Do religious people make easy targets for scams?

November 22, 2010

(RNS) 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 Wunderkinder Foundation.

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 Commission.

"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, Ammerman said.

"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 faith."

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 Islam-compliant loans.

"Trust, but verify," she said. "If something sound too good to be
true, it probably is."

Comments

Ponzi Schemes

Affinity fraud knows no denominational boundaries. Reed Slakin took $500 million from Scientologists. Without being anti Jewish, four of the five mega Ponzi schemes disclosed in the bast two years have been in that group. (Madoff being the prime example, Scott
Rothstein, Tom Petters and Marc Drier.) Along with Mark Sanford, these Ponzi schemes individually exceeded all Mormon fraud of all time combined. The largest Utah scheme is Val Southwick who took an estimated $170 million.

People just cannot be too cautious regardless of religion.

Nonsense

All financial scams are enabled by either one or both simple things: human greed, and/or self-preservation instinct. Religion, or any other associative factor is used purely for establishing initial bond with a victim.

serves 'em right

I just love it when i hear about how selfish, greedy people who suppossedly have the presence of an all knowing entity living inside them do not have the presence of mind to be aware of how stupid they are. They're just as greedy as the ones who stole from them. I hope this continues to happen; it makes me laugh. I love it when folks go broke in the name of religion.