Convicted Ponzi schemer
Bernard Madoff bilked billions of dollars out of thousands of fellow Jews,
including charities like the Elie Wiesel Foundation and Steven Spielberg
Other major frauds exposed
by federal investigators in recent years have targeted Jehovah’s Witnesses,
Baptists, black churches and other denominations, from $190 million lost in a
three-year scam promoted by a Christian radio host in Minnesota to an estimated
$1.4 billion conned from thousands of Utah Mormons.
Now three Pakistani
immigrants — two believed to have fled the U.S. — are accused of swindling $30
million from hundreds of Chicago-area Muslims with an investment plan they
promised complied with Islamic law.
Is it simply too easy for
con artists to prey on people of faith?
“We’ve seen where it’s an
outsider who has come into the fold, and we’ve seen some where it’s a person
who has been a member of the community for decades,” said Lori Schock, director
of investment education and advocacy for the U.S. Securities and Exchange
“We’ve had cases where
people quote Scripture, that the Lord wants you to make money. And when the
house of cards comes crashing down, the victims sometimes lose more than just
their money — sometimes they lose their faith, and it’s extremely sad.”
Why do religious groups make
such easy targets? For one, a swindler who professes the same faith, or belongs
to the same congregation, has an easy time of earning trust, however misplaced.
Duped investors, meanwhile, also hesitate to suspect or report on one of their
own, Schock added.
Although the FBI’s Utah
Securities Fraud Task Force has issued a warning to members of the Church of
Latter-day Saints, the SEC hasn’t examined whether religious groups are more
susceptible to “affinity fraud” — scams that target specific demographics,
whether evangelical Christians or the elderly.
But researchers say it’s a
question worth considering.
Harvard scholar Robert D.
Putnam and Notre Dame’s David E. Campbell found a connection between
religiosity and trust in others in their new book, American Grace: How Religion
Unites and Divides Us.
Based on Harvard’s 2006
Faith Matters Survey, Putnam and Campbell conclude religious people are viewed
as more trustworthy by both religious and nonreligious Americans, and also tend
to be more trusting of others.
In an interview, Campbell
said the strong social networks found in some faith communities, such as “the
tight bonds among Mormons,” seems to make them especially vulnerable to fraud.
“The underlying issue, I
think, is the question of mutual trust,” agreed Nancy Ammerman, a Boston
University professor of religion and sociology. “These schemes rely on and
exploit that trust, and people within religious communities tend to have high
levels of trust for others within their community.”
There’s also ease of access,
“Conversations are easy to
strike up, and everybody’s got a directory or an e-mail list or at least people
they talk to at coffee hour. The social connections are there, and that makes
it easier for someone with something to sell to get new customers.”
Anson Shupe, an Indiana
University sociologist and author of several books on faith-based fraud, said
his own research indicates evangelicals, Mormons and black churches are most
susceptible, while Catholics are relatively protected by a dense, hierarchical
network of clergy supervision.
“Protestants and Mormons
tend to believe that there is a sort of straightforward relationship between
keeping the tenets of the faith and contributing financially to it, and then
reaping rewards in the here and now,” he explained. “Some pastors preach a
one-to-one relationship between worldly prosperity and attendance to matters of
Members of these groups also
believe that God wants them to prosper, and that God wouldn’t allow them to be
ripped off — especially not by someone who shares their beliefs, he added.
But Earl L. Grinols, a
Baylor University economics professor, believes any correlation between faith
and fraud stems from a “mistaken” perception that religious people as easily
misled. That prompts con artists to disproportionately target them, along with
the elderly and the newly affluent.
“It’s the ease of
identifying and finding people in the group to scam, and that the perpetrators
have a misperception that these members are more naive,” he said. “They may
tend to view (Christians) as more simple, maybe more easily led.”
Schock said potential
investors should check with the regional SEC office before handing money over
to potential con artists, whether it’s a longtime congregant in good standing,
a religious leader who has been endorsed by fellow clergy, or someone who
promotes an investment that appears faith-friendly, such as church bonds or
“Trust, but verify,” she
said. “If something sound too good to be true, it probably is.”