Canada as Global Incubator and Protector of Ponzi Schemes?
Canada: Land of Ponzis and Pyramid Selling Schemes
The birth and collapse of Canadas Pigeon King International is only one of several examples of Canada serving as a haven for business opportunity schemes using the endless chain as their lure.
1. Women Helping Women
In 2000-2002, a pyramid epidemic spread across the United States and on to other countries, including England, Australia, parts of Africa and other European nations. It was called Women Helping Women. Some estimate that as many as a million women fell into the trap. That scam began in Canada, spread across the country to Vancouver and entered the United States . It then spread further. Canada was its birthplace.
In that pyramid scheme, one person at the top received money paid in by the last eight participants. The scheme had four levels (1-2-4-8). As the scheme expanded the last to join progressed to the top level and received the money paid in by latest eight investors.
Each time a person moved up one level, the total number of new participants had to double. In order for all to make money, the scheme would have to expand forever and the number of people joining would have to be endless. This is obviously impossible in the real world so extreme deception was needed to pull off the fraud.
The Women Helping Women fraud was reported widely and prosecuted in many countries and even debunked on the Opra Winfrey television show. But in Canada it has merely taken on new forms.
2. Treasure Traders International
No sooner had the Women Helping Women scam which began in Canada died out, than another was born in Canada that had exactly the same 1-2-4-8
structure and expansion plan, with one exception. Instead of just posting cash, the participants could acquire absurdly over-appraised emeralds. In this way, a blatant money transfer was made to look like a sales company. The scheme was shut down in England as a pyramid scheme.
According to the UK Government, Pyramid selling schemes are officially known as Money Circulation Schemes. Treasure Traders Corporation Ltd was in breach of the Fair Trading Act 1973 because it offered participants the prospect of receiving payments or other benefits by taking part in the scheme and enticing other people to join the scheme. The scheme is also contrary to the Lotteries and Amusements Act 1976.
After the UK government prosecuted and closed the scheme in that country, it collapsed in Canada in January 2006, but was never prosecuted. The website of the Global Calgary in January 25, 2006, estimated that as many as 40,000 people across Canada were involved in Treasure Traders when it collapsed. The total number of victims is still unknown. Canadas Competition Bureau never moved to close it down.
3. Business in Motion
Treasure Traders International collapsed in Canada after being shut down in England. The founder of Treasure Traders, Allan Kippax, soon opened another pyramid business, called Business in Motion, based on the 1-2-4-8
endless chain recruitment model. His cousin, Peter Kippax, had operated the Treasure Traders International scheme in England that was prosecuted as a fraud there.
Both Treasure Traders and Business in Motion (which might be considered one and the same) sued a Canadian citizen who dared to say what the Canadian government apparently would not. Dave Thornton of Ontario called Treasure Traders and Business in Motion a pyramid scheme, noting that Treasure Traders had been shut down in England and collapsed in Canada, costing many Canadians thousands of dollars. The two schemes sued him for defaming the schemes and causing them irreparable harm. Without goverment law enforcement to prosecute the scam, the scam now prosecuted the public, or at least anyone that dared to question its legitimacy.
Without a lawyer and representing himself in court against the schemes, Thornton showed the judge how the schemes were modeled identically on the Women Helping Women scam which had become publicly revealed as a worldwide fraud. He also asked how could a business provide a way for a person to buy an over-valued emerald and then, without investing any more money, receive multiples of the original investment? Where did the profit come from, if not from new investors?
Thornton offered news articles and direct evidence that Treasurer Traders and Business in Motion violated Canadas Section 55.1 law that defines and outlaws a scheme of pyramid selling as well as 206(1)(e) of the Canadian Criminal Code.
In Ontario Superior Court, Judge M.G.J. Quigley wrote an 18-page ruling and determined that Thorntons reasons for calling the schemes pyramids were reasonable and, partly on this basis, he denied the schemes effort to stop Thornton from his public exposures.
The entire business plan was laid out in a courtroom and a Canadian Judge denied the effort to stop a Canadian citizen from calling the scheme illegal, based on the merit of the citizens evidence and reasoning. Still, the Canadian government did not prosecute either Treasure Traders or Business in Motion.
4. Canadian Diamond Traders
Another product of Canada that is essentially the same as Women Helping Women and Treasure Traders International, but using diamonds instead of emeralds, is called Canadian Diamond Traders. Again the same 1-2-4-8
proposition. Born in Canada, and still operating without government prosecution, it is spreading to many others countries.
Here is what the government of Western Australia wrote about it.
Canadian Diamond Traders: Pyramid
Canadian Diamond Traders (CDT) is being promoted on the Internet, explaining how people can join the scheme and by recruiting others, receive a diamond and money at exit when they reach the top of the pyramid.
The website shows a pyramid diagram with four levels. Recruits place a deposit on a diamond through the website and commence on the base level as a Diamond Miner (8 positions). By recruiting others, participants progress through to Diamond Cutter (4), Polisher (2) and the top, the Diamond Collector. Once reaching the top, they supposedly receive the diamond and $3,000 cash. They are also encouraged to rejoin, which continues the scheme.
CDTs website makes such statements as:
-- If you have $100 to invest and you know two other people with $100 to invest, you can make $3,000 over and over again;
-- You earn commissions by referring other members to the program. When they make a purchase, you get credit for the sales; and
-- The more people you directly sponsor, the faster you will cycle out and the more frequently you will cycle. The ideal is to sponsor at least two members as soon as possible.
Consumer Protection believes the scheme to be a pyramid trading scheme in breach of the Fair Trading Act.
To date, the Canadian government has taken no public action against Canadian Diamond Traders.