The Winkler Police Service has learned that a Winkler resident is part of a pyramid scheme, or ponzi scheme, called Pay Diamond: selling diamonds and recruiting others to sell diamonds through a distributor supposedly from Hong Kong.

Winkler Police have also become aware that this person has recruited at least five people to join them selling the diamonds.

"This individual has convinced friends and family to invest in PayDiamond, and has profited through recruitment fees. This is a classic Pyramid/Ponzi scheme model," said Constable Chris Kalansky of the Winkler Police Service.

A press release was issued late Saturday warning people about the pyramid scheme:

"The Manitoba Securities Commission (MSC) and the Winkler Police Service are issuing a joint warning to Manitobans about PayDiamond.com...Evidence indicates the company may be operating a so-called Pyramid scheme, which has cropped up in Manitoba."


In a Pyramid or Ponzi scheme, investors are promised high returns. They operate by paying interest to investors with money brought in by new investors. These new investors are attracted by stories of people claiming to be getting high returns, and in some cases by receiving small amounts of money back in the early stages of the scheme. These schemes inevitably collapse, and investors lose money.


The release explained a little of how PayDiamond works,

"PayDiamond's model is to raise money from investors which is pooled into a fund to purchase raw diamonds which the company purchases, cuts, polishes and markets. Investor returns are allegedly from the profits of the pool they have invested in.

Investors are called "affiliates" and buy in-between $200 and $36,000, for terms up to 50 weeks. Investors are supposed to receive a weekly payment until the end of the term when the diamonds are sold with profits to be split with the affiliates.


"There is a heavy emphasis on recruiting new investors," says Len Terlinski, MSC investigator, "An 'affiliate' is paid based on the amount invested by people he or she recruits. This is a red flag. Additionally, the 'affiliate memberships' maybe be considered a trade in a security, and PayDiamond is not registered to sell securities in Manitoba."

MSC has recently received calls about the legitimacy of PayDiamond, while the Winkler Police Service has received reports of local residents who have been recruited into the scheme.

Members of the public are advised to contact MSC or their local police if they believe they have been targeted by a fraud attempt. MSC’s anti-fraud line is 1-855-FRAUD-MB.

People can also visit recognizeinvestmentfraud.com for more information on common frauds and scams.