Two people charged in birthday pyramid scheme in London
Two London residents are accused of being behind a birthday gifting pyramid scheme.
The London Police Service Financial Crime Unit executed a search warrant at a meeting for a ‘birthday gifting cloud’ held in Lambeth on November 26th.
Investigators believe that this pyramid scheme has been operating throughout London and region for at least one year, with meetings held on a bi-weekly basis at locations throughout the city.
The scheme begins with a request for a $5000 ‘gift’, which is given to the person at the top of the pyramid at a social gathering resembling a birthday celebration. Eight people in total give the recipient $5000 in cash at this “birthday party”.
The recipient then leaves the pyramid but has the option to buy back in at the base level. The two people below the recipient then rise to the top, the pyramid splits in two, and the scheme proceeds to evolve with the individuals at the top receiving $40,000 once new members are recruited. By giving the person at the top $5000, each investor has bought into the pyramid (referred to as a cloud), and each is now responsible to recruit others – most often friends and family.
Organizers of this scheme attempt to convince prospects that the scheme is not a pyramid but an ‘ever-evolving cloud’ and that it is legal because the Canada Revenue Agency (CRA) allows for gifting in this country. Rules for gifts and awards can be found on the CRA website or by following this link https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events/gifts-awards-long-service-awards.html . According to the CRA website, “a gift has to be for a special occasion such as a religious holiday, a birthday, a wedding, or the birth of a child.”
Participants are told that transactions must be done using cash only, and that nicknames are required to protect the anonymity of those involved. These tactics appear to be designed to impede law enforcement. Most people involved in this scheme will never see a return of their money. Only the people at the top of the pyramid profit from this scheme and organizers will often inject themselves back into the pyramid at upper levels to profit more, leaving those waiting for their ‘birthday’ to wait even longer.
The London Police Service is asking that anyone who may have been approached to contribute to this scheme, anyone who has invested in the scheme or anyone who has profited from the scheme, call the Financial Crime Unit at 519 661 5515 extension 5257.
London police say Shakila Bayat, 51, and Bernard Baratta, 72, both of London, have been jointly charged with conducting or managing a pyramid scheme, contrary to the Criminal Code of Canada.
Both of the accused are scheduled to appear in London court on January 7th, 2019 in relation to the charge.
Anyone with information in relation to this incident is asked to call the London Police Service at (519) 661-5670 or Crime Stoppers at 1-800-222-TIPS (8477). Information can also be sent in online anonymously to www.londoncrimestoppers.com