Government Must Reopen Probe Into Offshore Money Transfers, Ponzi Scheme Victims Say

Victims of a Ponzi scheme that operated for years out of Montreal are calling for the reopening of a probe into offshore money transfers.

Investors who lost more than $500 million in the massive investment fraud say they want federal politicians to keep looking into Canadian shell companies set up in the Isle of Man — a popular tax haven used by global accounting firms — after a previous investigation was shut down, CBC reports. 

The fraud affected thousands of everyday Canadian investors, some of whom had invested their whole retirement savings. It involved the three Montreal companies Cinar, Norshield and Mount Real. 

Members of parliament previously started asking questions about offshore companies on the Isle of Man after reports that accounting firm KPMG had helped unknown wealthy Canadians set up offshore shell companies there. 

But the House of Commons finance committee abruptly shut down its investigation in 2016 after KPMG raised objections about the impact on ongoing court cases, CBC reported.

However, now that three of those cases have been settled out of court, victims of the Ponzi scheme want the investigation resumed. They say it is time for politicians to work out what actually happened to their money.

Fraud victim Janet Watson told CBC she also wants MPs to hold financial institutions accountable for not properly auditing investment funds as millions of dollars appeared to be being transferred offshore. 

“Millions and millions and millions of dollars was lost. How did [the fraudsters] do it and get away with it?”

A recent documentary investigation from CBC’s The Fifth Estate and Radio-Canada’s Enquête reported suspected links between Watson and others’ missing investments and financial transactions in the Isle of Man.

It also reported alleged financial records provided by an unnamed source, or whistleblower,  linking KPMG to four shell companies believed by some people to be linked to the fraud. 

However, KPMG denies it had any involvement with setting up the shell companies. 

In general, the probe is supported by opposition parties, CBC reported. Prior to the probe being halted, the government committee learned KPMG had been marketing an offshore tax dodging scheme to rich Canadians.

Last month, NDP MP Peter Julian put forward a motion in Ottawa calling on the finance committee to probe tax havens once again.

“People have been cheated, they have lost their savings. The federal government should do more than pay lip service in the fight against tax evasion and international tax evaders,” Julian told CBC.

Meanwhile, whistleblowers, or people who uncover fraud or other illegal activity, often at their places of employment, are protected by certain regulations. 

Whistleblower protection laws were enacted to encourage people to report illegal behavior, especially that which affects the government. If you are thinking of coming forward about fraud you’ve witnessed, you can read more about Canada’s whistleblower protections here. 

Do you think the government should reopen its probe into fraud and offshore accounts? Let us know in the comments!

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