Pearls thrown to swine

More and more Christians have fallen victim to con artists in recent years. These criminals often prey on an individual’s trust, making religious organizations particularly susceptible. After all, churches are to be places of acceptance, compassion, and forgiveness.

One common scheme is called affinity fraud. A con artist joins a close-knit group, such as a church, intentionally builds a common bond or affinity with its members to gain their trust, and then defrauds them of their money. Often, victims are too ashamed to report the fraud.

Affinity fraud is devastating. It’s not just a financial loss. It brings destruction of trust among friends and family and, in the case of religious groups, can cause a loss of faith.

The following real-life story highlights the devastating nature of affinity fraud.

One story

Mr. and Mrs. Anderson are a retired couple in their early 70s. They’re typically very conservative investors.

One evening over coffee, their friends, the McLeans, told the Andersons about a great opportunity to invest in an offshore, tax-sheltered venture that could provide them with a return in excess of 50 percent per year. It was, however, a secret.

Shortly after, the Andersons met a financial planner, Stuart, who made them promise not to tell their banker, lawyer, or accountant about this investment. He told them that this opportunity was usually open only to large international banks, but they could “get in on it.” The McLeans had already earned a return of 25 percent in just two weeks.

The Andersons were impressed and invested the minimum amount. In short order, they received an interest cheque. Convinced, they cashed in some of their conservative investments and invested much more money in this “great” opportunity. A week later, they got another interest cheque.

Time passed, but they didn’t receive any more interest cheques. They called their friends, who also had not received any more cheques. They called Stuart. He told them their cheque was on its way.

Still more time passed. When the Andersons and McLeans tried to call Stuart again, they found his telephone had been disconnected. They called their provincial securities regulator.

Following an investigation, the couples found out that Stuart had taken almost seven million dollars from more than 500 people. None of these people ever received their original investment back, let alone the fantastic returns that were promised.

The Andersons and the McLeans had become victims of a prime bank instrument fraud.

The numbers

According to a report released by Canadian Securities Administrators, there are some startling statistics about financial fraud in our country.

• An estimated 900,000 Canadians have been victims of financial fraud.
• A high percentage of victims report being introduced to a fraud artist through a friend or family member.
• Seniors are more likely than others to report that their most recent exposure to a possible fraudulent investment was recommended by their financial adviser.
• Only 14 percent of fraud attempts have been reported to authorities.

These con artists are real. They often target the most vulnerable – church members, the elderly, new immigrants, and minority groups. They can swindle people out of their entire life savings. Surprisingly, only 47 percent of people surveyed believe that fraud is common.

The solution

The best way to defeat these criminals is to talk about the reality of affinity fraud within our church walls. We can also protect ourselves with proper education. Much of our stewardship teaching focuses on due diligence about economic and business factors. Little attention is given to relationship matters and the risk of being cheated by a “friend.”

In response to this issue, the Canadian conference’s Stewardship Ministries is now partnering with B.C. Securities Commission, the independent provincial government agency responsible for regulating securities trading in B.C. through the administration of the Securities Act, to educate Mennonite Brethren church members about affinity fraud.

These representatives teach people how to identify “red flags” regarding money and investment opportunities. “Red flags” very often include sales pitches stating: Guaranteed high returns – no risk. Limited time offer to make early retirement a reality. Offshore investment – tax-free! Insider tips – exclusive and available to a privileged few.

People can also access resources available through government agencies and other channels for researching and reporting suspected cases of affinity fraud. A number of these resources are multilingual and accessible via internet.

Matthew 7:6 warns, “do not throw your pearls to pigs. If you do, they may trample them under their feet. . . .” We can avoid investing in the wrong places by being wary and speaking up when we suspect affinity fraud.

Allen Thiessen, Lloyd Reimer, and David Leung are B.C regional representatives for Stewardship Ministries. To find out what you can do to protect yourself, please contact a Stewardship Ministries rep or visit the B.C. Securities Commission website.