A prestigious Montreal private school is scrambling to repair its damaged reputation, after police busted a counterfeit currency scheme among students trying to pay off gambling debts.

Four students have withdrawn from Lower Canada College, and five others have been suspended after allegations that some were selling fake $10 bills to help a friend pay off a gambling debt.

The student at the centre of it all is just 14 years old, and has been arrested. He reportedly racked up about $15,000 in debts, partly by gambling over the Internet on sports like football.

The boy's father told CTV News that his son was placing bets with bookies, who were forcing him to repay his debts under threat of violence.

To do that, the boy was reportedly photocopying the bills and selling them. The copies were a poor quality, and storeowners easily spotted them as fakes. The school found out and the teen was picked up by police. He was found to be carrying more than 40 counterfeit $10 bills.

It's not clear if he's been charged with anything yet.

According to Lower Canada College headmaster Dr. Paul Bennett, the problem is serious, but isolated.

"A small group of our students in grades 9 and 10 became involved initially in some gambling," he said in an interview with CTV's Montreal affiliate, CFCF News on Thursday.

"It progressed to being involved with the passing of counterfeit money to raise money to essentially help a student who had a gambling problem."

With some experts suggesting as many as one student in every high school class across the province could have a gambling problem, Bennett concedes his students aren't immune.

"The students are well aware of the honour code so our first reaction was complete shock, but we began to realize that it was part of a larger issue in society affecting a whole generation of young people."

The school's website says that four students, all Grade 9 and 10 boys, have withdrawn from LCC "following a comprehensive internal investigation and interviews" with parents and students.

One student, a Grade 9 boy, is currently serving a one-week suspension for loaning money to a friend to pay gambling debts and for passing counterfeit bills.

"Four other Grade 9 boys who admitted to handling the money on LCC premises served a one-day in-school suspension on October 12 and have returned to regular classes," the statement said.

McGill University youth gambling expert Carmen Messerlian says, although laws prohibit minors from playing lotteries for example, there are other avenues kids can take to get drawn into the thrill of a gamble.

"Recent research has shown that approximately five per cent of kids have gambled on the Internet in Quebec," she told CFCF, noting that many are playing so-called practice rounds that don't involve wagering actual money.

Across Canada, more than 70 per cent of high school kids have bet in the past year, he added. Of those, approximately five per cent are considered pathological gamblers.

To head off another similar problem at his school, Bennett has instituted a programme of counseling and preventive education.

"LCC continues to be a truly fine school... That is why we acted firmly to put an expedient end to such activities," Bennett said.

With a report from CTV's Jed Kahane