He has often heard victims say, "'I heard him in church cry when he expressed his beliefs.'"
But they were the tears of a Temple thief.
In an unusually insightful article on affinity fraud, John L. Smith in the Las Vegas Review-Journal entitled, "Thieves in the temple: How 'affinity fraud' hurts LDS church members" details how Church members are taken in by fraudsters. He interviewed several white-collar crime investigators who are Mormons themselves. This collection of quotes illustrates the approach fraudsters take in separating people from their money.

"He was a religious man, so he says, and he really put on the, 'I am just so guided by the spirit and I know I'm here to help you,'
Fraudsters commonly start veiled sales meetings with prayers, sometimes spending as much as 90 percent of a pitch discussing Scripture before turning to the business at hand: separating squares from their savings by promising them, for instance, up to 10 percent monthly returns on their "risk-free" investments. In one case, a law enforcement source reports watching a rain of tears flow from one fraudster's eyes as he described the profits investors might put to good use in their lives and their religion.
Not surprisingly, it is the extensive cohesive network structure of Mormons that aids them.

"Affinity fraud's really not a type of fraud," Utah Division of Securities Director Keith Woodwell says. "It's more a way to market your fraud. … Think of it more in terms of friends and family fraud."Adds Malpede, 

"Once they can get themselves into that [LDS] community, they have kind of a built-in marketing network already. In many communities throughout the country, you can live in a place for five years and know two or three of your neighbors. That's not the case in Utah.
Affinity fraud can be compounded by whether Church leaders are involved or even if they just give their tacit approval by allowing things to occur.

"no matter how outrageous the investment or the claims, if you have somebody that's a church leader that's involved, or just attend a seminar and make comments, they legitimize it."
The articles does point out that anyone of any faith or affiliation can be taken in by affinity fraud approaches but Mormons seem especially vulnerable. Instead of automatically trusting people, we should be cautious.

Anyone who carries his religion in one hand and an investment pitch in the other should generate suspicion, not confidence,
Former Bishop Shawn Merriman was sentenced this week. So was Frank Castaldi. They are linked by their crimes but not their religions. Merriman cheated his Mormon connections, Castaldi his Italian-American ones. Both ran Ponzi Schemes.

Affinity fraud is bad enough in Mormondom that top Church Leaders have taken steps to warn members against falling victim to it.

Suicide is often the concluding chapter to these sad tales.

"We have had a number of people who, once they realize they've lost their entire investment, have committed suicide," Malpede says. "That's not an uncommon event for us. 
"Some individuals commit suicide," he says. "For elderly people, there isn't another lifetime to make the money back. They've lost their dignity."

My Ph.D. dissertation covered the savings and loan disaster of the 1980s-90s amongst other things. Suicide was a common conclusion to many of those sad tales too.

What puzzled me so much was how the perpetrators of so much misery could defend themselves even after their crimes were totally exposed. Dr. W. Steve Albrecht finally gave the answer. People judge themselves by their intentions. We judge them by their actions.

(Dr. Albrecht is in accounting professor who specializes in ethics. This PowerPoint show is a source for this idea but I don't remember the original source.)

Merriman has lost everything now, his wife, children his Church membership, his possessions, his credibility, everything. So have his victims. Merriman has claimed he didn't have bad "intent." His "intent" makes little difference to his victims. His victims' "intent" in investing with him makes little difference now too.

I read multiple accounts of fraudsters in the S&L disaster claiming their intent was good. Nearly all of them protested their innocence and insisted they had done nothing wrong. This perplexed me until I think I finally made the connection. Think of a gambler who has lost everything at the gaming tables. If you pull him away from the table he won't thank you for it. Usually the response is, "If you hadn't stopped me I would have won it all back." They really believe it too.

Sadly, I think we will see more affinity fraud in the future. Human nature just doesn't change that much.

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