BIM)
Exposed in Television News Show

Read Robert FitzPatrick's Q&A Notes from Attending a BIM Meeting in Toronto

February, 2009

The award-winning Canadian Broadcasting Corporation (CBC) television news show, Marketplace, dedicated its February 6, 2009 show to a devastating exposé of the Canada-based multi-level marketing scheme, Business in Motion. PSA President Robert L. FitzPatrick was invited on the show to attend a BIM meeting in Toronto (undercover, with hidden cameras and microphones) and then to offer an expert analysis.

See the entire show. (Less than 30 minutes).

Robert FitzPatrick on CBC "Marketplace" with anchor, Wendy Mesley

Robert FitzPatrick on Marketplace with anchor, Wendy MesleyFitzPatrick's conclusion: BIM is a blatant pyramid scam which – by its design – will inflict losses on 90+% of all consumers who are ensnared. As the show noted, pyramid schemes are illegal in Canada, yet the founder of the scheme, Alan Kippax, defended his scheme mostly on the grounds that the Canadian authorities had not prosecuted him. This has become a regular defense of fraudsters now, including Bernard Madoff whose $50 billion Ponzi scam on Wall Street had run for years and was defended by Madoff on the grounds that "it can't be illegal because the government has never prosecuted me."

BIM, like all multi-level marketing schemes (MLMs), also offers a "product" and claims that the "sale" of a product automatically makes BIM legal. Camouflaging the pyramid money through a "product purchase" and then calling the pyramid payments "commissions" is the preferred disguise for money-laundering in MLM pyramid scams. Usually the products are absurdly over-priced, not retailed, and are only purchased by the "salespeople." BIM fits this model perfectly. Marketplace showed that the product was actually worthless. It claimed to be a $3,200 "membership" in a travel club that offered low cost travel packages. However, Marketplace revealed that the same travel packages offered by BIM were available for far less cost through free travel services on the Internet.

Marketplace also shockingly revealed that the Canadian Competition Bureau and the national police, which are supposed to protect the pubic from pyramid frauds, not only had done nothing to stop the scheme but, filmed on the show, actually arrested the Canadian consumer activist Dave Thornton for protesting the scam. Thornton's Crime Busters Now website has previously exposed the Canadian Ponzi scam, Pigeon King, which collapsed after ruining more than 1,000 family farmers. Canadian authorities did nothing about that scam either.

The founder of BIM became angry and loud when confronted by Marketplace anchor Wendy Mesley, claiming that he had "100 experts" that would defend BIM's legitimacy against PSA President Robert FitzParick whom Marketplace had cited as the expert that concluded BIM is an illegal pyramid scheme.

The show also noted that Kippax had operated a nearly identical scam, called Treasure Traders International, which sold overpriced (nearly worthless) emeralds, rather than travel packages. The government of England had shut it down as an illegal pyramid scheme. Kippax then closed that scheme in Canada, costing Canadian investors thousands. Now, he runs the same scam with only superficial changes and under a new name, and it now operates openly in Canada. BIM is holding recruitment meetings in hotels all over Canada. It claims to have over 8,000 "members" and travels in a bus with a large sign on the front, reading "I Can't Believe Its True!"

See the entire show. (Less than 30 minutes).

Here is the Canadian law against multi-level marketing pyramid schemes:

Competition Act
Definition of "scheme of pyramid selling"
55.1 (1) For the purposes of this section, “scheme of pyramid selling” means a multi-level marketing plan whereby
(a) a participant in the plan gives consideration for the right to receive compensation by reason of the recruitment into the plan of another participant in the plan who gives consideration for the same right;

Here is Canada’s fraud law (shortened here for clarity):
206. (1) Every one is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years who
(e) conducts… any scheme… by which any person, on payment of any sum of money… shall become entitled under the scheme… to receive from the person conducting … the scheme… a larger sum of money … than the … amount paid … by reason of the fact that other persons have paid … money … under the scheme.

This is a precise definition of a Ponzi or Pyramid Scheme. So why are Canadian authorities doing nothing about BIM? The reasons are all speculative and all are indefensible. They include:

1) Incompetence – Canadian regulators possibly do not understand the nature of pyramid/Ponzi fraud and can’t see it when it is in front of their eyes. If they do see it, then they might be outsmarted by the scam artists.

2) Insensitivity – Canadian regulators possibly don’t appreciate the harm caused by pyramid scams. They blame the victims, as stupid, greedy and deserving of harm. Or they just downplay the scale of the harm. They don’t act unless the public forces them to do their jobs.

3) Complicity and corruption – It is possible that some Canadian government officials are involved in the schemes themselves (this has occurred often in the USA) and are making money from the frauds. It may also be that Canadian politicians are receiving campaign contributions from the scams and, in return, Canadian regulators must provide political protection to scam artists.

4) Intimidation by USA – It is well known that huge, USA-based pyramid selling schemes, such as Amway, are protected by the US Federal Trade Commission and that powerful Republican politicians in America have received millions from MLM scams. Canadian officials may fear that law enforcement against pyramid schemes in Canada could put Canada in conflict with the current government of the USA, so the Competition Bureau sacrifices Canadian citizens to the scams and thereby makes Canada an even better haven for the scams than the USA.

Whatever the root cause, it is now a sad fact that Canada is becoming known as a "global scam capital." Consumers will be wise to avoid or scrutinize any business opportunity that has a “made in Canada” label.

Pigeons, Soap, Vitamins and Weight Loss Pills

Consumers Need to Understand How Fraudulent Ponzi's and Pyramid Schemes are Disguised.
--A Consumer Bulletin

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This page last updated on 2/13/09