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An IMET Investigation Leads to a Series of Arrests among the Members of a Retirement Investment Fraud Ring
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Montréal, December 8, 2009 - This morning, officers of the Integrated Market Enforcement Team (IMET) are conducting a police operation to dismantle a criminal organization engaging in registered savings account fraud through stock market manipulation. This project initiated in December 2008 should lead to the arrest of sixteen persons and searches at approximately fifteen locations in the Greater Montreal and the Laurentians.
The investigation, dubbed Carrefour, reveals that the organization sought registered savings account holders through classified ads placed in local newspapers, on the Internet or through word of mouth. These ads were primarily intended for investors facing cashflow problems.
It is alleged that these ads offered investors an opportunity to redeem approximately 40% of the value of their registered accounts. The account holders were instructed to transfer money from their Registered Retirement Savings Plans (RRSPs), Locked-in Retirement Accounts (LIRAs) or Life Income Funds (LIFs) to self-directed registered accounts.
Once the transfer was done, the victims were asked to provide personal information, such as access codes or passwords to their brokerage accounts, to third parties responsible for managing their self-directed accounts.
The balances in the victims’ retirement accounts were allegedly administered by third parties who conducted a series of transactions involving the sale and purchase of shares. The goal of the criminal organization was to drive up the prices of various companies’ shares. When share prices reached a high enough level, the organization sold its own shares for a profit. As a result the market price of the shares plummeted, leaving the victims with empty investment accounts, no securities or worthless shares.
Two other schemes have also been observed by the police officers since the investigation began: stock market manipulation, frequently referred to as “Pump and Dump”, and fraudulent loans on registered accounts.
The police wish to remind everyone to exercise extreme caution before replying to ads that offer attractive opportunities for making quick money.
IMET investigators also wish to advise investors never to disclose personal information to strangers and further remind them that all money withdrawn from retirement investments is subject to taxation.
It should be noted that IMET is part of the RCMP Financial Integrity Program. It is composed of the Royal Canadian Mounted Police, Sûreté du Québec, Autorité des marchés financiers and Public Prosecution Service of Canada. All IMET partners are committed to working closely together to ensure the safety and security of Canada’s economy.
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