The SEC recently announced fraud charges, and sought an emergency asset freeze against a pastor who was accused of exploiting church members, retirees, and laid-off autoworkers. Apparently, he mislead these people by purportedly selling them on a successful real estate business.
The pastor cloaked his fraud in faith-based rhetoric, including references to the bible and suggestions that he was praying for investors. As a result, his defrauded investors thought that he was more trustworthy than a banker, investing nearly $7 million in this scheme.
The message here is that fraud lurks everywhere and that affinity schemes are alive and well. Unfortunately, for those defrauded, they had access to public information that may have helped them avoid the fraud.
Neither the pastor nor his investment firm were registered with the SEC. A simple check on the SEC’s investor web side would have revealed no records for the pastor or his firm.
Undoubtedly, he would have still gotten some of those who checked, but look before you leap into an investment. Be wary of those who are focused on a particular group as a source of investing funds; it may be an affinity fraud.