Saturday, March 26, 2016

Amish & other Christian affinity frauds

By Greg Wright
Certified Fraud Examiner
Certified Financial Planner™

I’ve received over 90 responses[i] to my Dec. 20, 2015, article “Amish on Amish Fraud.” An anonymous comment earlier today prompted my writing this post:

“While victims have lost millions of dollars, there is a much larger story here, as you pointed out in your December writing. The subterfuge of this sad episode compromises the character -- and the cause -- of evangelism. This crime affects several hundred investors while the fraud of this crime impacts the ultimate destinies of many thousands of people.”

Another victim also wrote this earlier today:

“Do you know that if Earl Miller of 5 Star is found guilty by the FEDS, He will spend the rest of his life paying back all the investors !!”

Redmond mug shot
A few days ago, another affinity fraud victim called to bring me up to date on Mr. Thomas H. Redmond, Jr.  You may recall my article[ii] of March 26, 2015, “Is you financial advisor a crook?” Mr. Redmond pled guilty in 2013, was sentenced to 15 years, and was required to pay restitution of $460,121.  Apparently he was released from prison last May and has been in contact with church members at his former church.  The lady said that many in her church and missionary groups had not easily survived the financial loss caused by Redmond.  She wondered if he would be able to pay them back.

Once a fraud victim learns that a fraudster has come to the attention of prosecutors, they hope that they will be able to recover their lost funds.  “(…)hope springs eternal in the human breast.”[iii]   

These events reminded me of the Veros Partners’ financial recovery.  You might recall that months ago the SEC brought charges against Veros, its president, and two associates for engaging in fraudulent offerings.  The SEC obtained an emergency asset freeze to halt the scheme and attorney William Wendling Jr was appointed to handle the liquidation and recover funds for the investors.  Later, I wrote about Wendling selling a major Veros asset without first having it appraised, and that his legal fees totaled $390,375.26.

The attorneys appointed by the courts to help victims are often paid very handsomely.  However, my experience has been that fraud victims are fortunate to recover 10% of their losses.  Many never receive a dime.

Juanita Hoagland
The Indianapolis Public Library confessed and convicted fraudster, Juanita Hoagland, was sued by the State of Indiana to recover the $450,000 she admitted embezzling.  After serving five months in prison, she filed for bankruptcy and was able to negotiate the judgment amount down to five cents on the dollar. 

A hotbed of affinity fraud is the state of Utah.  It is so prevalent in Utah that the SEC has a financial fraud investigating task force office in Utah.  Apparently, Mormons are so trusting of other Mormons that Utah is known for having one of the highest levels of financial fraud in the U.S. 

Several weeks ago Utah lawmakers authorized an on-line database containing the names of convicted white collar criminals.  Utahns can now check not only if there are convicted sex offenders living near them; but, they can also check about convicted fraudsters.  The Utah Attorney General said, “Utah’s unique personal interweavings and close relationships offer a rich environment for predatory behavior and financial crimes in our state.”[iv]

I teach church groups and Seniors how to find out if their financial advisor has had his licenses suspended, revoked, had multiple consumer complaints or been charged by a regulator. The advisor may have hidden this part of his background. The audience learns how to use free internet sites when conducting a background check on financial advisors.  Contact me for a free seminar on your organization.

I use these same techniques to check out volunteer speakers at the Community Outreach For Financial Education (COFFEE), a non-profit organization that teaches financial literacy.[v]

The real victim of church-related “affinity” frauds is the damage to the Body of Christ. 

Happy Easter to the Amish, Mormon and other Christians. 

1 comment: