Investors lose millions in Global Silver

King was at a loss to say how investors could have protected themselves. None of the references she checked before admitting Global Silver as a BBB member last January raised any red flags, she said. Global Silver ""really did their homework before they set up their business," King said. The type of business it was running could have been successful, she added. Many legitimate firms operate similar businesses.

The Toronto Star
January 11, 2002

Investors lose millions in Global Silver scam
Fraud artists abscond with franchise funds
Dana Flavelle

Rosanna and Eddy Canova thought they were buying into a good business when they sank
$16,000 of their savings into Global Silver Inc., a company that sold jewelry distributorships.

Instead, all they got was a lot of heartache, along with at least 80 other investors in Canada and the United States who have complained to the RCMP. The investors' combined losses are believed to be in the millions.

The RCMP is investigating the company, Sgt. Sandy Fraser confirmed yesterday in a telephone interview from Kingston, where Global Silver had its head office. Fraser said he had so far received 80 complaints. Individual losses range from $8,000 to more than $20,000, according to PhoneBusters, a joint Ontario
Provincial Police-RCMP anti-fraud project.

But the probe has come too late for stung investors like the Canovas. Global Silver closed up shop in late November.

"I'm so angry," said Rosanna Canova, a supply teacher in Richmond Hill whose husband, Eddy, is a mining engineer. "I feel so helpless but I want to do something."

Rosanna, whose previous experience investing in a "business opportunity" had worked out well, said she was familiar with franchise-type operations and Global Silver's plan was very appealing.

It was supposed to work like this: Investors like the Canovas would put money up front in return for a certain amount of product and help getting set up. The product was to be high-quality silver jewelry the company said it had made from a silver mine it owned in Taxco, Mexico.

Global Silver would provide the Canovas with the jewelry and display cases. Location experts would help them find the best places to set up. The kiosks would go into other merchants' premises, places such as beauty parlours and clothing boutiques. The merchants would get a percentage of the sales. The Canovas would keep them stocked with product.

The company seemed very professional right from the start, Rosanna said. Its promotional material was first rate. Its corporate head office in Kingston was stunning. Its representative, a man who called himself Edward Lewis, was impeccably dressed and his sales pitch was polished.

The Canovas were so impressed they didn't even balk when a meeting Lewis had arranged with a distributor fell through at the last minute. Nor were they concerned when Lewis insisted they make up their minds within three days because he had other investors interested in the same territory.

The Canovas paid the full $16,000 in advance. The jewelry was never delivered. A few weeks later, Global Silver had closed down. The company is no longer listed in the telephone directory for Kingston. Its president, Donald Michael Stevens, has no phone listing.

Lawyer Michael Webster, of the Toronto law firm Telford Siegel Webster, said he's heard from 35 investors in Global Silver since the beginning of December who are hoping to recover their lost investment.

Most of the complainants believe they did a good job of checking out the firm before investing, he said. But even companies intent on defrauding people often look legitimate for the first few months, he said. He recommends potential investors check out the firm with the U.S. Federal Trade Commission if it's also doing business in one of 20 states that require companies to register. If they're registered in Ontario, they're required to produce a detailed disclosure document that, among other things, would reveal whether the principals in the company have ever been sued, and what sort of return an investor can realistically expect, he said.

Suppliers like Richard De Longte, who owns a trucking company in Mississauga, said Global Silver initially paid its bills. But then its cheques started to bounce. De Longte, whose company Display Transportation was delivering the display cases for Global Silver, said he's owed $20,000.

The Better Business Bureau of Eastern Ontario, based in Ottawa, says it had received 22 complaints about Global Silver by the time the company closed in late November.

"They had the most complaints against them of any of our members," said executive director Leslie King. The bureau launched an investigation into the company before it ceased operations, she said.

King was at a loss to say how investors could have protected themselves. None of the references she checked before admitting Global Silver as a BBB member last January raised any red flags, she said.

Global Silver "really did their homework before they set up their business," King said. The type of business it was running could have been successful, she added. Many legitimate firms operate similar businesses.


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