A London man and woman are facing charges in relation to a birthday themed pyramid scheme.
Officers with the London police financial crime unit raided a meeting of the so-called "birthday gifting cloud" which was being held in Lambeth on Monday.
According to police, the scheme begins with an individual being asked for a $5,000 gift, which is given to the person at the top of the pyramid at a bi-weekly meeting that resembles a birthday celebration. The meetings were held at different locations throughout the city. In total, eight people give the person at the top the requested funds.
The top person leaves the pyramid after receiving the money, but has the option to buy back in at the base level. The two people directly under that individual then rise to the top and the pyramid splits into two. The people at the bottom of the pyramid, or cloud, are tasked with recruiting new members -- usually friends and family.
Those participating in the birthday gifting cloud are told all "gifts" have to be in cash and that only nicknames can be used in order to protect the identities of those involved. These are tactics designed to impede law enforcement, police said.
As the scheme is billed as an "ever-evolving cloud" and not a pyramid, organizers work to convince potential participants that this is a legal practice because rules laid out by the Canada Revenue Agency allow for gifts for special occasions, such as birthdays.
"Most people involved in this scheme will never see a return of their money. Only the people at the top of the pyramid profit from this scheme and organizers will often inject themselves back into the pyramid at upper levels to profit more, leaving those waiting for their ‘birthday’ to wait even longer," police said in a release issued Tuesday.
Police are asking anyone who may have been approached to contribute to this scheme or has invested in it to call the Financial Crime Unit at 519-661-5515 extension 5257.
Shakila Bayat, 51, and Bernard Baratta, 72, both of London, are charged with conducting or managing a pyramid scheme.
The pair is scheduled to appear in court on January 7.
