Fleecing the Flock

I have been reading a number of stories in the news lately about individuals fleecing the flock. Take, for example, the fraud at Church of the Open Door. A number of Canadians were involved in this particular fraud.

McNaughton was a former youth assistant at Church of the Open Door. The 51-year-old Canadian was charged with fraud and tax evasion, accused of selling $17 million in bogus securities. He conned over 200 people. He pled guilty to ten counts of fraud. The SEC report can be found here.

Scams in churches are among the fastest-growing frauds in America. In 1989, the North American Securities Administrators Association found that 15,000 people lost $450 million over five years in schemes centered at church. Those numbers have ballooned. The association found that 80,000 people were victimized between 1998 and 2001, losing nearly $2 billion.

Sometimes the scams come in the form of Multi-level marketing schemes. At least the tele-evangelists usually don’t make it a secret that they are really scamming the money for their own personal enrichment.

I have major issues with MLM companies that simply act as sophisticated pyramid schemes. Quixtar, formerly Amway, is one such example. And it is exceptionally difficult to bring these types of companies to account.

Boies, Schiller and Flexner, a high-profile legal firm, have raised a class action lawsuit against Quixtar. The suit charges that the Quixtar program ”“ based upon selling products to recruits “for personal use”, then authorizing them to recruit others to do the same while requiring or incentivizing them to maintain quota levels of monthly purchases, and then rewarding them in a multi-level compensation system ”“ is a fraud. The suit also attacks Quixtar’s tools business as a second pyramid scheme perpetrated on new recruits. I hope the lawsuit is successful. Virtually all of the people who get involved in Quixtar end up with little or no money to show for their experience. The average gross monthly income for people active in Quixtar was $115. Before expenses.

At least most con artists who take advantage of individuals through investment schemes eventually get caught. Brian Anderson was a former British Columbia pastor and member of the Peace Portal Alliance Church. He was a fundraiser with Trinity Western before he began conning people with investments and MLMs. The MLM he favoured featured the marketing of vitamins and supplements. Some of the folks he conned with his investment fraud are so upset that they put up a website to warn others about this man. If you want some interesting insight into his character, you can read more at the Anderson Fraud website here.

So sad.