“Recovery room” schemes that are reportedly surfacing in Manitoba, Saskatchewan and British Columbia, the Alberta Securities Commission warned Tuesday.

Recovery room schemes involve companies that contact investors who may have lost money in an illiquid investment with an offer to buy their shares at an inflated price. Once investors agree to the deal, the operators of the scheme ask them to pay a fee for the transaction. The scammers keep the fee but do not repurchase the shares.

The investor warning issued Tuesday is specifically aimed at Alberta investors of York-Rio Resources Inc. and TLC Explorations Inc. after the Manitoba Securities Commission and British Columbia Securities Commission issued an investor alert and the Saskatchewan Financial Services Commission (SFSC) issued a cease trade order last week based on recovery room activity suspected in their jurisdictions.

In the September 24 investor alert, MSC and BCSC caution that an organization called Penn Capital Management Ltd. has contacted investors in York-Rio Resources Inc. to repurchase their shares at an inflated price for a fee.

On September 25, the SFSC issued temporary cease trade orders to The Castleton Group, Beltway M&A, Joshua Stevens, Patrick Thompson, Vick Newman, Daniel Greco and Jim Young for allegedly contacting TLC Explorations Inc. investors with the same offer to buy back shares at a higher price but with a fee attached.

The ASC is asking anyone who has been approached by these companies or others with the repurchase offer to contact the the regulator’s public inquiries group at 1-877-355-4488.

IE