Edmonton woman accused in Ponzi scheme

"These people are artists at building trust and getting people to part with their money," he said.

The Globe and Mail
December 14, 2005

Edmonton woman accused in Ponzi scheme
Dozens duped in scam that brought in more than $10-million, Mounties allege
Katherine Harding

EDMONTON — An Edmonton woman is accused of duping more than 60 people out of $10-million in an illegal Ponzi investment scheme.

"They just keep coming," RCMP Corporal Robert Moore said about the frequency of these types of fraud cases in Canada.

He said that in this case, people invested from $10,000 to $800,000, with losses totalling more than $10-million during a 19-month period.

"It was really a cross-section of people. There was no one group targeted," Cpl. Moore said. "The losses were substantial."

The Ponzi scheme works on the "rob-Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors, and to maintain the lifestyle of the perpetrator, until the whole scheme collapses. Profits are never created because there is no underlying investment.

It is named after Carl Ponzi, the man who, in the 1920s, swindled thousands of New England investors using the method.

Cpl. Moore wouldn't talk specifically about how the Edmonton case finally unravelled, but he said that generally these schemes collapse when one or more investors become concerned or nervous and start pulling money out.

Cheryl-Lynne Braun, the accused 42-year-old woman, doesn't have an investment or business background, he said.

Cpl. Moore added that it's not surprising that people are often lured into investing in get-rich programs that are often "too good to be true."

"These people are artists at building trust and getting people to part with their money," he said.

However, Fugi Saito, program director of an Edmonton-based fraud prevention and education group, has a more blunt assessment of why individuals are continually duped by illegal investment schemes. "People are either needy or greedy," he said.

His group, called the Heads Up Fraud Prevention Association, warns investors to seek the advice of a licensed investment broker before getting involved with any high-risk schemes.

Mr. Saito said that people should always be wary of hard-sell tactics that create a sense of urgency. He added that legitimate investment programs should be transparent and not secretive.

Ms. Braun is charged with one count of fraud over $5,000 and one count of theft over $5,000. She is scheduled to appear in an Edmonton court on Jan. 5.

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