Articles Tagged with religious fraud

A Texas former financial advisor, Christian radio host, author, and self-identified “Money Doctor” Neil Gallagher has been arrested and charged by the SEC for allegedly running a $19.6 million Ponzi Scheme targeting elderly retirees, according to reports. Between December 2014 and January 2019, Gallagher allegedly used religion to solicit and misappropriate the funds of 60 senior investors. The recently unsealed SEC civil complaint alleges that William Neil “Doc” Gallagher using his companies, Gallagher Financial Group and W. Neil Gallagher, Ph. D Agency, Inc. promised guaranteed-risk free returns in a non-existent investment product titled, “Diversified Growth and Income Strategy Account.” Instead of investing the money as promised, Gallagher allegedly used their money to fund his lifestyle and pay falsified returns to other investors, in a typical Ponzi-Scheme fashion.  Our Ponzi fraud law team finds the details of the egregious allegations in the SEC complaint horrible, but not atypical in affinity frauds.

Securities attorney Jenice Malecki has extensive knowledge on similarly alleged affinity frauds, having provided her insight on a religious-based Ponzi Scheme to CNBC’s white-collar crime show, American Greed. Religious fraud is a type of affinity fraud, in which the perpetrator target members of identifiable groups, with shared commonalities like race, age, and religion. The FBI has been investigating affinity fraud instances amounting to billions of dollars in projected losses. Additionally, the true prevalence of affinity fraud cannot be fully counted as group members tend to not report the activity to authorities for proper legal redress, especially within religious communities. In some states, like Utah, affinity fraud is so common that the legislature has an online white-color crime register. Fraudsters often target religious communities because of the members’ shared trust, even without the relevant facts. Religious investors are at an even higher risk when the fraudster intertwines their religious values with their deceitful sales pitch, as seen in the activity alleged here.

According to the SEC complaint, Gallagher allegedly raised at least $19.6 million from investors while pretending to be a licensed professional, despite that no longer being the truth. Gallagher allegedly offered an investment product that could provide returns that ranged between 5% and 8% each year. The complaint details that the investment product was supposed to be comprised of U.S Treasury Securities, publicly-traded stock, fixed-index annuities, life settlements, and mutual-fund shares, but Gallagher only purchased a single $75,000 annuity. It further alleges that instead of making genuine investments, Gallagher is alleged to have used $5.8 million to repay investors and $3.2 million for his own personal expenses. As of January 31, 2019, Gallagher allegedly depleted nearly all of the millions provided by his elderly victims who ranged in age between 62 and 91 years old. Our investor fraud team finds it to be in particularly devastating that victims of alleged Gallagher’s Ponzi Scheme are unlikely to re-earn their stolen funds.

Investors are encouraged to watch out for “false prophets” that commit affinity fraud by targeting members of religious communities. CNBC posted an article about rampant religious-based fraud with securities attorney Jenice Malecki’s commentary for tonight’s new episode of true crime series American Greed. The episode, entitled “An Ungodly Scammer” will feature the story of convicted multimillion-dollar Ponzi Scheme fraudster Ephren Taylor, who targeted churchgoers. Ephren Taylor pleaded guilty to conspiracy to commit wire fraud and sentenced to 235 months. In an interview for tonight’s premiering American Greed episode, Jenice Malecki comments on Ephren Taylor’s religious fraud with a warning for investors to be on the lookout for affinity fraud.

Ephren Taylor collected millions of dollars by traveling to megachurches in 43 states to solicit investors in his low-risk investments as part of his “Building Wealth” tour. In his visits, Ephren Taylor spoke of his status as a self-made multimillionaire from a young age to represent his credibility. Investors listened and believed as Ephren Taylor used religion to garner their funds through his “prosperity gospel” sales pitches. Ephren Taylor claimed to sell investors high yield promissory notes that would finance socially responsible ventures that included low-income housing projects. Instead, provided funds were being allocated to Ephren Taylor’s personal expenditures and occasional false “returns” to existing investors, as part of a Ponzi Scheme.

Now, victims of Ephren Taylors’ Ponzi Scheme are left distraught and defrauded out of millions of dollars in life savings after falling prey to his affinity fraud. Affinity fraud refers to an investment scam that targets members of identifiable groups based on shared commonalities. The affinity fraud perpetrator will leverage represented membership within the group to exploit trust and sell a fraudulent investment. Jenice Malecki told CNBC that in affinity situations, people would tend to be comfortable enough to blindly trust those that share membership within their church or ethnic communities. A famous example of this is Bernie Madoff’s Ponzi Scheme which raised billions through targeting Jewish communities.