New York Securities Fraud Lawyers Blog
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.
Members of religious organizations are even more likely to become victims of affinity fraud because of their faith. In fact, reported cases of affinity fraud is expected to reach $80 billion by 2025, based on researcher predictions. Some individuals speculate that the incidences of religious-based financial fraud could be much higher than reported. This is partly because victims of religious and other affinity fraud might be hesitant to publicly report members of their group. The perceived close bond between members impacts their willingness to lose faith and assign blame to the appropriate party. In effect, affinity fraud continues to run rampant within the religious communities.
Based on the likelihood of affinity fraud, Jenice Malecki tells CNBC that being solicited to invest at a “faith-based belief system institution” like a church is a red flag. Given this, Jenice Malecki encourages potential investors to separate their faith in a higher power with their faith in the salesperson before making an investment. Just as with any other investment advisor, Jenice Malecki reminded American Greed viewers to do their due diligence in research through BrokerCheck and Investment Advisor Public Disclosure website.
Although a difficult fact to process, even churches and other commonly trusted organizations are not impervious to investment fraud and frequently targeted. With affinity fraud targeting the “weakest of the flock”, investors must learn to protect themselves through more knowledge. For that reason, our securities attorneys continue with our mission to provide as much information as possible about Ponzi schemes and affinity fraud for the safety of investors. Tune in to CNBC tonight for an all-new Monday episode of “American Greed” to learn more about affinity and religious-based fraud from Jenice Malecki.