PREYING ON THE FAITHFUL: Thoughts about the Salt Lake Tribune article

Tom Harvey put together a well-researched article on investment scams in Utah that appeared in the Salt Lake Tribune this weekend.  I have just been reading all of the comments about it (149 so far) and aside from the usual anti-Mormon drivel that always seems to fill up the comments in any article that even remotely references the Church, it was interesting to read the comments about why the LDS Church is not participating in the “Fraud College” event that will take place in June.  One comment stated, in effect, that if the church put as much money and effort into fighting fraud among members as it does fighting gay marriage, the problem would be solved.

According to the Tribune article the church did issue a written statement insisting that “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.'”  Unfortunately the full statement was not quoted in the article.

According to a 2008 article on the Church’s website called Protecting Family Finances by Avoiding Fraud, Elder M. Russell Ballard covered some of these issues in a 1987 general conference address.  He said, “Do not trust your money to others without a thorough evaluation of any proposed investment. Our people have lost far too much money by trusting their assets to others. In my judgment, we will never have balance in our lives unless our finances are securely under control” (“Keeping Life’s Demands in Balance,” Ensign, May 1987, 13).  In a conference address in 2003 church president Gordon B. Hinckley counseled: “We warn our people against ‘get rich’ schemes and other entanglements which are nearly always designed to trap the gullible” (“The Condition of the Church,” Liahona, May 2003, 4).  More recently, in February of 2008 the First Presidency issued a letter to general and local leaders in the United States and Canada that stated: “First, avoid unnecessary debt, especially consumer debt; second, before investing, seek advice from a qualified and licensed financial advisor; and third, be wise.”  Good advice, it’s just too bad nobody in Utah County was listening.

Has the Church Done Enough?

I have personally spoken to numerous state and federal governmental authorities who are involved in securities fraud cases, and there are two themes that nearly always come out in our discussions.  First is why the vast majority of the cases we see are in Utah County, and second why the LDS Church doesn’t do more to educate its members about this problem.   I know that over the past decade many representatives of the FBI, US Attorneys office and State Division of Securities have requested meetings with senior Church officials to try to raise the awareness and to plead with them to do more to educate their members.  Presumably these meetings resulted the talks and statements cited above, among others.  What it did not do is stem the flow of fraud cases emanating from Utah County.  Those talks just haven’t done much — if anything — to fix the problem.

Those of us who hear stories from victims of fraud as often as we do get very frustrated.  We all get calls several times a week from victims of fraud.  In some cases we can help, but in most cases we cannot.  And the stories are heart-wrenching, often involving the loss of the victim’s entire life savings.   I have had many conversations with elderly people who have been induced to invest in some get rich quick scheme by a nephew or grandson and have lost their savings.  I have talked to several who are about to lose their homes and are contemplating going back to work at a minimum wage job just to pay the bills.

Those are difficult conversations to have.  When the money is gone there is little that can be done, and I think its natural that some of this frustration gets directed at the leadership of the LDS Church for not doing more to stop it.  But is it their fault?  Who should bear responsibility for the culture of corruption that persists in this state?  This issue is not as simple as it sounds.

Although there are some who would disagree, I am not aware of any aspect of “official” LDS church doctrine that has any impact on this whatsoever.  On the contrary, the church has pretty clearly stated that people should avoid investments that sound too good to be true.   Many who I have discussed this with blame “church culture” as opposed to official doctrine.   They claim that there is a culture of seeking for riches in the church.  I have also heard some say that there is an implicit association in the church between economic success and righteousness.   I will leave it to the sociologists to debate that.

In my experience affinity fraud is common among church members for the same reason that it occurs between members of other religious, social and civic organizations — trust.   Investing inherently involves risk, and so it is not unreasonable for people to turn to those they know and trust because of church or other associations for investment advice.  The thought is that I know so-and-so and he/she is a good person, so therefore investing with him/her will take some of the risk out of this investment.  Unfortunately, that simply isn’t true.  In fact, if it causes people to let down their guard and not engage in the amount of due diligence and investigation into the opportunity that they might otherwise do then investing with people you know may in fact be more risky.

I really don’t think there is anything unique about affinity fraud that occurs among LDS church members.  But the one question I still struggle with is why it happens in Utah County so much…

One thought on “PREYING ON THE FAITHFUL: Thoughts about the Salt Lake Tribune article

  1. How’s this for a “trap for the gullible”- for the low fee of 10% you get to live in paradise.

    Why would the Church teach its members to avoid the very practice that gives them all that dough?

    I do not say that to incite anger but what is the difference between being duped intentionally and being duped by someone who has also been duped?

    If only VesCor had been selling tickets to paradise in the afterlife they would have been seen as a legitimate organization.

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