The Manitoba Securities Commission wants the public to think twice when they’re presented with RRSP and RRIF promotions that may sound too good to be true.
The MSC says RRSP “stripping” scams are complex schemes often presented as a sound investment strategy by people at seminars.
“The name of the game changes, but the end result is the same,” says Jason Roy, senior investigator at MSC. “In a stripping scam, the consumer is often left with their retirement savings gone, in addition to a hefty tax bill—and usually penalties—from CRA.”
In a media release, the MSC explains a “stripping” scam encourages people to withdraw funds from a locked-in RRSP or RRIF. The funds are used to purchase shares in a company or real estate. The promoter retains a percentage as their “fee.”
The MSC says these new shares are actually worth little or nothing and are deposited back into the RRSP at an inflated price. The portions of the original fund left over are sometimes directed back to the consumer through a loan, credit card, or offshore account.
Canada Revenue Agency considers this a form of tax avoidance, the MSC says, and has little tolerance for people who participate.
The Securities Commission is warning a weekend seminar may raise some red flags.
“How to Invest Your Retirement Money in Real Estate,” is being held in Winnipeg this Saturday, the MSC says.
The MSC says the guest speaker, Sunil Tulsiani, has been permanently barred from selling securities in Manitoba and Ontario for repeated securities violations including taking part in a multi-million dollar Ponzi scheme.
