TORONTO - Financial Crimes investigators have made two arrests in connection with a massive pyramid scheme that allegedly bilked thousands of investors out of tens of millions of dollars.
Christopher George Smith, of Toronto, and Rajiv Dixit, of Vancouver – both 45 years old – were arrested on December 9, 2015. They appeared in court a few hours later.
It’s alleged that over US$93 million was obtained from thousands of participants of which approximately $45 million was paid out to the early participants. The money was funnelled to accounts in Belize, St. Lucia and other countries.
At a press conference at police headquarters on December 9, Detective Sergeant Ian Nichol said the Service’s Financial Crimes officers started the investigation in January 2013.
TOP PHOTO: Detective Sergeant Ian Nichol briefs the media on a pyramid scheme fraud
He said allegations are that between October 2010 and 2013, the accused operated the scheme, known as Banners Broker, out of a Church St. address in Toronto.
“The scheme offered participants the opportunity to double their money by participating in an advertising company with access to a globally renowned network,” said Nichol. “Participants were led to believe that their investments were applied to a program that offered payment for the direction of web traffic via referral links. It’s alleged that the program’s existence was entirely dependent upon the base entry of subscribers. Little or no product service was provided.”
Nichols said police are alleging that new investors were drawn to the scheme by way of a series of false and misleading representation.
“They were duped into believing they were advertising in an internet advertising business, a legitimate business,” he said. “In fact, no actual product was generated. There were steps that were taken to give that appearance.
“Companies were hired that specialized in internet advertising, but there was really no genuine effort here. We are not talking about people who tried and failed. We are alleging this was a pyramid scheme from the get-go, regardless of how it was dressed up with smoke and mirrors and industry language. At the end of the day, this was a pyramid scheme from start to finish.”
Nichols added that thousands of participants worldwide participated in the illegal scheme.
“Earlier on, people who invested at the top of the pyramid received those funds and somebody is left holding the bag,” he pointed out. “Many of them probably knew it was a pyramid scheme in the initial stages and then, later on, people who invested actually thought they were investing in something that was genuine. In most cases, they didn’t receive anything at all. The numbers vary from a few hundred dollars to several thousand dollars.”
Dixit and Smith were charged with defrauding the public, possession of proceeds of crime, laundering the proceeds of crime, operating a pyramid scheme and making false or misleading representations.
Written by Ron Fanfair; Content in partnership with Toronto Police Services.