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ARTICLE · 12 JULY 2022

Ponzi Scheme Participants Ordered To Return Payments That Were "Too Good To Be True"

Gardiner Roberts LLP
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Investors in a scheme that seems too good to be true should be aware that they may be liable to return the funds under principles of unjust enrichment or bankruptcy preference laws.

CanadaInsolvency/Bankruptcy/Re-Structuring
James R.G. Cook
James R.G. Cook
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Investors in a scheme that seems too good to be true should be aware that they may be liable to return the funds under principles of unjust enrichment or bankruptcy preference laws.

The claims in Golden Oaks Enterprises Inc. v. Scott, 2022 ONCA 509 (CanLII), arose from a Ponzi scheme in Ottawa that was advertised as a "rent-to-own" business (Golden Oaks) but was promoted by its principal owner (Lacasse) to certain individuals as a way to turn a quick profit by advancing funds for short time periods in exchange for high-interest promissory notes.

Over five hundred promissory notes were issued by Golden Oaks to investors from 2009-2013, with early investors earning commissions for persuading new investors to make loans. The interest on the issues increased to the point where it exceeded the criminal rate of 60%, and money from new investors was being used to pay existing investors.

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