The editorial board of the Salt Lake Tribune recently wrote an editorial titled “Gambling-averse Utahns take wild investment bets” (reproduced below) which asks why Utahns, who are always talking about the evils of gambling, so often fall prey to the pitches of con-men who promise outrageously high returns with significant risk. Isn’t an investment that promises returns of 600% per year (or more) basically gambling too?
I wish I knew the answer to that question, but I think a hint lies in a comment I recently received on one of my posts about a convicted con-man named Alan Oviatt, who is currently serving time in prison for felony theft. The commenter wrote:
“My family and I have known Alan Oviatt for more than 35 years, and I can assure everyone that he is a great man with a wonderful family, his outstanding life style based on wonderful principles has inspired me to be much better.”
I think, for whatever reason, many here in Utah focus more on the person than the nature of the investment. They think so-and-so is a great person or such a good member of the church, so the investment he is pitching must be great too. If only that were true.
I have previously written about how to spot a scam; these steps should be followed regardless of whether or not the person offering the investment is a “great man with a wonderful family.” Investing in a private deal with no paperwork is extremely risky. In fact, you might be better off driving down to Las Vegas and putting your retirement on the blackjack table — the risks there are much lower.
What do you think makes Utah people take such wild investment risks with their money? Add your thoughts in the comments below.
Tribune Editorial: Gambling-averse Utahns take wild investment bets
Another day, another Utah fraud conviction. Logan businessman John Scott Clark pleaded guilty this week in federal court to defrauding investors of $1.84 million. That’s a lot of money, but not anywhere close to the major fraud cases that have floated through this state.
What makes Clark’s case a little different is that he started the fraud scheme while he was on supervised release for a 2012 guilty plea in a New York federal court to conspiracy to commit bank fraud, money laundering and obstruction of justice.
And that came after Clark had been sued in Salt Lake City by the federal Securities and Exchange Commission for allegedly operating a $47 million Ponzi scheme through his payday loan operations. In that case he was ordered not to violate federal securities laws and he was required to pay more than $5.6 million.
In other words, this guy is not someone to trust with your money, and yet there were 46 people willing to give him the $1.84 million.
At least some of the victims came through church associations, and that has an all too familiar ring. Utah is thought to have the highest rate of affinity fraud, in which scammers use religious and other associations to gain trust from victims.
Aware of the reputation, Utah Attorney General Sean Reyes has championed a state white-collar crime registry, and the registry’s website recently launched with 106 people listed (with photos). That may be helpful, but this case also shows the limitations of such lists. Clark, for all his history, is not among the listed, at least not yet.
The greed of these perpetrators is obvious, but what is less acknowledged is the greed of the victims. Consider what Clark was selling. He promised returns of 15 percent to 15,000 percent on foreign oil contracts by telling investors he and his business partner “were members of a top secret U.S. military and government program and held special security clearances which enabled them to invest in the purchase and sale of Iraqi dinar and oil contracts.”
Who in his right mind would buy that line?
That brings us to another state effort to counter our fraud-capital rep. Utah is one of only a few states to require high school students to take a course in financial literacy. The standards for that class say students are required to “understand that investments put principal at risk.” On the sliding scale of risks vs. rewards, there is a point at which investing is more like gambling, and 15,000 percent returns are definitely past that point.
And that is where gambling-averse Utahns may be easy prey. Along with counseling our children on benefits of wise money management, maybe we should be teaching them how to play poker. Then they won’t be surprised when someone in real life tries to bluff.
Copyright © 2016 by Mark W. Pugsley. All rights reserved.