Banners Broker Scammers Plead Guilty
On December 9, 2015, Christopher George Smith, 45, of Toronto, and Rajiv Dixit, 45, of Vancouver, were arrested for running the Banners Broker scam. On April 27, 2017, Smith and Dixit pleaded guilty to operating a pyramid scheme under the Competition Act.
It is alleged that:
- Between October 2010 and March 2013, a pyramid scheme known as “Banners Broker” was operated out of a Church Street address in Toronto.
- The scheme offered participants the opportunity to double their money by investing in an advertising company that had access to a “globally renowned network”.
- Participants were led to believe their investments were being applied towards a program that offered payment for the direction of web traffic via referral links.
- The program’s existence was entirely dependent upon the fee-based entry of new members and little or no real product or service was provided.
- New investors were drawn into the scheme via a series of false or misleading representations.
- By the end of 2012, over $93 million US was obtained from thousands of participants, of which approximately $45 million was paid back to participants in the scheme.
- The remaining funds were funneled to a number of offshore accounts in Belize, St. Lucia, Cyprus, and others.
They have now been sentenced for running their $93 million pyramid scheme.
Sentence: They will serve two years less a day in the community and will be required to pay a $50,000 fine within two years. – Source BB Receiver Report
If you have ever wondered why pyramid schemes are common around the world, here is a good example of why this is the case. You can take millions of dollars from people and get community service for the crime. It would seem justice was not done for the victims of this scam.
Pursuant to the terms of the Dixit Settlement Agreement, Dixit turned over several items of personal property to the Receiver including home furnishings and high end liquor bottles that the Receiver had asserted were purchased with Banners Broker funds. These assets were sold by the Receiver resulting in a realization of approximately $5,950 for the benefit of the BBIL receivership estate. Dixit has also turned over some jewelry that the Receiver also intends to sell. 30. Additionally, Dixit met with the Receiver and its counsel for two full days in late September, 2016. The purpose of these meetings was for Dixit to make full and complete disclosure of everything that he knew about Banners Broker. Although the contents of the discussions are subject to confidentiality terms, the Receiver believes that Dixit made full disclosure in respect of the matters discussed. – Source BB Receiver Report
I wonder if the receiver missed an offshore account or two.
Here is some background from truthinadvertising.org on Banners Broker:
- Banners Broker International Ltd’s holding company in the Isle of Man was put into liquidation in March 2014. The company, whose only asset on the Isle of Man appears to be a $6-million bank account, did not contest the liquidation.
- In early 2013, Indian authorities in Goa froze the bank accounts of Banners Broker India Ltd and seized the company’s books, files, documents and hard disks based on allegations of economic offense involving “a huge sum of money.” BBI, claimed that the investigation resulted from “unfounded complaints…” and that it had moved its office from Goa to Bangalore.
- With no advance notice, BBI closed its offices in Ireland and terminated its Irish representative, Paul McCarthy, in late August 2013, according to Irish newspaper accounts. As many as 15,000 individuals had invested in the Banners Broker program in Ireland in 2013, according to some estimates. McCarthy had said at a 2012 recruitment meeting secretly filmed by a news reporter that people could quadruple their money with BBI, a claim he later denied making.
- Beginning sometime in 2013, BBI affiliates began receiving their commissions late, received only partial commissions, or none at all. BBI admitted in November 2013 that “[t]here have been issues in the past and we acknowledge that the payouts have not been as regular as they should have been. We are working hard to remedy that and it is important to us that payments go out regularly and consistently.” (Emphasis added by BBI)
- BBI had been providing payouts using a company called Vector Card Services, LLC to its affiliates with prepaid MasterCards – a fact that some used to reject allegations that BBI is a pyramid scheme. However, in early 2013, MasterCard canceled its contract with BBI. Smith explained, “Unfortunately MasterCard has the option in their contract to cancel the contract any time. The email I received said that because of bad publicity surrounding Banner Brokers, they would not want to be associated with BB any longer.”
- After MasterCard canceled its contract, BBI introduced World eWallet in December 2013 as a payment processor for affiliates. Smith said: “This is one of the components on the road to recovery on the payout issue. Let me make this crystal clear, this does not mean that everyone will get paid on day one. I don’t want to over-excite, but I want to make you aware that this is the step to getting us back on track.”
- Former BBI Chief Operating Officer Rajiv Dixit is no stranger to working with companies accused of being pyramid schemes. Prior to his affiliation with BBI, Dixit worked for ICF World Homes, which was alleged to be a pyramid scheme and is no longer in operation. Dixit was quoted as saying, “I do believe ICF was not a pyramid, as I would not be involved with one.”
- Dixit and BBI have been engaged in some fishy business themselves. In a slight of hand, the Canadian company known as Bannersbroker Limited changed its name to Stellar Point Inc. in July 2012. BBI said that Stellar Point was “an independent firm who was contracted by Banners Broker to handle support, training and marketing for Banners Broker.” And who, you might ask was in charge of Stellar Point? None other than former COO of BBI, Rajiv Dixit, who was the CEO and President of Stellar Point Inc. BBI apparently ended its relationship with Stellar Point in August 2013 saying: “[o]n August 1, 2013, a decision was made at Banners Broker, in an attempt to further reduce the cost of running a support centre, to move the support to the head office in Belize. At this time, the contract with Stellar Point . . . was terminated . . ..” Dixit is now running his own think tank called The Dixit Consortium.