Convicted Ponzi scheme architect Bernard Madoff defrauded billions of dollars from thousands of his fellow Jews, including notable charities like the Elie Wiesel Foundation and Steven Spielberg Wunderkinder Foundation.
Federal investigations have also revealed significant scams targeting various religious groups. These range from a three-year scheme by a Christian radio host in Minnesota resulting in $190 million in losses to an estimated $1.4 billion swindled from thousands of Mormons in Utah.
Recently, three Pakistani immigrants, two of whom are believed to have fled the U.S., are accused of scamming $30 million from hundreds of Muslims in the Chicago area, promising an investment plan compliant with Islamic law.
Is it easier for con artists to target people of faith?
Lori Schock, director of investment education and advocacy for the U.S. Securities and Exchange Commission, noted, “We’ve seen cases where it’s an outsider who has infiltrated the community, and others where it’s a long-standing member of the community.” She added that some scammers even use scripture, suggesting that making money is aligned with the Lord’s will. When these scams collapse, victims often lose more than just their money; they lose their faith, which is deeply tragic.
So, why are religious communities often targeted? One reason is that scammers who share the same faith or belong to the same congregations can easily gain trust. Additionally, those who have been deceived are often hesitant to suspect or report one of their own.
While the FBI’s Utah Securities Fraud Task Force has warned members of the Church of Latter-day Saints about these scams, the SEC hasn’t explored whether religious groups are more vulnerable to “affinity fraud” — scams targeting specific demographics like evangelical Christians or the elderly.
However, researchers suggest this is a question worth investigating.
Harvard scholar Robert D. Putnam and Notre Dame’s David E. Campbell found a correlation between religiosity and trust in others in their book “American Grace: How Religion Unites and Divides Us.” Based on Harvard’s 2006 Faith Matters Survey, they conclude that religious individuals are perceived as more trustworthy by both religious and non-religious Americans and tend to be more trusting of others.
In an interview, Campbell said the strong social networks found in some faith communities, such as “the tight bonds among Mormons,” seem to make them particularly vulnerable to fraud. Nancy Ammerman, a Boston University professor of religion and sociology, agrees, stating, “These schemes rely on and exploit that trust, and people within religious communities tend to have high levels of trust for others within their community.”
Anson Shupe, an Indiana University sociologist and author specializing in faith-based fraud, suggests that evangelicals, Mormons, and black churches are the most vulnerable, whereas Catholics are relatively protected due to a dense, hierarchical network of clergy supervision. “Protestants and Mormons tend to believe in a direct relationship between adhering to their faith’s principles, financial contributions, and receiving worldly rewards,” Shupe explains. “Some pastors preach a one-to-one relationship between worldly prosperity and faithfulness,” Shupe adds that members of these groups often believe God wants them to prosper and would not allow them to be deceived, especially not by someone who shares their beliefs.
However, Earl L. Grinols, a Baylor University economics professor, believes that any perceived correlation between faith and fraud stems from a “mistaken” notion that religious individuals are easily misled. This misperception leads con artists to disproportionately target them, along with the elderly and the newly affluent. He states, “It’s the ease of identifying and finding people in the group to scam, and that the perpetrators have a misperception that these members are more naive.”
Lori Schock advises potential investors to verify the legitimacy of investment opportunities with the regional SEC office before investing, whether it’s with a trusted congregation member, an endorsed religious leader, or someone promoting faith-friendly investments like church bonds or Islam-compliant loans.
“Trust, but verify,” she advises. “If something sounds too good to be true, it probably is.”
(https://www.christiancentury.org/article/2010-11/do-religious-people-make-easy-targets-sc)