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."
Six links looks worse than it is, since 3 of them all refer to the same case.
Another one is allegedly [”Jeff also claims to be married to Erin Mowen - and has 5 children by her. The State of Utah also says he is merried to Elixzabeth Ward.” http://www.whoisjeffmowen.com/] a bigamist...hardly a “good” mainstream LDS member. Oh, and he was already jailed and standing trial on the other charges, operating the intimidation attempt from jail.
As for your stats, if Mormons are 2% of the population, then how does that stack up agains this?
In all, more than 150 Ponzi schemes collapsed in 2009, compared to about 40 in 2008, according to the AP’s examination of criminal cases at all U.S. attorneys’ offices and the FBI, as well as criminal and civil actions taken by state prosecutors and regulators at both the federal and state levels. http://www.journalnet.com/news/national/article_36fcf528-ef05-5163-a379-29fe3a8defac.html
As for the LDS leadership warning members, maybe other groups should follow suit, rather than trying to make it out to be a bad thing?
My first impression of the article was that it was, as you said, a hit piece on the Mormons. But the article didn’t make the connsection that the guy was a con man because he was a Mormon. It seemed to me that it suggested that Barton was a Mormon because he was a con man, and he abused the church’s vetting process.
As I said, this article revolves around TX victims...one of the links, Aurora, CO; the earliest link, Sacramento area; Mowen was from Lindon, UT; Merriman, from Taylorsville, UT. That's five regions right there that the perps were hitting up -- and I wasn't pretending to be comprehensive (as if I know of all the Lds fraud going on out there).
Let me give you info about a story that was splashed across the nation--hitting even the Bloomberg News, which the Salt Lake Trib republished (Sept. 18, 2009)
See Mormon victims are caught up in $50M scam to sell gold bullion...
I mention this case both because one of the perps in this case was actually a Christian pastor from Perris, CA, and because of some of the interesting observations by Utah insiders:
From the Salt Lake Trib, Sept. 18, 2009, republishing the Bloomberg News piece: Ned Hill, a professor of business management and a former dean of the Marriott School of Management at Brigham Young University in Provo, notes that Mormons have a history of being victimized by financial scams. The church teaches its 13.5 million members they can get into heaven by following a prescribed path of good works. "What you have in a Mormon community or any religious community is a community of trust, and it can be very strong," said Hill, who is a Mormon. "If you can break into that trust, then the things that make this so supportive can make people really vulnerable. Mormons can be especially vulnerable because they're committed to doing good." Jones, Jennings and Simburg, none of whom is a Mormon, exploited this vulnerability for at least four years, offering a cocktail of spirituality, exclusivity and the promise of high returns. "The guys who did this were geniuses in a way," said Dana Carney, an assistant professor of management at the Columbia University Graduate School of Business in New York, who has written about investor psychology. "This has the flavor of a cult. They hit all these vulnerabilities. There was religion; we trust like people, especially religiously like people. With the nightly calls, there was an illusion of transparency. They took advantage of the sunk-costs phenomenon: The more people invest in something, the more connected they feel." Taylorsville resident, Danniel J. Merriman was named in a Securities and Exchange Commission complaint as an investor who also solicited investments from others and forwarded the money to the scammers. Merriman also apparently used the last name Meniman. The SEC called Merriman one of the "significant promoters who brought man victims into the fraud.
As for your stats, if Mormons are 2% of the population, then how does that stack up agains this? In all, more than 150 Ponzi schemes collapsed in 2009... [ApplegateRanch]
Wow!!!! You are hilarious!!! So who are you -- the FFA? (Financial Fraud Apologist?)
Of course, for your outright vast statistical distortion attempt, we would first need to buy into your horrendous assumption here that of these 150 Ponzi schemes that collapsed in 2009, all 150 were either generated by religious folks or at least vastly exploited them.
Tell you what: Why don't you do the research on these 150 Ponzi schemes, and then tell me what # were either generated by key religious people of influence -- or vastly exploited them -- and then we'll have what the overall pool # is to give you a nice % answer.
Why do you say that? Lds current teachings from the top on down --while yes, threaten ex-communication for bigamy/polygamy -- actually supposedly simultaneously "practices" what is tantamount to the opposite approach!!!
What do I mean? Well, Lds-wise, if you marry serially to multiple spouses in your lifetime, AND are married to EACH in the temple & sealed to them for eternity, then you become, upon death (Lds say), an eternal bigamist/polygamist!!! So the issue to them is in reality simply a mere turf distinction -- of WHERE it's "OK" to be practiced: Earth, no -- at least not until the Mormon jesus returns (so says Lds apostle Bruce R. McConkie in his book, Mormon Doctrine, who referenced polygamy in his book as a "holy practice");...
...whereasother colonies beyond death? Yes, of course! Both as mentioned above as well as all the 20th and 19th century Lds polygamists!!! (They say "families are forever!") I mean, you can't get any more "mainstream" than Joseph Smith or Brigham Young!!!
If a person is gullible about MORMONism - they just might be gullible about other things.
We cannot afford statues in downtown SLC.
“I have learned for myself that Presbyterianism is not true.”
17 It no sooner appeared than I found myself delivered from the enemy which held me bound. When the light rested upon me I saw two Personages, whose brightness and glory defy all description, standing above me in the air. One of them spake unto me, calling me by name and said, pointing to the other—This is My Beloved Son. Hear Him!
18 My object in going to inquire of the Lord was to know which of all the sects was right, that I might know which to join. No sooner, therefore, did I get possession of myself, so as to be able to speak, than I asked the Personages who stood above me in the light, which of all the sects was right (for at this time it had never entered into my heart that all were wrong)—and which I should join.
19 I was answered that I must join none of them, for they were all wrong; and the Personage who addressed me said that all their creeds were an abomination in his sight; that those professors were all corrupt; that: “they draw near to me with their lips, but their hearts are far from me, they teach for doctrines the commandments of men, having a form of godliness, but they deny the power thereof.”
20 He again forbade me to join with any of them; and many other things did he say unto me, which I cannot write at this time. When I came to myself again, I found myself lying on my back, looking up into heaven. When the light had departed, I had no strength; but soon recovering in some degree, I went home. And as I leaned up to the fireplace, mother inquired what the matter was. I replied, “Never mind, all is well—I am well enough off.” I then said to my mother,
Well, he just came back with his answer. Threw in Bernie Madoff for good measure.
I think we’ve got your drift Colofornian.
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