A $ 60 million Ponzi scheme has been revealed after thousands and thousands of investigative hours were put into reconstructing relevant documents that were used in citing the company HMS Financial.
Calgary police have charged four people with fraud and conspiracy to commit fraud after a five-year long investigation that unravelled a $60 million Ponzi scheme that has victimized more than 1,000 people across North America.
A Ponzi scheme is a type of fraud where people who invest money into a company are paid returns from money that other people have invested after them. Meanwhile, there is little or no company or commercial activity taking place.
Calgary police say that HMS Financial was behind a scheme that apparently offered investors between an 8% and 12% return on their invested money without any risk. HMS Financial collapsed back in 2004, but it took a five-year investigation to compile enough paperwork and witnesses to lay charges. HMS Financial has been in an ongoing civil lawsuit since 2005.
That class-action lawsuit stemmed from allegations that prospective investors were being offered shares in a private investment company that claimed to have been financing major construction projects around the world. According to the Plaintiffs, there were no such projects worldwide that were being funded by the company. The defendants in that lawsuit, which include the four in this Ponzi scheme, denied the allegations.
Many of these types of schemes prey on friends and families, who in turn, invite their friends and families to invest. Small groups of people that belong to community organizations or churches learn about these companies through advice from one another. When these companies fail to pay, it causes divisions in the groups. Many of these people lost their savings and will have to work long past retirement to regain the lost investment money.
Calgary police say there is little chance of recouping their money as there is simply no treasure chest, as their money would have been used to pay other investors, so the cycle continues around.
Charged with fraud, conspiracy to commit fraud and money-laundering is Murray Stark, 73, of Three Hills, Alberta; Robert Fyn, 62, of Linden, Alberta and Garth Bailey, 57, of Okotoks. Katherine Bailey, 53, of Okotoks, also face money-laundering charges. They are will appear provincial court in Drumheller, Alberta, on April 16.
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