A pyramid scheme requiring participants to invest $1,250 and recruit other investors has become widespread in and around Caraquet.

A pamphlet obtained by Radio-Canada explains the scheme, run by an organization known as Le Groupe Résolution, which is supposedly based in Calgary and arrived in the Caraquet area three months ago.

The pamphlet details in French how the group, also known as Mouvement Entraide Féminine, was created for women in need by other women, in order to help them become financially independent. The document instructs recruits to respect the privacy and confidentiality of other members.

Kevin Hache

Caraquet Mayor Kevin Haché says AcadieNor Inc., which runs the municipally owned Greater Caraquet Industrial Complex, is independent from the municipal council. (CBC)

At least one Caraquet municipal councillor has been victimized in the scheme.

Louise Blanchard came out publicly last week to denounce the pyramid scheme.

Caraquet Mayor Kevin Haché held a closed meeting for council and staff Monday afternoon.

"I found out a couple weeks ago that we had a pyramid scheme in Caraquet and basically decided to tell the population to be wary of the scheme that was going around and it was important that people knew that it was illegal and charges could be laid," said Haché.

"I have confidence in my council that no one would have gotten into it knowing it was not legal and not right."

According to Haché, based on conversations with those drawn into the scheme, investors are instructed to ask their friends and family to invest $1,250, and then to find two others who are willing to invest an equal amount.

"Then you get higher up on the pyramid scheme and when you're at the top, eight people will give you that $1,250 dollars and you will make $10,000 at the end."

`Seductive nature of a quick pay out'

Brian Maude, a lawyer with the Financial and Consumer Services Commission, has been investigating the scheme and spoke to a group in Caraquet last week to educate the population on its dangers.

Brian Maude

Brian Maude, of the Financial and Consumer Services Commission, made a presentation in Caraquet to educate the population about the dangers of pyramid schemes (Submitted by Financial and Consumer Services Commission)

"We don't know really who is behind the pyramid scheme at this point. It appears to have originated out west and there may have been some people from out west who came back here, but we don't know for sure," said Maude.

According to Maude, the investors he spoke to "are quite protective," having been advised to respect the privacy of other members.

"At this point we don't know how high it goes or how far it goes," he said.

In many cases, investors are approached by trusted friends, and told they are supporting a good cause — in this case, needy women, or sick children.

"They were basically saying we're going to be women for women," said Haché.

"You're helping people, but hoping that you're going to get some help also, but that may not come."

Maude advises anyone involved in the scheme to think twice, and educate themselves on the legality of their investments.

"It's just the seductive nature of a quick pay out and the question people need to ask themselves is 'If it's too good to be true, is it?'"