The RCMP have arrested six people in connection to a large investment fraud they say risked defrauding the federal government of as much as $200 million.

The fraud involved convincing thousands of investors that they could legitimately purchase a company’s business losses and then use them to offset their income and lower their income taxes.

It some of the cases, the businesses themselves were legitimate but the companies did not have agreements for their losses to be transferred over to third parties.

In other instances, the businesses were controlled by the six accused and the losses were fabricated.

The RCMP says that since 2004, the frauds resulted in "substantial" illegitimate income tax refund cheques being issued to these claimants, "off the backs of taxpayers."

"Since 2004, the risk of financial loss by the government of Canada because of this specific fraud exceeds $200 million," the RCMP said in a statement.

The RCMP’s Greater Toronto Area Financial Crime team began investigating in April 2012 after receiving a tip about the scheme.

They say that at least 490 Canadians fell victim to this scheme between 2009 and 2012.

The following six people have been charged with two counts of fraud over $5000 and Commission of an Offence for a Criminal Organization:

  • Vincent “Vince” Villanti, 66, of Whitby
  • Shane Davidson Smith, 46, of Peterborough
  • David Prentice, 52, of Oakville
  • Ravendra “Ravi” Chaudhary, 65, of North York
  • Andrew Lloyd, 42, of Pickering
  • Joe Loschiavo, 49, of Etobicoke

If you or someone you know has fallen victim to this illegal tax shelter, you can contact the RCMP GTA Central Intake unit at 1-855-253-7267.