Posted on 01/17/2010 2:54:36 PM PST by Colofornian
After Diane Gordon's husband died in a motorcycle crash in 2004, a million-dollar insurance settlement allowed her to stop working as a housekeeper. For help in managing her money, she turned to a financial adviser, Kurt Barton. She'd met him through their Church of Jesus Christ of Latter-day Saints congregation west of Austin. Their common spirituality, she said, made her trust him; eventually, she placed all of her savings with Barton's company, Triton Financial.
Three weeks ago, the company was taken over by state and federal regulators, who described Triton's finances as a $50 million "shell game." Now 57 years old, with her money possibly gone, Gordon views her decision to trust her fellow worshipper with regret.
"I should have just stopped and thought about it," she said.
The story of Triton has so far centered on well-known sports figures who invested in and promoted the company. Heisman Trophy winners Ty Detmer and Chris Weinke were early investors and, for a time, listed as company executives. Earl Campbell lent his name to an East Texas car dealership opened by Triton, which also sponsored a Champions Tour golf event.
Yet interviews with people who either lent or invested money with Triton, as well as a spreadsheet listing more than 300 people identified as investors by a person who had financial dealings with the company, indicate there was a group whose fortunes were even more tied to Triton: members of the Church of Jesus Christ of Latter-day Saints, or Mormons.
Barton is a member of the church, as were at least two other company executives listed on corporate documents. Anthony Goodall, an attorney and member of the church, said he did legal work for the company. Detmer, who for a time was listed an a Triton executive, is a Mormon.
Members of the church who agreed to review the investor list for the American-Statesman counted more than two dozen investors in just a single Triton affiliate called CapVest who belonged to local congregations of the Mormon church. The number could be considerably higher, some congregants said.
"There are a number of people (within the church) who invested," said Ryan Searle, a local property manager and member of the church who said he lent money to Barton.
Joe Turner, Barton's lawyer, said it is not unusual for people to do business with their friends and family. "These are the people he knows. These are his friends," he said. "I think it's pretty common."
But Barton also was known in the church as someone with financial expertise. At one point, the leadership of one of three Austin-area stakes (a stake is a group of several congregations consisting of about 3,000 worshippers) designated him as a knowledgeable congregant other church members could turn to with questions about their finances, according to several members. Such designations are typically made known in regular printed bulletins for members.
"That gave him a much larger group to draw on," said church member Joe Straubhaar, who also placed money with Triton. Straubhaar stressed that he didn't blame church leaders for their role in recommending Barton. If anyone is at fault, he said, it is Barton. "He seemed like a trustworthy guy," Straubhaar said.
Former Houston Astro and Austin resident Jeff Kent also thought Barton was credible — at least at first. The baseball player met Barton and other Triton executives through their church congregation. In 2008 he came close to forming a partnership with Triton to purchase a private country club in Spicewood. But he backed away at the last minute because, he said, "it just didn't feel right."
Scrutiny for Triton
The Securities and Exchange Commission and the Texas State Securities Board have filed separate securities actions contending that Barton and Triton raised more than $50 million from investors in the past five years but misrepresented how the money was used. Turner has said Barton will cooperate with regulators and investigators.
The company's assets have been frozen, and a receiver has been appointed to help recover money for investors. Many of those, it now appears, were members of Mormon congregations west of Austin, where Barton lived.
Church members and others describe the concentration of Triton executives and investors from the Mormon church as a possible example of "affinity fraud," in which people looking for money often go first to those they know, either personally or through social organizations.
"It's common for perpetrators of fraud to target an identifiable group — anyone who shares a common interest," said Robert Elder, a spokesman for the state securities board. Such schemes can spread quickly within a community, he added, as satisfied early investors talk up the deals among their friends.
The tie can be as simple as a shared ZIP code. In 2007, Bruce Ruark, a regular visitor to the Williamson County retirement community of Sun City Texas, pleaded guilty to selling unregistered securities. According to court documents, he gathered investors for his Ponzi scheme selling investments in mobile billboards by meeting regularly with Sun City residents and offering investment advice while serving breakfast tacos. Eventually he was ordered to pay about $138,000 in restitution.
Experts said a shared spiritual home is often a common denominator between financial predators and their victims. "Of all the affinity frauds, religion is the most effective," said Wayne Klein, who led the Utah Division of Securities for two years before leaving in 2008. "Not only do you share a common bond, religions require you to reach out to newcomers, so it becomes an especially seductive means of establishing trust."
After Austin resident and financial adviser Derrich Pollock died in a plane crash in February 2007, many fellow congregants of Great Hills Baptist Church who had entrusted their money to him were shocked to learn they had been participating in what court documents called a multimillion-dollar Ponzi scheme. Pollock reportedly liked to take friends for rides in his plane to show them where he communed with God.
Several Latter-day Saints church members and affinity fraud experts said the Mormon religion lends itself to affinity fraud in particular because of the way its congregations are organized and the close ties and regular contact among members. Many congregants participate in moral audits, in which members are periodically quizzed about behavior and ethics, adding more trust.
Worshippers in the Church of Latter-day Saints are divided by geographic areas, said Kent Huntsman, an Austin-area church official and spokesman. Members within established boundaries are assigned to congregations, also known as wards. As a result, beyond sharing a common religion and place of worship, members typically also share a neighborhood; families frequently socialize and support one another outside of church.
Barton has been a member of the Barton Creek ward. Each ward is overseen by a lay bishop. Todd McCullough, a local real estate developer and bishop of Barton Creek, declined to comment on Barton in detail but confirmed that "there have been a number of our members who lost money" with Triton.
Because of recent boundary changes within the local church, Barton also has belonged to the Lake Travis ward, according to several members. Garick Power, the bishop of that ward, did not return phone calls to his home.
In addition to attending regular services at chapels, qualified members periodically visit the closest of about 130 Mormon temples worldwide, Huntsman said. The nearest temple to Austin is in San Antonio.
To enter a temple, he added, every two years church members must obtain a seal of approval called a "recommend." "They must meet a standard of worthiness," he said. To qualify, members answer questions from church officials about their commitment to the religion and adherence to its values, such as: Are you honest with your fellow man?
Though considered private, the recommend can add another layer of trust to those who attain it. "The person has already gone to ecclesiastical leaders and sworn to God that he's honest," said Klein.
According to several congregants, Barton had passed his recommend interview.
But a recommend doesn't guarantee business scruples. Last year, Val Southwick pleaded guilty to Utah's largest swindle ever, cheating investors, many of them Mormon, out of $180 million.
Southwick "showed his LDS temple recommend, or mentioned its existence and his office contains LDS 'memorabilia,' all of which appeared designed to breed a sense of trust between Southwick and investors," according to a February 2008 investigation summary from the Utah Division of Securities.
Affinity fraud among Latter-day Saints members has been common enough that the church leadership has issued periodic advisories about it. In early 2008, leaders sent a letter warning worshippers, "We are concerned that there are those who use relationships of trust to promote risky or even fraudulent investment and business schemes."
'I'm still numb'
Straubhaar, 58, and his wife, Sandy, 59, said they now wish they'd been more cautious. The Straubhaars, both professors at the University of Texas, came to know Barton at their shared Barton Creek congregation. "As a group, people tend to be sincere, very trusting," Joe Straubhaar said of his fellow Mormon ward members.
The couple had inherited several hundred thousand dollars from Sandy's mother and were looking for stable investments. At first, they said, Barton recommended a balanced, low-risk portfolio that consisted largely of a fixed annuity and some stocks and bonds, as well as a few riskier real estate projects.
All paid off at first, but as time went on, Barton began stressing more high-risk real estate deals, the Straubhaars said. By the time government regulators shut down the company in December, the couple said, it appeared they had lost two-thirds of their retirement money.
"We probably should have been more suspicious," Joe Straubhaar said.
Today, Gordon also says she is paying the price for placing her trust in Barton. The widow said she remains stunned by her sudden reversal of fortune. "It was my income," she said. "Now, I have to get out and look for a job. I'm still numb.
"I still trust people in the church," she said. But she added, "I won't be just blindly trusting people just because they are members of the church."
There's been so many that at least a half-dozen FR threads on financial fraud schemes occurring horizontally from one Lds member to another have popped up over the past year.
From the article: Today, Gordon also says she is paying the price for placing her trust in Barton. The widow said she remains stunned by her sudden reversal of fortune. "It was my income," she said. "Now, I have to get out and look for a job. I'm still numb."
- Traveler
How many financial frauds were NOT perpetrated by Mormons? I’ve heard the same bigoted remarks about Jews. Or, for that matter, conservatives.
Let’s get off of this track and agree that despicable people come from all creeds and colors.
What religion was Bernie Madoff?
Barney Frank/Mr. Raines/?
How about some of the others in recent pyramid/ponzi schemes?
Why is it relevant here, that there were "LDS ties", other than the LDS “leadership has issued periodic advisories about it...”?
The same thing happens in both religious and secular service organizations, charities, country clubs, and other groups; not just churches.
So again, why the emphasis on LDS, even though the article does speck to other groups? What is the (not so) hidden agenda?
Didn't Jody see something like that through his peeping-tom rock?
My friends Filipino wife left Catholicism and joined an evangelical sect. He is upset since he is Catholic.
She is always falling for affinity scams. A constant steam of small hustles.
I don’t think affinity hustles are restricted to any one denomination or religion.
This is a hit piece on the Mormons. My cousin Dick was the comptroller for Rite Ade, he was very good at what he did and said that people should buy Rite Aid. People bought Rite Aide, it went down the Toilet, who is to blame, Dick who gave an honest opinion, though he was an evil Mormon or the market.
A business associate tried to sell my business partner and I into a pyramid scheme two weeks ago. Of course, he swore it wasn’t a pyramid. But when he drew it on the board, it was a classic pyramid. I was born at night, but I wasn’t born last night. And it was only going to cost me $500 to get started! After five iterations, there would have to be 67,000 people under me to make it, IIRC. LOL. I don’t have that many gullible relatives.
Seriously though, could that stake in Austin find itself in the crosshairs of Texas or Federal securities investigators for putting it's imprimatur on this guy? Does the stake leadership have any direct ties to Barton or his firm (i.e. conflicts of interest)?
Big bump to that! Just another chance to attack Mormons from the usual suspects here at FR.
.... your either an prudjudiced or just an idiot! I personally know and individual who was excommunicated from the LDS church for fraudulent business deals.
After the miriad Mega-Church Ministers who have been caught in sexual or fruadulent situations .... I think you ought to keep your hypocracy to yourself.
http://www.winnipesaukee.com/forums/showthread.php?t=8897
Cat (i.e. Viking Kitties) got his tongue?
Or is Colofornian just suddenly ashamed of posting this blatant hit piece?
If you remember I said "part of the reason". Which implies it is not the only reason.
I’m not quire sure why you think this is an attack on Mormons.
Seems tome to be to be a cautionary tale to not be taken just because someone sits in the pew next to you.
Could happen with any religion.
What religion was Bernie Madoff? … How about some of the others in recent pyramid/ponzi schemes? Why is it relevant here, that there were "LDS ties", other than the LDS “leadership has issued periodic advisories about it...”? The same thing happens in both religious and secular service organizations, charities, country clubs, and other groups; not just churches. So again, why the emphasis on LDS, even though the article does speck to other groups? What is the (not so) hidden agenda? [Applegate Ranch]
I don’t think affinity hustles are restricted to any one denomination or religion. [thecodont]
This is a hit piece on the Mormons. [Little Bill]
Just another chance to attack Mormons… [panaxanax]
Lds are 2% of the U.S. population – and about 2.5%-3% of the religious population. So you’d expect to see Lds responsible for these schemes in about 3% of the church-related schemes, right?
So, y’all, please explain, why in less than 10 months, we’ve seen all these journalists’ Lds-based articles, as noted on these FR threads (this is the seventh article in less than 10 months – many of these involving Ponzi schemes from Sacramento, CA, to Aurora, CO to Texas to Utah)?
Please inform us ALL of you -- if this is such a rampant epidemic in other denominations or religions -- which denominations are you referencing? (Name names)
If you can't, stop the innuendo that this is a "rampant epidemic" problem in Christian denominations vs. an occasional problem in those denominations...and start producing facts like what you see as follows below:
Besides, I think we all, myself included, could be better instructed on how to actually empathize with all the $ victims behind all these articles listed below -- including well-off older widows who suddenly have to hunt for jobs. (I noticed all of you have basically, by having the above as your first post response, wind up either intentionally or inadvertently siding with the fraud perps!!! Where's our hearts for the victims here?)
Man Who Defrauded Fellow Church Goer Pleads Guilty
Source: www.connect2utah.com (KUTV) Jan. 7, 2010
Lindon Man Accused of Trying To Kill Witnesses To Alleged Scam
Source: MidUtahRadio.com, Nov. 19, 2009
Calif. Man Charged with $40 million Ponzi scheme
Source: AP, March 20, 2009
Man Who Defrauded Fellow Church Goer Pleads Guilty
Source: Fox News, April 8, 2009
Merriman's church donations may be tainted [Mormon Ponzi schemer's tithe monies ill-gotten?]
Source: Denver Post, April 24, 2009
LDS Church returned $200K in Southwick Tithing
Source: AP, Sept. 14, 2009
From this article: Affinity fraud among Latter-day Saints members has been common enough that the church leadership has issued periodic advisories about it...interviews...indicate there was a group whose fortunes were even more tied to Triton: members of the Church of Jesus Christ of Latter-day Saints, or Mormons.
Oh, snap. ;-)
I’m not siding with the fraud perps at all. Sorry if you misunderstood my post. I am very sorry that trusting people have been taken in by these monsters.
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