The Manitoba Securities Commission (MSC) is warning investors about so-called “RRSP stripping” scams ahead of an upcoming investment seminar that’s being held in Winnipeg this Saturday that “raises a number of associated red flags.”
“We are very concerned about the nature of the seminar taking place this Saturday,” says Jason Roy, senior investigator with the MSC, in a statement. “Withdrawing funds from a registered retirement account to fund real estate or securities purchases is one of the hallmarks of an RRSP stripping scam.”
These scams involve withdrawing funds from a locked-in RRSP or RRIF to purchase shares in a company or real estate at the direction of a promoter, who takes a fee from the investor, the MSC states: “These new shares [actually worth little or nothing] are deposited back into the RRSP at an inflated price. The remaining portions of the original funds are sometimes directed back to the consumer via a loan, credit card, or offshore account.
“While the plan may appear legitimate, Canada Revenue Agency (CRA) has, in the past, considered this a form of tax avoidance and has little tolerance for participants,” the MSC reports.
“The name of the game changes, but the end result is the same,” Roy says. “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 the CRA.”
In addition, the MSC points out that the event will feature a speaker, Sunil Tulsiani, “under cease-trade orders in Ontario and Manitoba and is currently charged with securities offences in Ontario.”
Adds the MSC: “Tulsiani has been permanently barred from selling securities in Manitoba and Ontario for repeated securities violations, and what the Ontario Securities Commission has called ‘egregious and dishonest’ behaviour for his part in a multi-million dollar Ponzi scheme.”
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