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Fleecing The Sheep: Avoiding Christian Rip-offs

March 19, 2014501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6), 501(c)(7), article, exempt organizations, nonprofit, tax exemptBy Lisa A. Runquist

by Lisa A. Runquist
WORKS, Vol. I, No. 1, May 1991.

How should I invest my money? Is there some way I can get a good return and still do the Lord’s work?

Many people ask these questions. Some choose to invest with an individual because he is a part of the church, is “a good brother,” knows how to “talk the talk,” works primarily with Christians, teaches at a Christian church or advertise on a Christian radio station.

Many of these same people are now wondering how to survive now that their nest eggs or retirement funds have disappeared,

There are so many fraudulent schemes within the church that an Investor Alert, Preying on the Faithful, was issued by the North American Securities Administrators Association and the Council of Better Business Bureaus. It states:

“More than 15,000 Americans have lost well over $450 million in the past five years to a growing number of investment swindlers and other sharp operators who play on religious beliefs in order to gain the trust, confidence and life savings of the faithful.”

Cases included a former preacher and Sunday school teacher who promised investors a “no-risk,” 36% annual return, diverting millions of investor dollars, a promoter who told investors the firm was using Old Testament prophecy to locate oil and gas in Israel, a treasurer of the largest Baptist church in Alabama who took $18 million by promising a monthly 8-30% return, and “Sonrise Management,” which raised $16 million, “primarily from fundamentalist Christians,” for more than 150 radio station partnerships to “spread the word of the Lord.”

None of these were successful. Some of the promoters have gone to jail. Few, if any, of the investments were returned.

All over the country people have invested their life savings, thinking they were secure, only to find that everything they had saved was gone.

How can you avoid being a victim? Here are several rules:

If it looks too good to be true, it probably is. Many fraudulent investments promise returns they simply can’t deliver.

If there are no audited financial statements, do not invest. An audited financial statement assures that an independent third party has reviewed the organization’s financial status. If there is no audit, you have no way to know whether the numbers are correct. an audit won’t turn up everything, but it will provide a good basis for beginning your review.

If you would not invest in the deal if it were offered by a stranger, do not invest it it is offered by a Christian. I recommend that you look more carefully at a deal offered by a Christian. With a stranger you are suspicious; with a Christian you are more likely to assume the best, even though you have more to lose. A stranger can only take your money; a Christian can take your money, as well as destroy your trust, your faith and your relationship.

If something looks suspicious, do not allow yourself to be persuaded that you simply don’t have enough faith. People who have been swindled by these scams include a U.S. congressman, a sheriff, and many, many pastors.

Do not invest any money you can’t afford to lose. Put money you can’t afford to lose only in secure places like insured bank accounts and regulated money market funds – not in speculative ventures.

If you have questions about a venture, consult with your attorney or call your state securities agency. These investments are almost always subject to federal and state securities and commodities laws. A securities attorney can tell you if the requisite disclosures have been made, what else you need to know and how to check out the promoter. Your state securities agency can tell you if the promoter and investment are properly registered and can take action if the venture is fraudulent.

If you follow these guidelines, you will have begun to be as wise as the serpent who would take what is yours.

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Copyright © 2009 Lisa A. Runquist, Attorney at Law

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Lisa A. Runquist

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