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By Kent Larsen
SEC Says Scam Artists Target Mormons
SALT LAKE CITY, UTAH -- The head of the Securities and Exchange Commission's
Salt Lake City office says that the Olympic bribery scandal is only the
latest scandal in a state with a history of scandals. And, says Kenneth
Israel, who heads the Salt Lake office, its because the scams target Mormons.
Salt Lake City is by far the smallest US city with a SEC office, mainly
because there has been so much work for SEC investigators to do there. As a
result, the state has developed a reputation for brazen, fraudulent scams
where investors are duped. The scams have even led some in the securities
industry to call Utah "the sewer of the securities industry," according to
the Associated Press. "It's outrageous, but we see a lot of it," says
Israel. "If it seems too good to be true, it probably is, but people keep
investing."
Israel's theory for the amount of fraud in Salt Lake City centers on the
trust that LDS Church members have for each other. The close-knit structure
among church members is what gives con artists the ability to spread their
frauds. "People are very trusting, especially if you're in the same faith,"
says former Sandy, Utah jeweler Chris Thomas. He lost $25,000 in a fraud by
a fellow church member and neighbor. He says these crimnals sometimes find a
haven in church.
The LDS Church has tried to discourage the use of church connections to
perpetrate these frauds. Its policies prohibit using Church facilities and
resources, including local church directories that form the basis of LDS
networking, to promote businesses. The Church also regularly cautions
members to be cautious in investing, even when other church members are
involved.
But the scandals happen, in spite of the warnings, often using networks of
people that have met through the Church, even though they haven't used
church facilities or resources to promote their business.' In other cases,
the Church's policies have been ignored. Complicating the issue is that the
growth of the LDS Church outside of Utah has meant that scams reach outside
of Utah, and even originate elsewhere.
Recently, Ohio Attorney General Betty Montgomery filed a lawsuit against a
buyer's club founded by an LDS man, alleging that the company was just a
ponzi scheme that preyed upon LDS relationships. News articles about the
company showed that it had spread among LDS Church members, even getting
local LDS bishops to refer unemployed members to the company as potential
employees.
The Associated Press lists a number of other Utah-based scams that have also
involved LDS Church members, including the Bonneville Pacific scandal, which
was wrapping up just as the Olympic bribery scandal broke, and the Mark
Hoffman scandal, involving the sale of fraudulent documents, many involving
Mormon history, to collectors.
Source:
Federal regulators call money scams a cottage industry in Utah
MSNBC (AP) 20Nov00 B4
Associated Press
See also:
LDS Man's Buyers Club Collapses After Suit by State of Ohio
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