Buyer beware . . . especially at church

October 27, 2010 | Viewpoints | Number 21
Mike Strathdee |

“Christians are particularly vulnerable to con artists,” a retired Ontario accountant says.

Sadly, Bruce Karcher’s comment is more than just speculation. For the past five years, he has walked with scores of people who have lost tens of millions of dollars to smooth-talking salespeople. In almost every case, the victims were Christians, taken in by someone who claimed to be a believer, often touting a scheme that purported to have a “charitable” intent. This affinity fraud is often a result of “misplaced or blind trust,” Karcher says.

Victims take the advice of someone in their church who has dealt with the con artist, or see the con artist attending their congregation, and don’t check to ensure the proposed “investment” is legitimate. The first person to become involved with the scheme becomes an unaware salesperson when his/her positive experience is held up to lure others in. A clever con artist ensures that the first person gets what was promised, and has a good experience—repaid with funds put in by subsequent investors.

Faith-based communities are in many cases less suspicious than secular society. Victims fail to verify whether their new adviser is properly registered and legitimate. A common thread in these scams is a promise of worthwhile or charitable activity, to be funnelled through foundations that later are discovered to be unregistered or illicit. More sophisticated, leveraged schemes hold out the promise of giving donors a receipt or other benefit greater than the “donation” they have made.

“Churches aren’t speaking out on this problem, often because many aren’t even addressing the basics of financial stewardship,” Karcher says.

Even prominent Christians fall victim to scammers. Several leading members of the family that puts on the 100 Huntley Street TV series had to step down from their jobs after convincing family members and friends to invest in a fraudulent investment. Ron Mainse, former host of the show, lost his investment and had to pay fines to the Ontario Securities Commission.

How do you avoid becoming the next victim? Here are a few tips:

  • Don’t release personal financial information over the phone or e-mail to someone you don’t know.
  • Don’t send money—often called a processing or handling fee—to someone promising to give you a percentage of an offshore investment, inheritance or lottery, or offering a new job.
  • Don’t believe anyone who promises a higher-than-average return on an investment that is described as being low- or no-risk. Greed can be costly.
  • Don’t be pressured into acting quickly.
  • Don’t think the courts will solve the problem. Police or government regulators usually can’t make things right in fraud situations.
  • Does the person trying to sell you the investment hold a recognized professional designation, such as a CFP or CLU? Is the accreditation still valid?
  • Is the salesperson properly registered to sell stocks, mutual funds or insurance? There are regulatory bodies you can check with. Don’t sign anything until you have checked it out.
  • Is the salesperson associated with a reputable firm that has a compliance department?

Even if you have heard good things about a particular advisor or product, you still need to do your own research. Get as much information as possible, preferably from sources other than the person who is trying to sell you the product.

Mike Strathdee is a stewardship consultant at the Kitchener, Ont., office of Mennonite Foundation of Canada (MFC). For stewardship education and estate and charitable gift planning, contact your nearest MFC office or visit

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