Investment frauds that take advantage of peoples faith
are on the rise, state security regulators warned at a recent press conference.
Investment frauds that take advantage of peoples faith
are on the rise, state security regulators warned at a recent press conference.
Three large recent cases alone have combined for losses of
nearly $1.5 billion, the North American Securities Administrators Association
reported recently. “Ive been a securities regulator for 20 years,
and Ive seen more money stolen in the name of God than in any other way,”
said Deborah Bortner, director of securities for Washington state and president
of the association.
In all, regulators identified 75 such cases from the last few
years, affecting more than 90,000 victims and costing investors $1.8 billion
in lost funds.
One case involves the Baptist Foundation of Arizona, which
took in more than $590 million from 13,000 investors before being shut down
by officials in 1999.
In another, Greater Ministries International allegedly took
in nearly $580 million in six years, promising investors that the church would
double their money through divinely inspired investments.
In another case, the IRM Corporation allegedly raised $400
million in at least five states, selling bogus promissory notes and limited
partnerships before being shut down by Michigan officials in 1999.
All three used religion in their efforts.
Bortner said investors should not let their guard down merely
because someone is appealing to their religion. “Always do your homework,”
she admonished. “Be as skeptical and as careful when you invest with someone
who shares your faith as you would with anyone else.”
Securities officials said con artists who use religion to promote
their scams often predict an imminent financial or social crisis, claim they
will reinvest a portion of profits in a worthy cause and equate faith in their
organization with faith in God.
“Cloaking an investment with religion can give it a false
aura of safety,” said Brad Skolnik, Indiana securities commissioner. “Its
one thing to tithe or give an offering so that your money is used for good works.
Its another thing if youre led to believe youll get a monetary
return. Its when people are promised earthly returns that we see a lot
of fraud.”
Before making any investment, state regulators urged investors
to ask:
Are the seller and investment licensed and registered
in the state? If not, they may be operating illegally. Call ones state
securities regulator to find out.
Has the seller provided written information fully explaining
the investment? Documentation should be clear and accurate enough to allow one
to evaluate and verify the particulars.
Are claims made for the investment realistic? Pie-in-the-sky
promises often signal fraud. Use common sense and get professional, third-party
advice when offered unusually high returns in comparison with other investment
options.
Does this investment meet ones personal investment
goals? Whether one is investing for long-term growth, investment income or other
reasons, any investment should be consistent with those goals. (ABP)
(The North American Securities Administration Web site may be found at www.nasaa.org)