What is a ‘recovery room’ or ‘re-victimization’ scheme?


Last week, BC and Manitoba issued an alert warning investors about a possible ‘recovery room’ scheme. Typically, these schemes involve companies that contact investors who may have lost money in a fraudulent or illiquid investment with an offer to buy their shares at an inflated price.

Once the investor agrees to sell their shares, a contract is drawn up, and they are asked to pay a fee to cover business costs. They are often told to wire a sum of money to an offshore bank account. The scammers take the money from this offshore account but do not repurchase the shares and the victim for a second time loses money.

The reason why we issue these investor alerts is to help investors avoid being scammed, in this case, twice.

Often investors do some homework to make sure that the company that they are considering investing in or doing business with is okay. A simple way is to Google the company by name.

By issuing these alerts, we hope that the information we have published about York-Rio Resources Inc. and Penn Capital Management Ltd. come up in online searches so that people avoid being targets of a ‘re-victimization’ scheme.