Fleecing the Flock - Wolves in Sheep's Clothing
Pastor Dale Morgan
Fleecing the Flock - Wolves in Sheep's Clothing*
Patti Pilniuk lost nearly $50,000 dollars to what is called 'Affinity
Fraud.'
Patti Pilniuk lost nearly $50,000 dollars to what is called 'Affinity
Fraud.'
Jane Kelly, of Elyria, Ohio lost her life savings.
Jane Kelly, of Elyria, Ohio lost her life savings.
W-FIVE Staff
Updated: Sat. Feb. 17 2007 6:55 PM ET
CANADA - It's called Affinity Fraud. And it is one of the fastest rising
frauds, targeting Christians in North America. In the US, in 1989 only
15,000 people lost a total of $450 million. By 2001 those numbers had
increased to 80,000 people who lost $2 billion.
Here's how it works. Conmen infiltrate organized Christian groups:
sometimes they're seniors, sometimes members of the same ethnic
community, often it's churches. Once they've won people's trust they
start selling them bogus investments. By offering rates of return
upwards of 50 per cent a year and a guarantee on the return of the
principle, people are coughing up their life-savings in droves.
Affinity Fraud is a scheme that has four main ingredients. Which mixed
together, can produce the perfect crime. Ingredient Number One - a
trusting group of victims. Because church goers are trusting by nature
this group had been particularly hard hit.
The front man is the second ingredient, someone who acts as a salesman
within the group.
Which brings us to the third essential ingredient--the trusted insider.
Someone within the church who will vouch for "the front man" Without the
insider, the Affinity Fraud often could never occur. Not just anyone can
walk into a church and win people over. Sometime he's an accomplice,
sometimes just a patsy.
And the final ingredient -- the master mind. The person who orchestrates
the scheme and after the money is collected, generally spirits it
offshore where it can't be found by authorities.
Patti Pilniuk, who lost nearly $50,000 to an Affinity Fraud that
happened in a Church campground near Barrie Ontario, describes the
individual that she says defrauded her as, "a wolf, but dressed up as a
sheep."
Jane Kelly, of Elyria, Ohio who lost her life savings to a couple of
Canadian con men running an Affinity Fraud says, "Not only are you
financially devastated and; and feel raped and then you feel stupid um
your whole lifestyle takes a nosedive. Your whole you know your faith is
spun out of control."
And who's responsible for protecting people from Affinity Fraud? Across
Canada the individual provincial security commissions put the onus on
the consumer to educate themselves against such a fraud. Their message:
Check to see if the person "selling" the investments is even licensed to
sell investments, and if not don't buy them.
But the B.C. Securities Commission has taken the additional step of
educating the Church-going public in the Frasier Valley by funding
"God's Fraud Squad." The program is delivered by two pastors and hopes
to reach 80 churches in the next year.
In Ontario, the Ontario Securities Commission has the powers to
investigate allegations of these types of affinity fraud -- and like the
police, they have the power to issue warrants, subpoenas and more. There
are sanctions available with fines of up to $5 million or five years in
jail, less a day. But according to their own web site, in the six years
from 1999 to 2005 -- the OSC received almost 3,800 complaints, and laid
just 11 charges.
Police are often reluctant to investigate white collar crime and a
class-action law suit can be filed, but as W-FIVE found out, after the
process of forensic audits are complete, more often than not the money
is gone, never to be returned to investors.