Regulators Warn on Religious Fraud
The Associated Press/August 7, 2001
By Marcy Gordon
Washington -- Forrest Bomar, a retiree with most of his life savings in brokerage accounts, was tired of the market's swings and attracted by the 6.7-percent return offered on investments by the Baptist Foundation of Arizona.
He and his wife, Lee, are Baptists and were impressed by the salesman who came to their home in Tucson and seemed to share their values. "So we plunged in, repeatedly," Bomar recalled in an interview. "I was foolish enough to not ask for an annual report."
Now, the Bomars have lost nearly all of their $236,166 investment in what turned out to be a scam. The foundation declared bankruptcy and was shut down by state regulators, and three foundation officials have pleaded guilty to defrauding investors.
Forrest Bomar said he went through stages of disbelief, shock and deep depression from which he has not fully recovered. Still, in the end, he said Tuesday at a news conference, "My faith was tested; my faith was not taken." More than 13,000 people around the country, many of them elderly Baptists, invested some $590 million in the organization, state securities regulators said.
They are warning people to beware of proliferating and increasingly sophisticated investment schemes that play on religious loyalties. "I've seen more money stolen in the name of God than in any other way," Deborah Bortner, president of the North American Securities Administrators Association, said at the news conference with Bomar. The association represents securities regulators in the 50 states, the District of Columbia, Puerto Rico, Canada and Mexico.
"Always do your homework," urged Bortner, who also is Washington state's director of securities. "Be as skeptical and careful when you invest with someone who shares your faith as you would with anyone else." Promoters of investment schemes based on religion often predict an imminent financial or social crisis, or claim they will reinvest part of the profits in a worthy cause. Some perpetrators have kneeled to pray with their victims.
In the past three years, securities regulators in 27 states have taken actions against hundreds of companies and individuals that used religious or spiritual beliefs to gain the trust of more than 90,000 investors. Bortner's warning came as the alleged mastermind behind the $448 million scheme of Greater Ministries International Church, based in Tampa, Fla., received a prison term. Gerald Payne, an ailing, 65-year-old minister, was sentenced Monday to 27 years in prison on fraud charges.
The organization's promoters used Bible verses - like Luke 6:38: "Give, and it shall be given unto you" - promising the faithful that God would double their money if they gave it to Greater Ministries. Some 20,000 investors nationwide were persuaded to mortgage their homes, run up big credit-card debts or cash in their retirement funds on the promise of huge returns from investments in cargo ships and gold, platinum, silver and diamond mines in the Caribbean and Africa, the regulators say.
Payne's wife, Betty, was sentenced to nearly 13 years behind bars for her part in the scheme. Investigators have yet to find the missing millions, which they believe might be stashed in secret, offshore accounts. Gerald Payne waved feebly to supporters as he was led out of the courtroom in Tampa, where U.S. District Judge James Whittemore handed down the Paynes' sentences and chastised Gerald Payne as a "wolf in sheep's clothing." "The fact that you used the word of God to perpetuate a fraud is absolutely despicable," Whittemore told Payne, who has suffered four strokes while in prison.
A third major case cited by the state regulators was that involving IRM Corp., which netted some $400 million from investors through the sale of bogus promissory notes and limited partnerships said to be linked to the California real estate market. Before being shut down by Michigan regulators, the scheme had solicited investors through religious television and radio programs.
Regulators say the three cases - involving the Baptist Foundation of Arizona, Greater Ministries and IRM - all were Ponzi schemes, in which new investors are continually recruited to make payments to previous investors until it all collapses.
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