Gardaí in Cavan are investigating complaints about a local man reported to have disappeared with up to €1 million in investors' funds after luring them into a pyramid investment scheme.

The first official complaint was made last Saturday and additional complaints have followed. Gardai are investigating the matter under the Theft Act, 2002, with the complainants believing they are victims of a fraud.

Supt Joe Sullivan of Cavan Garda Station said yesterday the inquiry was still at a "preliminary stage". "We're investigating a number of complaints which have been made," he said, adding that all complaints at this stage had come from Cavan residents.

The inquiry is understood to focus on a scheme which promised above-average profits to investors within months. It was reported in the latest edition of Cavan-based newspaper, the Anglo-Celt, that some investors may have parted with €100,000 to gain a return of up to 25 per cent in what operated as a pyramid scheme.

A pyramid scheme is only sustainable as long as new investors can be persuaded to enter and their funds can be used to pay returns due to existing members. As soon as the pool of new members disappears, the scheme collapses.

It is believed investors have been unable to contact the man at the top of the scheme for weeks.

The Cavan newspaper reported that some investors might be reluctant to report losses because of concerns about possible tax implications.

The individual at the centre of the inquiry is not thought to have been authorised to act as a broker or financial intermediary. A spokesman for the Central Bank said it has received no complaints and that the individual concerned was not authorised by the Bank to act as a financial intermediary.