Ponzi and pyramid schemes are alive and well in New Brunswick and the RCMP, along with the province's Financial and Consumer Services Commission, want people to be aware of the scams.
Brian Maude of the commission's enforcement division says fraudsters promise high rates of return, then keep most of the money for themselves.
The RCMP said the interest rate offered is often 10 per cent per year, or more, and the person raising the funds will provide a promissory note or loan agreement in exchange for the cash.
Maude said a few years years ago a case was prosecuted in Nackawic.
"It involved a gentleman who was ostensibly financing a construction project. And what he was doing was bringing in money through mortgage loans that were taken out on people's residences, promising to invest it in his construction scheme," he said.
"What he did was use all that money to pay himself. He was saying all this money is tied up in this construction scheme. But it was an out-and-out fraud," said Maude.
A level of trust
Maude said anyone offered what seems like a real deal should check to ensure the promoter is licensed as investment advisers or dealers.
He said most are not and usually involve people who know each other, so there is a level of trust.
Even when you know the person, Maude said potential investors need to do a check on anyone offering such deal before handing over any money.
"They're really not licensed as investment advisors or investment dealers," he said.
"I also recommend that people ask detailed questions of any type of investment scheme like that. If it sounds too good to be true, it almost certainly is."
If anyone realizes, or even suspects, being asked to invest in something that might be a scam, the RCMP said the Financial and Consumer Services Commission or police should be contacted.