What is an Offshore Investment Scheme?
These schemes come in many forms, but one common characteristic runs through them all: the promoters want you to send money out of the country. Once a fraud artist has moved the money offshore, they may move it two or more times. Moving money over borders helps fraudsters avoid detection.
How Does it Work?
Promoters lure investors through seminars, advertising, or word-of-mouth. The investment vehicle is often one that is getting a lot of recent attention in the media.
The company you send your money to could be a fake, or one that is set up merely to funnel investor funds to the fraudsters. After you send the money to the offshore company, the operators remove it and deposit it somewhere else – a holding company in Panama, for example.
While the offshore scam is running, you may receive some statements, get some money back, or get updates on the progress of the company. When it collapses, or the company goes broke, your money will be gone. When people move money to another country (including the United States), Canadian law does not protect their investments, and they may not have legal recourse in Canadian courts.
Another characteristic of this scheme is an investment offer that will let you avoid or lower your taxes.
A tax-avoidance offshore scheme usually requires you to deposit money in an offshore account that you supposedly control. The promoters will tell you that money will flow in and out of the account, so you may see activity in the account. This money could be going to a feeder account, which is draining money out of your account.
If the promised tax savings are false, you may also be required to pay the Canadian government money in back taxes, interest, and penalties.
Watch out for one or more of these common characteristics:
- Promoters want you to wire money outside of Canada.
- Promoters who are not registered with a securities regulator.
- A company or investment that does not have a prospectus that is filed with a securities regulator.
- Offers of high returns, tax savings, and insider information.
- Documentation that doesn’t contain audited financial statements, or details about the investment or management, etc.