Posted on 05/02/2010 5:39:16 PM PDT by Colofornian
Southwick, Koerber, Hammons and Mowen -- a gallery of Utahns convicted or facing criminal charges for involvement in some of the state's biggest fraud schemes.
But the four represent only a sampling of the problem that has wracked Utah in recent years as the recession has pushed more schemes into the open.
Frustrated by the wave of fraud that by one estimate took $750 million out of Utahns' pocketbooks last year, regulators, law enforcement officials and attorneys are organizing a free "Fraud College" next month in Utah County for the public to call attention to the problem and to try to combat it.
But the one player that all agree has to lend its loud voice to the proceedings if they are to be as effective as possible will be largely silent -- the LDS Church.
This is Utah, after all, where The Church of Jesus Christ of Latter-day Saints claims about 60 percent of residents as members. Beyond the numbers, there is the church's organization into close-knit local wards led by male authority figures where members' social and religious lives revolve around shared beliefs in the sacredness and uniqueness of their religion.
Those characteristics make Mormons vulnerable to what regulators and government investigators label "affinity fraud" in which groups who through shared associations develop bonds of trust that can be easily exploited by con artists. Though other faiths are similarly vulnerable, that is particularly true in the insular Mormon culture of Utah.
"There's this notion that if you pay your tithing and do what you're supposed to do, the windows of heaven will be open to you and God will pour you out a blessing such that there's not room enough to receive it," said Keith Woodwell, a church member and director of the Division of Securities, the state's chief investigator of investment fraud. "So it's very easy for someone who has [fraud] as their motive to use that doctrine and say, 'Look, you're a member in good standing and you pay your tithing and you're entitled to be blessed.' "
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Choosing not to participate » But the church, after initially signaling to organizers that it would be a key player in the fraud conference that is drawing representatives of other faiths, has chosen not to send a high-ranking authority to speak.
A church spokesman declined to say why it was not participating.
Mark F. Zimbelman, a Brigham Young University professor of accounting who teaches a class about how frauds are committed, will be the LDS member on the interfaith panel at the Fraud College. But he said will not be speaking for the church.
The church's decision is a disappointment for organizers, who wanted a strong LDS presence to send a message about safe investments.
"I don't think any church has done enough, including the Mormon Church," said attorney Brent Baker, a former Securities and Exchange Commission lawyer and a specialist in securities fraud cases.
Discouraged by the level of fraud in Utah and the inability of government to deal with the problem, Baker and fellow attorneys, state regulators and others saw the Fraud College set for June 30 at Utah Valley University in Orem as a way educate Utahns and give them the tools to evaluate pitches and make decisions about whether to invest.
The sessions will include an interfaith panel in which representatives of several faiths are scheduled to participate. But organizers saw the involvement of the LDS Church as crucial, given the level of fraud perpetrated in its ranks and what many perceive as its muted response to the problem.
"I think more needs to be done" by the church, said Francine Giani, a church member and executive director of the state Department of Commerce. "A couple of years ago we saw a statement that was read over the pulpit that I was happy about, but we should see more and we should see it often."
In a written statement, LDS Church spokesman Scott Trotter said church leaders have been warning members for years about the dangers of fraud and get-rich-quick schemes. "These messages have been delivered over the pulpit in General Conference, in official letters from church leadership, and in articles found in official church publications," he said.
Even without an official LDS presence, Fraud College organizers think they will still be able to put on a credible event. The one-day session will feature panelists speaking on various aspects of investing and on investment fraud. Gov. Gary Herbert will be the keynote speaker. Spokeswoman Angie Welling said the governor agreed to participate because he's concerned about the issue.
"Too often Utahns are very quick to simply trust those people in their inner circles, whether it's through church affiliation or any other social or recreational group," said Welling, adding that the governor will talk about the importance of research before investing.
Barbara Bowden knows the pitch all too well. She and members of her family invested about $1 million with a former LDS bishop, mostly because of his standing in the church.
"Bill Hammons reached a great deal of people in the church, and I know he did perpetuate the fact that he was a bishop or had been a bishop and that was first and foremost your reason for trusting him,"said Bowden.
Hammons of St. George is facing trial this year on 10 felony fraud-related charges for allegedly helping bilk dozens of people out of tens of millions of dollars. Hammons, who denies he knowingly participated in a crime, was the largest fundraiser for VesCor Capital, the entity associated with what appears to be the biggest financial fraud case in Utah history.
VesCor owner Val E. Southwick, who is serving a lengthy prison sentence for his role, displayed LDS symbols in his Ogden office, and was known to sometimes push his Mormon temple recommend across his desk at potential investors. Southwick has been excommunicated, the church confirmed on Friday.
State regulator Woodwell would like to see the church treat fraud as a violation of as sacred relationship.
"I'd love to hear a very clear statement that this is a relationship of scared trust that you have with your ward members, stake members," he said. "And to abuse this relationship of trust, to take advantage of someone financially, is not just a crime but that it is really a reprehensible and an egregious abuse of that relationship. And it should be treated in the same way the abuse of other sacred relationships are treated. It's just like spousal abuse or child abuse."
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Worst in the country » Fraud is a long-standing problem in the state, stretching back decades as it ebbs and flows, coming back each time with a vengeance, said James Malpede, who Leads the FBI's white-collar crime unit in the state. Utah has lost its ranking as the top state per capita in fraud but it remains a huge problem.
"I'd say per capita it is one of the worst in the country," said Malpede.
How bad? The agency is mostly limiting itself to investigating cases in Utah involving $20 million or more.
"Most of what we're working on is $25 million and up, and a lot of what we're working on is $100 to $150 million and more," said Malpede.
Attorney Baker said he came up with an estimate of the amount of money Utahns lost to big fraud schemes in 2009 based on cases in which charges have been filed and those he knows of where no actions have yet been brought.
"I did a rough calculation of Ponzi schemes I saw over the last year that came through Utah and I would say it was at least $750 million."
Mike Hines, chief of enforcement at the Division of Securities and a 20-year veteran of fraud investigations in Utah, said state and federal officials are limited in what they can do in educating people about how to avoid affinity fraud.
"As I step back as a regulator I look at it this way. If the trust within the affinity causes the harm, the affinity has some responsibility in helping us solve the problem," he said. "As regulators, we can't do it. We can't catch their attention."
The Fraud College is intentionally being staged in Utah County, which in the past decade or so has become a center for fraud in the state.
"There's a much higher percentage of cases in Utah County or that touch Utah County," said Malpede of the FBI, who was assigned to Provo for a time.
Rick Koerber, who has pleaded not guilty to 20 fraud-related charges in federal court, operated out of Utah County with an real estate investment operation the government says raised at least $100 million. Jeffrey Mowen also was a Utah County resident. He is in jail waiting trial on charges of fraudulently taking about $10 million of investor funds.
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Focus on Utah County » Officials say there are several reasons for Utah County's heightened profile. One is the growth of wealth over the past 20 years as the economy prospered before the recession and the corresponding rise in home prices. This left many would-be investors with the belief they had available funds that could return big profits.
Attorney Mark Pugsley, who handles securities cases and recently served on the advisory board for the Division of Securities, told about one man who was soliciting investments for Mowen in Utah County that is 77 percent LDS.
"They just used the ward list and went straight down and made phone calls to everybody. Next to each name where they successfully raised money they wrote a dollar figure in the margin," said Pugsley, who also blogs about fraud in Utah at utahsecuritiesfraud.com.
Two fraud-related phenomenon particular to Utah and more so to Utah County are the recruitment of returned missionaries into what turn out to be illegal activities and the creation of investment programs based on multilevel marketing models.
Returned missionaries often come back with enhanced communications skills and thick skins but in recent years have been met with fewer employment options because of the recession, Baker said. Other young people also are caught up in scams when they are recruited to raise money for businesses, he said.
"You have this 18- to 25-year-old segment that frankly is being recruited as lieutenants and ultimately perpetrators or perpetuators of the fraud," he said.
He would like to see the church debrief missionaries about the dangers of being caught up in a fraudulent activities as they seek employment after their church service.
Regulators say another type of fraud particular to Utah County involves multilevel marketing in which participants recruit others into an investment, who then recruit still others, with each level receiving a return from the investment of those recruited after them.
Plenty of companies use that marketing plan legitimately, but recruitment of people into some types of "business opportunities" within the multilevel marketing business model often crosses legal lines, and participants become victims and participants in the crime at the same time.
"In the securities industry you rarely hear of multilevel marketing of fraud programs," said state regulator Hines. "But [in Utah] we hear of them with regularity."
All of this fraud is taking a toll not just on individual Utahns but on the state's economy and its future. Millions of dollars have been drained that could have gone to legitimate businesses or even into relatively safe investments.
"All of those hundreds and hundreds of millions of dollars leak out of the legitimate investment system and just disappear," said attorney Baker. "That can't go to fund the company that has the next cure for cancer or the new clean energy company, nor can it go into safer market-based products like mutual funds."
Oh, yeah!
That's worked out well!
I'm still waiting for some MORMON to 'teach' me just what Joseph Smith alledgedly learned to be UN TRUE about PRESBYTERIANism of hbis day.
I think you were SUPPOSED to get a DIFFERENT reaction!
WHAT???
Are you ADMITing that many MORMONs do NOT 'follow the Prophet'???
SCANDOLOUS!
In conclusion let us summarize this grand key, these “Fourteen Fundamentals in Following the Prophet”, for our salvation depends on them.
1. The prophet is the only man who speaks for the Lord in everything.
2. The living prophet is more vital to us than the standard works.
3. The living prophet is more important to us than a dead prophet.
4. The prophet will never lead the church astray.
5. The prophet is not required to have any particular earthly training or credentials to speak on any subject or act on any matter at any time.
6. The prophet does not have to say “Thus Saith the Lord,” to give us scripture.
7. The prophet tells us what we need to know, not always what we want to know.
8. The prophet is not limited by men’s reasoning.
9. The prophet can receive revelation on any matter, temporal or spiritual.
10. The prophet may advise on civic matters.
11. The two groups who have the greatest difficulty in following the prophet are the proud who are learned and the proud who are rich.
12. The prophet will not necessarily be popular with the world or the worldly.
13. The prophet and his counselors make up the First Presidency—the highest quorum in the Church.
14. The prophet and the presidency—the living prophet and the First Presidency—follow them and be blessed—reject them and suffer.
I testify that these fourteen fundamentals in following the living prophet are true. If we want to know how well we stand with the Lord then let us ask ourselves how well we stand with His mortal captain—how close do our lives harmonize with the Lord’s anointed—the living Prophet—President of the Church, and with the Quorum of the First Presidency.
Ezra Taft Benson
(Address given Tuesday, February 26, 1980 at Brigham Young University)
Sounds to ME that the "pray to GOD about it's TRUTHFULLNESS" thingy only applies to the BoM!!
Why would GOD let His faithful followers be DUPED that way???
"Lay up your treasures in Heaven; where neither..."
Malachi 3:10 “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.”
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Into the storehouse...
Not into the mormon corporaqtion bank...
Mormons write their ttithe checks to “The Corporation of the president of etc” Does that sound like a “church” to you ???
Storehouse as in feeding the hungry and poor and needy with ALL the money...
However the mormons only spend about 1% of the MILLIONS taken in every day and only on their own tithing mormo n members, and instead spend $4 BILLION building a mall and multi millions more on apartment buildings, restorts in Hawaii and 100s of idiot “temples”, and buying banks, insurance companies and real estate
Members have to pay 10% of their gross income to go to the “temple”...
Plus the top CEOs of the mormon corporation live like kings..
How much does your church charge you to go to the services ???
How many poor financial judgments would have been avoided had we listened to the years of advice given through our prophets about avoiding risky speculation and following a careful budget to avoid consumer debt?
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Perhaps the mormons lost their money because they had “listened to the years of advice given through our prophets”
Lots of them lost their life savings because they listened to Joey Smith and invested in his bank scam and home printed $3 bills...
BTW Why does the Mormon Church still teach that Joseph Smith was a true prophet of God after he made a false prophecy about a temple being built in Missouri in his generation (Doctrine and Covenants 84:1-5)?
These blessing come in various forms not always monetary.
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Probably the croofed money grabbing mormon god claims that...
But the God of the Christian Bible says and does differently...
He always gives an honest return for an investment...
Ya not too prosperous are ya Resty ???
“various forms “
Hows yer health, Resty ???
These blessing come in various forms not always monetary.
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Then how dare the mormon god de3mand money for his sacrifice ???
Just give a button or an old holey sock...
If the mormon god doesnt give back money just pay him in what ever commodity he does give...
Now think...
What was it that the mormon god gave you lasdt time ???
Fleas ??? Hives ??? A bad cold ??? A run in your hise ???
A flat tire ??? Burnt toast ???
See how easy it is ???
Then there's the "other crowd" who founded Santa Claus IN, Christmas Valley, OR, Christmas, FL, and so on. They take a different position on the matter and might even be said to "worship" Santa Claus (Little Red Man), Reindeer (Reindeer Man), and Herb Woman (a whole lotta' other stuff including three household goddesses ~ e.g. Saravasti).
What we call "faith healing" cuts through the different beliefs about Santa Claus so you find that happening all over the place ~ which is why they end up with a very high infant mortality rate.
Enough state prosecutors have been successful at busting these guys for not taking their kids to the doctors as needed that they have been changing their church's names!
It's the peyote eating bunch (a subset of the COTFB) who are most disturbing. They managed to affiliate themselves with the American Indian Religion (as they call it) to gain access to peyote. FLDS also built their Texas temple right smack dab in the world's most prolific peyote fields ~ not that they ever use the stuff, but check the teeth. Peyote use, like crystal meth, Cipro and some peridontal gum diseases will loosen your teeth!
The purpose was to insure that he could "make the tithe" in case he were ever unemployed.
At the same time my friend already knew enough about tithing to view that, in and of itself, as a sort of church based social insurance.
He didn't say, but I think he backed off that insurance policy, but as a "newbie" he was literally a sheep to be sheered by someone ~ so new recruits to the Mormons, or any other apostolic organization really ought to be very careful.
This stuff is not limited to the Mormons!
Resty, “blessings” doesn’t mean cash. God is nether Santa Claus or an ATM machine.
Developing Good Judgment and Not Judging Others
(Sounds to be like if these Mormon victims of these many Mormon financial scams had actually “judged others” —
“judging” as in properly discerning them — they could have saved themselves $ & heartache)
***
You can lead a horse to water, but you can’t make him drink!
People, like horses, will only do what they have a mind to do.
____
N Nephi 15
23 And they said unto me: What meaneth the rod of iron which our father saw, that led to the tree?
24 And I said unto them that it was the word of God; and whoso would hearken unto the word of God, and would hold fast unto it, they would never perish; neither could the temptations and the fiery darts of the adversary overpower them unto blindness, to lead them away to destruction.
They avoid revealing truths such as you can become a god of your own planet?
http://www.youtube.com/watch?v=cYv6H7ek14Y
There are enough people who will believe anything that some can make a living on just that characteristic.
I think the old adage it true however, “you can’t cheat an honest man”.
One variety of con is called the "pigeon drop" and that plays on human greed. However, the "pigeon drop" is not the ONLY con.
You can make as much money playing on a man's concern for the safety and welfare of his children and family. That is, you can rip him off by tricking into believing he is being altruistic.
That's what the phony insurance business is about.
The fellow telling folks "you can make the tithe even if unemployed" was preying on "newbies" ~ folks who'd only had enough information about tithing standards and customs to be dangerous to themselves.
Watch the video in post 55, it really explains why LDS are so easily taken in by pyramid scams.
An Amway church????? Now I have heard of everything!
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