Calgary Police and RCMP uncover pyramid scheme, one Okotoks resident is arrested

By Cindy Ballance
Editor

One Okotoks resident and three others from Calgary have been arrested
after Calgary Police uncovered a pyramid scam know as 'Circle of
Friends.'

After receiving numerous tips from the public, the Calgary Police
Service Commercial Crime Section and the RCMP were able to infiltrate
secretive meetings of the group and made four arrests.

Andrea Northam, 25, Marlise Vittur, 22, and Lori Deane, 40 all of
Calgary and Dena Liebrecht, 30, of Okotoks have been charged with
operating an unlawful money increment scheme and operating a pyramid
scheme.

They will enter their plea today (Wednesday) in Calgary.

According to Cst. Barbara Smail of the RCMP Commercial Crime Section,
RCMP became aware of a group originating in Okotoks which lead to the
Circle of Friends group.

Smail added that since the first group of citizens was charged and
convicted in Calgary, it opened the floodgates to calls of other
similar scams in the area.

'Once that happened the phone calls (to the RCMP) picked up,' said the
constable.

Through numerous public tips and tips through Crime Stoppers, RCMP
were able to determine which meetings they would be able to attend
undetected.

Undercover operators with the police were able to identify the pyramid
schemes after attending the secretive meetings where the suspects
would stand and tell attendees how much money they needed to join the
circle.

'They would talk about how (the money) is not taxable because they are
actually giving a gift, which is not true,' said Smail.

Those in attendance were then told how to obtain the $5,000 needed to
join through various means such as taking out a loan or borrowing the
money from family.

Then, Smail explained, actual pyramids were drawn on a board telling
people how the pyramid works. They were then given the name of a
person to meet at an undisclosed place to hand over the cash.

She explained that people are promised that they will quickly move up
on the pyramid and once they reach the top they will collect $40,000.

The pyramid scams are solely dependent on recruitment, said Smail, and
normally they fall apart before the person on the bottom can reach the
top.

'It doesn't work. It is dependent on recruitment and if they can't
recruit enough people eventually it will die off,' said Smail. 'It is
an illegal game.'

'It usually is a victimless crime. The people at the bottom who give
the money also could be charged for participating,' she added.

'It is illegal because it falls under the gaming section of the
criminal code. The way (the pyramid works) it can't work the way it is
presented.'

Normally, Smail added, people who participate in these types of scams
are in desperate need of money to pay off a debt or they want to help
someone else out. 'There is usually a lot of greed,' she said.

Smail explained that there are quite a number of pyramids schemes
under way not only in Calgary, but the surrounding communities as well
under various names such as the Perpetual Money Tree, the Wine Club
and the Muffin Club.

'There are a lot of these pyramids going on for sure,' she explained.
'We have had complaints from every single small town outside of the
city.'

Although each scheme may come under a different name, residents will
quickly recognize it is a scam. 'You will know instantly,' she said.

Failure to declare income from a pyramid scheme could also result in
tax evasion charges and prosecution by the Canada Customs and Revenue
Agency (CCRA).

However, individuals who have not filed returns for previous years or
who have not reported all their income, can still voluntarily correct
their tax affairs.

The CCRA will not penalize or prosecute if full disclosure is made
before the agency starts any action of investigation.