Preying On Faith/ A Must Read.
Abraham Kennard was a pastor who crisscrossed the country on private jets and and limos. He showered himself with cruises and cars. He traveled the nation spreading the word of the Lord and pushing a program that took a little faith but pledged to give a lot of money. His promises were many and great. Parishioners believed. He's a man of faith. But this pastor preys on his flock. Trusting Christians from small, struggling churches hand over their savings to better their communities. But instead, they are swindled out of $10 million. An FBI raid uncovers the truth. Kennard's pledge to help was a massive scheme to defraud 1600 churches nationwide. His crimes and conviction are profiled on American Greed.
Pastor Abraham Kennard preaches the word of the Lord and scams small African-American churches out of more than $9 million. Kennard convinces them to contribute to his fraudulent investment company, Network International Investment Corporation.
Pastor Donald Downing wants to build a new church for his Maryland ministry. He invests $9,000 in Network International Investment Corporation, and Kennard promises him that in 90 days, he will get a return of $1.5 million. Excited about this investment, Downing tells all of his colleagues. In the end, Downing lost this money and his friends.
Pastor William Toney scrapes together $3,000 and is promised he will receive $500,000. Kennard encourages him to recruit other churches to join and in turn he will receive $500 for each church that joins.
Although Abraham Kennard appears to present hundreds of thousands of dollars to his investors, the oversized checks are just for show, and Kennard pays out just a fraction of what he promised. In June 2002, Kennard announces to all of the church investors that they will not receive their returns.
In July of 2002, FBI Agent Tim Coakley receives calls from numerous churches about the Network International Investment Corporation. Coakley begins investigating Abraham Kennard and finds there is no proof of wealthy investors backing the program.
Prosecutor David McClernan says Kennard used proceeds from his scheme to fund a lavish lifestyle including traveling in limousines, 23 vehicles and property in Georgia.
On February 24, 2004, the FBI SWAT team and the Tupelo Police Department arrest Abraham Kennard in Okolona, Mississippi. The following year, Kennard is convicted of 116 counts including mail fraud, money laundering and income tax invasion. Kennard is currently serving 17 years in federal prison and has been ordered to pay nearly $8 million in restitution.
Do you think you could fall for this scam?
Listen to Kennard pitch his program, this aired on American Greed on CNBC.
http://www.cnbc.com/id/15840232?video=642274842&play=1
Religious affinity fraud also continues to be a widespread problem. And swindlers who prey upon people of their own religion come in all denominations. Some elderly investors were duped into buying bogus promissory notes by three men, two insurance agents and an investment adviser, who often got on their knees and prayed with their victims to gain their trust.
"I've known him all my life." "I trusted her as if she were a member of my family." "He was such a nice young man." "We had the same values and beliefs."
The last of these statements was made by a complainant who had lost $100,000 by investing with a member of her church group who was going to produce a film supporting the political positions and beliefs of the group. The film was not made and the scammer disappeared.
The Internet missionary church Greater Ministries International Church GMI took in over $550 million dollars from over 27,000 believers and although it promised great returns from heaven over one half of the money has not been accounted for.
Many of the investors were fundamentalist Christians, including Mennonites in rural Pennsylvania, Ohio and Virginia. They were told their money would double in installment payments made over 17 months or less. Investors were quoted Luke 6:38: "Give, and it shall be given unto you."
With such high yield returns, promoters will suggest that much of the bounty can be used by the investor to benefit the church or organization. Prime bank schemes will often attach a charitable aspect to them so as to offset any guilt resulting from suppressed greed.
Greater Ministries officials told investors that state and federal securities laws did not apply to them because the investments were "gifts" to the Church and the payments from the church to investors, called "blessings," were not subject to taxes.
You should ignore claims that religiously-based investments are unregulated because virtually all investment opportunities, including church bonds, come under the scope of federal and state securities or commodities laws.
Scams using religion as a lure to get people to invest money have taken in about $1.8 billion over the last three years, according to the Washington-based North American Securities Administrators Association.
------------------------------
One affinity fraud which targeted members of Christian churches in rural Kansas, Nebraska and Missouri towns raised $7.4 million in funds from at least 125 investors, supposedly to trade in high-yield foreign bank instruments in a secret "prime bank" trading market. The promoters said investors would receive a monthly return of 20% for 12 to 18 months, and that the return of principal was fully guaranteed.
To establish credibility within the church-minded communities, they gave the investments various names with Biblical connotations, such as Jubilee Trust Fund, Oracle Trust Fund and Elkosh Trust Fund. They also proclaimed their status as "born-again Christians" and suggested that the investment would fulfill a religious "duty" or "prophecy." They even informally enlisted members of various church communities to praise and promote the investment funds.
Consequently, the churchgoers, most of whom were unsophisticated investors, invested in the trading programs based on trust and faith, rather than adequate information. The prime bank trading program did not actually exist and all funds have been transferred to several offshore entities. By making principal and interest payments to early investors, with funds raised from later investors, they gave the false illusion that the investment was successful.
When confronted by authorities they attempted to persuade investors not to cooperate by referring to previously signed confidentiality agreements and by falsely telling them that cooperation with the government would forfeit any return on their investment.
-------------------------
A Baptist minister from Texas is accused by the SEC of robbing $3.5 million from more than 150 investors in a religious affinity fraud scam in which he exclusively targeted African-American Baptists and promised them returns of between 7 and 30 percent.
Ronald Randolph is accused of selling investment contracts for his fake plastics company, International Polymers Works which he claimed was profitable and had several contracts with major companies, including Exxon Mobil Corp., DuPont and Dow Chemical. He also said the investments were insured by Lloyds of London.
There were in fact no contracts and no guarantees. To keep the ponzi scheme alive from 1997 through 2000 he used the money of new investors to pay back prior investors.
--------------------------------
Marcus D. Dukes, 33, and Teresa Hodge, 39, owners of Financial Warfare Club Inc. are accused of convincing black parishioners in 18 states to buy stock in nonpublic companies and to pay for investor education courses.
The SEC said the pair used the money for other purposes and that none of the 1000 investors have made a return on their investments, which exceeded $1 million..
Going to churches from Maryland to Alabama they held presentations full of prayers and quotes from the Bible, selling their ideas by claiming blacks had been left out of the lucrative market for initial public offerings of stocks.
They then offered parishioners unregistered securities, claiming they were investments that would help black-owned companies soon to go public through different entities, including Financial Warfare Inc., the Financial Warfare Club and Covenant EcoNet Inc.
The pair offered three types of membership: "Founders" paid $2,500 and $50 a year for 2,000 shares of stock in one of three companies that were purportedly poised to launch IPOs; "warriors" paid $1,000 and $50 a year for 500 shares of stock in the three companies; "believers" paid $500 with an annual fee of $50.
Financial Warfare Club's toll-free phone number greeted callers with: "We're excited that you are joining the war against financial apartheid and plan to ensure that we have the same economic and financial freedoms as every other American."
The money collected was spent instead on other things, including $300,000 on salaries for Dukes and Hodge, $600,000 in transfers between the defendants, $42,000 in payments to hotels and more than $92,000 in cash withdrawals.
Dukes, who was a stockbroker in the early 1990s, had been censured and fined $25,000 by the National Association of Securities Dealers, while Hodge had petitioned for bankruptcy relief four times between 1996 and 1999.
In Alabama, nine people have been charged with cheating church members at the Daystar Assembly of God church out of more than $3 million by telling them the money would be used to buy retirement properties in Florida, the income of which would be used to pay off the mortgage of the Prattville church and build a religious theme park.
The money went instead to pay off investors in a previous scam and to purchase equipment for unrelated businesses.
Such appeals to race, religion or another commonality in selling fraudulent investments are referred to as affinity fraud. Such solicitations often try to equate faith in God with faith in the financial scheme.
-----------------------
Your church can avoid being caught up in affinity fraud by implementing these practical steps:
1. Be cautious if the promoter of an investment opportunity tries to capitalize on connections or leadership within your church or denomination. A common affinity fraud tactic is to lull the church into a misplaced trust by first selling to a few prominent members. Then, using their names, the con artist pitches the scam to the church itself.
2. Be suspicious of returns that sound too good to be true. Early and high returns on investments may be indicative of a "Ponzi" scheme, which involves the use of later investors' money to pay earlier investors. These early investors often become unsuspecting--but enthusiastic--promoters of the scheme.
3. Adopt a church investment policy. Include in the policy specific investment objectives, such as safety and liquidity, and the criteria to be used in evaluating potential investments. The policy should identify the level of investment risk your church is willing to take. It may identify particular types of investments as acceptable and specifically exclude others.
4. Always get an offer in writing. A legitimate promoter is always willing to provide detailed written materials that include the nature of the investment, the risks involved, financial statements and the procedures for getting your money out.
5. Make sure you understand the investment. You should be able to explain to anyone in your congregation how it works.
6. Don't rush into making an investment decision. If the promoter is requiring you to make a hasty decision, it is likely that the investment is a scam.
7. Check out the promoter and the investment through your state or provincial securities regulation agency. You can find their address and phone number in the government section of your phone book or on the Web page of the North American Securities Administrators Association (www.nasaa.org). Your local Better Business Bureau may also have records of complaints about the promoter.
8. Think with your head and your heart. Promoters of religious affinity frauds frequently cloak the investments with the mantle of "good stewardship." Make the effort to verify any claims made by the promoters regarding their giving.
9. Ask for professional advice from a neutral expert. An accountant, attorney or financial planner can help you evaluate the investment. Be wary of any promoter who discourages you from doing this.
10. If you have been the victim of an affinity fraud, don't give a break to a swindler who hides behind religion. Con artists recognize that the close-knit nature of churches makes it less likely that a scam will be detected, and that victims will be more likely to forgive one of their own. Don't allow others to be victimized by letting an investment con artist off the hook.
By exercising caution in all of your investments, you practice good stewardship and protect your church.
----------------------------
Yours truly,
Anthony Smith
Pastor Abraham Kennard preaches the word of the Lord and scams small African-American churches out of more than $9 million. Kennard convinces them to contribute to his fraudulent investment company, Network International Investment Corporation.
Pastor Donald Downing wants to build a new church for his Maryland ministry. He invests $9,000 in Network International Investment Corporation, and Kennard promises him that in 90 days, he will get a return of $1.5 million. Excited about this investment, Downing tells all of his colleagues. In the end, Downing lost this money and his friends.
Pastor William Toney scrapes together $3,000 and is promised he will receive $500,000. Kennard encourages him to recruit other churches to join and in turn he will receive $500 for each church that joins.
Although Abraham Kennard appears to present hundreds of thousands of dollars to his investors, the oversized checks are just for show, and Kennard pays out just a fraction of what he promised. In June 2002, Kennard announces to all of the church investors that they will not receive their returns.
In July of 2002, FBI Agent Tim Coakley receives calls from numerous churches about the Network International Investment Corporation. Coakley begins investigating Abraham Kennard and finds there is no proof of wealthy investors backing the program.
Prosecutor David McClernan says Kennard used proceeds from his scheme to fund a lavish lifestyle including traveling in limousines, 23 vehicles and property in Georgia.
On February 24, 2004, the FBI SWAT team and the Tupelo Police Department arrest Abraham Kennard in Okolona, Mississippi. The following year, Kennard is convicted of 116 counts including mail fraud, money laundering and income tax invasion. Kennard is currently serving 17 years in federal prison and has been ordered to pay nearly $8 million in restitution.
Do you think you could fall for this scam?
Listen to Kennard pitch his program, this aired on American Greed on CNBC.
http://www.cnbc.com/id/15840232?video=642274842&play=1
Religious affinity fraud also continues to be a widespread problem. And swindlers who prey upon people of their own religion come in all denominations. Some elderly investors were duped into buying bogus promissory notes by three men, two insurance agents and an investment adviser, who often got on their knees and prayed with their victims to gain their trust.
"I've known him all my life." "I trusted her as if she were a member of my family." "He was such a nice young man." "We had the same values and beliefs."
The last of these statements was made by a complainant who had lost $100,000 by investing with a member of her church group who was going to produce a film supporting the political positions and beliefs of the group. The film was not made and the scammer disappeared.
The Internet missionary church Greater Ministries International Church GMI took in over $550 million dollars from over 27,000 believers and although it promised great returns from heaven over one half of the money has not been accounted for.
Many of the investors were fundamentalist Christians, including Mennonites in rural Pennsylvania, Ohio and Virginia. They were told their money would double in installment payments made over 17 months or less. Investors were quoted Luke 6:38: "Give, and it shall be given unto you."
With such high yield returns, promoters will suggest that much of the bounty can be used by the investor to benefit the church or organization. Prime bank schemes will often attach a charitable aspect to them so as to offset any guilt resulting from suppressed greed.
Greater Ministries officials told investors that state and federal securities laws did not apply to them because the investments were "gifts" to the Church and the payments from the church to investors, called "blessings," were not subject to taxes.
You should ignore claims that religiously-based investments are unregulated because virtually all investment opportunities, including church bonds, come under the scope of federal and state securities or commodities laws.
Scams using religion as a lure to get people to invest money have taken in about $1.8 billion over the last three years, according to the Washington-based North American Securities Administrators Association.
------------------------------
One affinity fraud which targeted members of Christian churches in rural Kansas, Nebraska and Missouri towns raised $7.4 million in funds from at least 125 investors, supposedly to trade in high-yield foreign bank instruments in a secret "prime bank" trading market. The promoters said investors would receive a monthly return of 20% for 12 to 18 months, and that the return of principal was fully guaranteed.
To establish credibility within the church-minded communities, they gave the investments various names with Biblical connotations, such as Jubilee Trust Fund, Oracle Trust Fund and Elkosh Trust Fund. They also proclaimed their status as "born-again Christians" and suggested that the investment would fulfill a religious "duty" or "prophecy." They even informally enlisted members of various church communities to praise and promote the investment funds.
Consequently, the churchgoers, most of whom were unsophisticated investors, invested in the trading programs based on trust and faith, rather than adequate information. The prime bank trading program did not actually exist and all funds have been transferred to several offshore entities. By making principal and interest payments to early investors, with funds raised from later investors, they gave the false illusion that the investment was successful.
When confronted by authorities they attempted to persuade investors not to cooperate by referring to previously signed confidentiality agreements and by falsely telling them that cooperation with the government would forfeit any return on their investment.
-------------------------
A Baptist minister from Texas is accused by the SEC of robbing $3.5 million from more than 150 investors in a religious affinity fraud scam in which he exclusively targeted African-American Baptists and promised them returns of between 7 and 30 percent.
Ronald Randolph is accused of selling investment contracts for his fake plastics company, International Polymers Works which he claimed was profitable and had several contracts with major companies, including Exxon Mobil Corp., DuPont and Dow Chemical. He also said the investments were insured by Lloyds of London.
There were in fact no contracts and no guarantees. To keep the ponzi scheme alive from 1997 through 2000 he used the money of new investors to pay back prior investors.
--------------------------------
Marcus D. Dukes, 33, and Teresa Hodge, 39, owners of Financial Warfare Club Inc. are accused of convincing black parishioners in 18 states to buy stock in nonpublic companies and to pay for investor education courses.
The SEC said the pair used the money for other purposes and that none of the 1000 investors have made a return on their investments, which exceeded $1 million..
Going to churches from Maryland to Alabama they held presentations full of prayers and quotes from the Bible, selling their ideas by claiming blacks had been left out of the lucrative market for initial public offerings of stocks.
They then offered parishioners unregistered securities, claiming they were investments that would help black-owned companies soon to go public through different entities, including Financial Warfare Inc., the Financial Warfare Club and Covenant EcoNet Inc.
The pair offered three types of membership: "Founders" paid $2,500 and $50 a year for 2,000 shares of stock in one of three companies that were purportedly poised to launch IPOs; "warriors" paid $1,000 and $50 a year for 500 shares of stock in the three companies; "believers" paid $500 with an annual fee of $50.
Financial Warfare Club's toll-free phone number greeted callers with: "We're excited that you are joining the war against financial apartheid and plan to ensure that we have the same economic and financial freedoms as every other American."
The money collected was spent instead on other things, including $300,000 on salaries for Dukes and Hodge, $600,000 in transfers between the defendants, $42,000 in payments to hotels and more than $92,000 in cash withdrawals.
Dukes, who was a stockbroker in the early 1990s, had been censured and fined $25,000 by the National Association of Securities Dealers, while Hodge had petitioned for bankruptcy relief four times between 1996 and 1999.
In Alabama, nine people have been charged with cheating church members at the Daystar Assembly of God church out of more than $3 million by telling them the money would be used to buy retirement properties in Florida, the income of which would be used to pay off the mortgage of the Prattville church and build a religious theme park.
The money went instead to pay off investors in a previous scam and to purchase equipment for unrelated businesses.
Such appeals to race, religion or another commonality in selling fraudulent investments are referred to as affinity fraud. Such solicitations often try to equate faith in God with faith in the financial scheme.
-----------------------
Your church can avoid being caught up in affinity fraud by implementing these practical steps:
1. Be cautious if the promoter of an investment opportunity tries to capitalize on connections or leadership within your church or denomination. A common affinity fraud tactic is to lull the church into a misplaced trust by first selling to a few prominent members. Then, using their names, the con artist pitches the scam to the church itself.
2. Be suspicious of returns that sound too good to be true. Early and high returns on investments may be indicative of a "Ponzi" scheme, which involves the use of later investors' money to pay earlier investors. These early investors often become unsuspecting--but enthusiastic--promoters of the scheme.
3. Adopt a church investment policy. Include in the policy specific investment objectives, such as safety and liquidity, and the criteria to be used in evaluating potential investments. The policy should identify the level of investment risk your church is willing to take. It may identify particular types of investments as acceptable and specifically exclude others.
4. Always get an offer in writing. A legitimate promoter is always willing to provide detailed written materials that include the nature of the investment, the risks involved, financial statements and the procedures for getting your money out.
5. Make sure you understand the investment. You should be able to explain to anyone in your congregation how it works.
6. Don't rush into making an investment decision. If the promoter is requiring you to make a hasty decision, it is likely that the investment is a scam.
7. Check out the promoter and the investment through your state or provincial securities regulation agency. You can find their address and phone number in the government section of your phone book or on the Web page of the North American Securities Administrators Association (www.nasaa.org). Your local Better Business Bureau may also have records of complaints about the promoter.
8. Think with your head and your heart. Promoters of religious affinity frauds frequently cloak the investments with the mantle of "good stewardship." Make the effort to verify any claims made by the promoters regarding their giving.
9. Ask for professional advice from a neutral expert. An accountant, attorney or financial planner can help you evaluate the investment. Be wary of any promoter who discourages you from doing this.
10. If you have been the victim of an affinity fraud, don't give a break to a swindler who hides behind religion. Con artists recognize that the close-knit nature of churches makes it less likely that a scam will be detected, and that victims will be more likely to forgive one of their own. Don't allow others to be victimized by letting an investment con artist off the hook.
By exercising caution in all of your investments, you practice good stewardship and protect your church.
----------------------------
Yours truly,
Anthony Smith
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