The Myths Behind

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The Myths Behind Get Rich Quick Investments
Doug Brown Director Investigation
Enforcement Jan Banasiak - Senior Investigator
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MYTHS ABOUT THE SCAM ARTIST

• Looks and acts like a con man
• someone not involved in community
• stranger, someone from out of town
• always trying to sell me something

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MYTHS ABOUT INVESTMENT SCAMS

• Always lose your money
• no one gets hurt
• only happens to dumb people
• starts and ends quickly
• cant happen to me

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Themes Used to Gain Your Trust

• Anti-Government
• anti-tax
• anti-banks
• exclusive offer
• investment only available to the rich
• limited time to participate
• complicated sounding investment

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AVENUES FOR SCAM ARTISTS

• Internet
• Telephone
• Mail
• Small group meetings

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PRIME BANK INSTRUMENT SCAM

• What the government, doesnt want you to know.
• Over 100 return on your money - with no risk.
• Well take the money offshore.
• Some investors do make money - for a while.
• Triwest Investment Club

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Tri-West players to face fraud charges
Alyn Richard Waage, a former Edmonton resident
and alleged mastermind of a 60-million (U.S.)
Internet investment scam, will appear in a
California court Tuesday to face charges of fraud
and money laundering, U.S. authorities said
yesterday. His scheduled court appearance comes
after a Federal grand jury in Sacramento decided
there was enough evidence to proceed with the
case against Mr. Waage and his alleged
accomplice, James Michael Webb of Mountain View,
Calif. Together, they are charged with 24 counts
of fraud and money laundering in connection with
the Tri-West Investment Club, which is reputed to
be one of the largest Internet investment fraud
cases in U.S. history. If convicted, they face
fines of over 120-million, prison terms of five
to more than 20 years and the forfeiture of
millions of dollars worth of real estate in Costa
Rica and Mexico. U.S. authorities say they would
also have to forfeit a yacht, a helicopter, over
a dozen cars, and millions of dollars in bank
accounts in Latvia, Mexico and Costa Rica. Mr.
Waage is considered a flight risk and is being
held in a Sacramento jail, said Patty Pontello of
the U.S. Attorney's office, Eastern District of
California. The indictment comes after U.S.
authorities spent 17 months trying to get Mr.
Waage and Mr. Webb extradited from Costa
Rica. According to Canadian and U.S. securities
regulators, the Tri-West group operated from 1999
until mid-2001 and allegedly netted more than
60-million from 15,000 investors worldwide.
It is alleged to have attracted investors by
offering guaranteed, no-risk returns of as much
as 120 per cent a year through trading in
so-called "prime bank" notes, which regulators
say do not exist. Mr. Waage and associates
allegedly used investor funds to make dividend
payments to some investors and to buy millions of
dollars worth of property in Mexico and Costa
Rica in what investigators called a "vast Ponzi
scheme." In September, 2001, Mr. Waage and Mr.
Webb, a U.S. citizen who allegedly designed the
Tri-West Web site, were arrested in San Jose,
Costa Rica, by authorities acting on U.S.
warrants. The arrests capped a months-long effort
in the United States and Costa Rica to
investigate and detain Mr. Waage, who had been
arrested in April, 2001, in Mexico after arriving
in Guadalajara with an undeclared 4.5-million in
cheques and money orders. At that time, he posted
bail and moved to Costa Rica. Mr. Waage's son,
Cary Waage, was arrested in December, 2001, on
his way from Canada to Costa Rica. In April, the
U.S. Department of Justice said Cary Waage
pleaded guilty to one count of mail fraud and one
count of conspiracy to commit money
laundering. As part of a plea agreement, Cary
Waage agreed to co-operate with authorities and
to forfeit millions of dollars connected to
Tri-West. By Peter Kennedy, Vancouver Globe and
Mail, Jan. 4/03
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RRSP SCAM

• Money locked into an RRSP or retirement account
  is sheltered from tax until the money is removed.
• Unlock retirement money to either
• receive a loan
• receive a portion as cash

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RRSP SCAM
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RESULTS OF RRSP SCAM

• Lose your retirement savings
• left with worthless shares
• loan payments
• possible tax penalties

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INTERNET SCAMS

• The perfect medium for criminals
• Your own web site - a license to steal
• Do you know who you are dealing with?
• There is one born every minute (OSC web site)
• The Pump and Dump

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OTHER TYPES OF INVESTMENT SCAMS

• Affinity Scams
• Pyramid Schemes
• PONZI Schemes
• Nigerian Letter
• Viatical Settlements

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• SCAM EXAM
• All of these scams have the same characteristics.

• Promise of high return
• no risk
• secrecy
• guarantee
• secret trading or confidentiality
• non-disclosure, no paper trail
• urgency
• not clear how it works

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HOW TO AVOID SCAMS

• Check out the person offering the investment
• Demand information about the investment
• Get someone elses perspective
• Dont be rushed
• Use common sense
• Unless you win the lottery, its a myth that you
  can get rich quick

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CONTACT

• The Manitoba Securities Commission
• 945-2548
• 1-800-655-5244
• www.msc.gov.mb.ca
• The RCMP
• www.rcmp-grc.gc.ca/scams/scams.htm