Mikestrathdee’s Blog

Christians and Investment Fraud
January 21, 2011, 9:50 pm
Filed under: Financial Management, Fraud, Investing

Christians and Investment Fraud – published in Christian Week Ontario July 2009

For the people of this world are more shrewd in dealing with their own kind than are the people of the light.” Luke 16:8

Christians are particularly vulnerable to con artists, says Bruce Karcher, a retired accountant who works

with victims of investment fraud. Sadly, Karcher’s comment is more than just theory, or speculation.

Over the past four years, he has walked with 50 people in Southwestern Ontario who have lost upwards

of $25 million to smooth talking salespeople.  In almost every case, the victims were Christians, taken in

by someone who claimed to be a believer, often touting a scheme that purported to have a “charitable”

intent. This affinity fraud is often a result of “misplaced or blind trust,” Karcher says.

Often victims take the advice of someone in their church who has dealt with the con artist, or see the con artist attending their congregation, and don’t check to ensure that the proposed “investment” is legitimate. The first person to become involved with the scheme in a given congregation often becomes an unaware salesperson when their positive experience is held up to lure others in. A clever con artist ensures that the first person gets what was promised, and has a good experience. They are often repaid with funds put in by subsequent investors.

Faith-based communities are in many cases less suspicious than secular society, and fail to verify whether their new adviser is properly registered and legitimate.  A common thread in these scams is a promise of worthwhile or “charitable” activity, to be funnelled through foundations that later are discovered to be unregistered or illicit. More sophisticated, leveraged schemes hold out the promise of giving donors a receipt or other benefit greater than the “donation” they have made.

Sadly, Canada Revenue Agency is nowhere close to keeping up with this shady business, and “those typically don’t collapse until two, three or four years down the road.”

Churches aren’t speaking out on this problem, often because many aren’t even addressing the basics of financial stewardship, Karcher says.

Things to beware in connection with a proposed investment:

-Guaranteed returns. Legitimate investment professionals cannot make guarantees about how a product will perform. (Many of the con artists don’t hold professional designations, however)

-Promise of no or very low risk

-Pressure tactics, lack of time to make a proper or informed decision

-Complexity, “creating the appearance it’s something a seminar participant can’t understand.”

Many of the people Karcher deals with have been victims of fraud more than once. Victims are often ashamed to go public with their stories, and “the fear of libel or slander causes most people to back off in terms of disclosing anything.  Scammers use stolen money to file frivolous lawsuits that (the victims)

can’t (afford to) defend.”

This problem hasn’t yet got on the radar of many church leaders. When the Ontario Securities Commission held a seminar on the subject last year, only 30 people of 250 invited to a free lunch seminar bothered to show up. “For so many of these churches, they don’t see that it can pertain to them.”


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