Another Former LDS Stake President Indicted for Affinity Fraud

On Wednesday September 6, 2018 the US Department of Justice announced the indictment of Robert G. Mouritsen of Kaysville, Utah on three counts of wire fraud and three counts of money laundering.

The DOJ alleged that Mouritsen used a “position of prominence” to induce friends and fellow church members to give him money to further a fraud scheme he called “The Project” which targeted his fellow church members and was ongoing at the time the Indictment was filed.  Luckily he only managed to raise $1.5 million before the feds shut him down.

The “position of prominence” the DOJ is referring to is the fact that Mouritsen was a stake president of the Kaysville Utah Crestwood Stake of the Mormon Church from 1989 to 1997.   He also wrote a book called “Mantle: Windy Day in August, at Nauvoo, When the Mantle of the Prophet Joseph Smith Fell on Brigham Young Hardcover” (available on Amazon!).

Kaysville, Utah is predominantly LDS community 20 miles north of Salt Lake City.  He allegedly began the scheme just a few years after he was released as the stake president.

Mouritsen told prospective investors that The Project “involved a series of complicated international transactions” that “involved governments in Asia and Europe and required the help of attorneys and bankers.”  He also purportedly told investors that this investment opportunity had to be kept “strictly confidential” so he could not disclose many of the details.  Right.

And of course he promised that the investment would produce very high returns.  Secrecy, unusually high returns and urgency are all significant red flags that should have caused investors to forego this investment opportunity, but unfortunately some folks fell for it.  If it sounds too good to be true, it probably is.

Predictably, Mouritsen neglected to tell investors that The Project had failed to produce any returns in over a decade and that he used a significant portion of investor money for his own personal use and benefit.

Affinity Fraud in Utah

Affinity fraud is particularly prevalent among members of the LDS Church.  The primary reason for this, in my opinion, is because church members tend to have a high level of trust in fellow church members, and that invites unscrupulous people to take advantage of that trust.

The thought process is that since Brother So-and-so is/was a bishop, stake president, elders quorum president, etc., he was called by revelation and therefore is a worthy priesthood holder in the eyes of God.  Sure, the investment sounds too good to be true, but since he was a great church leader it must be legit!  In Utah affinity fraud schemes are nearly always targeted at people who are in same ward or stake – a place where his current or former church service is well-known.

I have written about affinity fraud schemes targeting members of the Mormon Church for years, including here, here, here, here and here (among others).

This is a big problem in our community and I have repeatedly called on leaders of the LDS Church to be more proactive in warning church members that they need to carefully evaluate investment opportunities on their merits, regardless of who is pitching them.

How To Avoid Affinity Fraud

Investing always involves some degree of risk, but investors can mitigate these risks by carefully investigating investment opportunities. The Securities and Exchange Commission recommends the following steps to avoid getting caught up in an affinity fraud scheme:

  • Check out everything – no matter how trustworthy the person seems who brings the investment opportunity to your attention. Never make an investment based solely on the recommendation of a member of an organization or religious or ethnic group to which you belong. Investigate the investment thoroughly and check the truth of every statement you are told about the investment. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.
  • Do not fall for investments that promise spectacular profits or “guaranteed” returns. If an investment seems too good to be true, then it probably is. Similarly, be extremely leery of any investment that is said to have no risks; very few investments are risk-free. The greater the potential return from an investment, the greater your risk of losing money. Promises of fast and high profits, with little or no risk, are classic warning signs of fraud.
  • Be skeptical of any investment opportunity that is not in writing. Fraudsters often avoid putting things in writing, but legitimate investments are usually in writing. Avoid an investment if you are told they do “not have the time to reduce to writing” the particulars about the investment. You should also be suspicious if you are told to keep the investment opportunity confidential.
  • Don’t be pressured or rushed into buying an investment before you have a chance to think about – or investigate – the “opportunity.” Just because someone you know made money, or claims to have made money, doesn’t mean you will, too. Be especially skeptical of investments that are pitched as “once-in-a-lifetime” opportunities, particularly when the promoter bases the recommendation on “inside” or confidential information.
  • Fraudsters are increasingly using the Internet to target particular groups through e-mail spams. If you receive an unsolicited e-mail from someone you don’t know, containing a “can’t miss” investment, your best move is to pass up the “opportunity” and forward the spam to the SEC at enforcement@sec.gov.

If you are a victim of this scam or know more details about Mr. Mouritsen please feel free to share your story in the comments below.  Anonymous comments are welcomed.

Copyright © 2018 by Mark Pugsley.  All rights reserved.