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CNN Live Saturday
State Regulators Identify Major Scams Masquerading as Christian-Based Investment Groups.
Aired August 25, 2001 - 13:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BRIAN NELSON, CNN ANCHOR: Being conned out of your life savings is bad enough. But when it's done in the name of God, well, you might as well just call it evil. State regulators around the country have identified three major scams that have been masquerading as Christian- based investment groups.
Together they have allegedly defrauded victims out of an estimated $1.5 billion. One of those organizations is Greater Ministries International Church in Tampa, Florida. It is believed to have swindled some $580 million from about 20,000 investors. The founder, Gerald Payne, now has been sentenced to 27 years in prison. His wife got a 13-year sentence.
Another group accused of preying on the faithful is Baptist Foundation of Arizona. Infomercial airing on local television stations tried play up the organizations credentials.
(BEGIN VIDEO CLIP, MARKETING VIDEO)
UNIDENTIFIED ACTOR: In addition to offering our clientele wonderful stewardship investment opportunities, we are also committed to providing the finest in up-close and personal service to our constituency.
(END VIDEO CLIP)
NELSON: Baptist Foundation of Arizona accused of running a ponzi scheme that took in nearly $600 million. Three officials have pled guilty and five others are preparing to go to trial. In its promotional materials it claimed that no one has ever lost any money.
(BEGIN VIDEO CLIP, BAPTIST FOUNDATION OF ARIZONA MARKETING VIDEO)
UNIDENTIFIED ACTOR: With a 95 percent customer renewal rate, we believe that we are doing everything just right. And our magnificent growth rate proves it. For example, every year since 1987, the total dollars invested in our mortgage backed notes and investment agreements have steadily increased helping to secure our future therefore helping to protect your investments. Not one investor has ever lost a penny of their investment or the interest they earned.
(END VIDEO CLIP) NELSON: Experts are warning that scams like this are on the rise, especially those that manipulate people with deep religious beliefs. Frequently these con artists will cite some type of emergency or an urgent situation, such as the Y2K scare in 1999. And they often exploit anti-government feelings as well.
In fact, many of the victims are so anti-government that they still refuse to speak to the authorities. With us now from New York is Joe Borg, the Alabama securities commissioner who is visiting New York. He is also the incoming president of the North American Securities Administrators Association. Mr. Borg, thank you for being with us.
JOE BORG, ALABAMA SECURITIES COMMISSIONER: Glad to be here, Brian.
NELSON: Could you explain this scam involving the ministries in Alabama. Just briefly tell us how this happened.
BORG: Certainly. It is a gifting program. They use Bible verses, such as, from Luke, give and it shall be given unto to you, to make the pitch that God wants his people to be wealthy and Gerald Payne was the anointed on who was going to create the Christian Social Security program.
And if you had faith in God, then you had faith in his investment plan. They game synonymous.
NELSON: How many investors were bilked by this? I understand there was about $580 million. How many people actually coughed up money?
BORG: About 28,000 from over 26 different countries.
NELSON: Now, how were they able to reach out around the world? Did they use the Internet? It's absolutely amazing. Word of mouth and the Internet. Personal visits to smaller fundamental Christian churches, and again, pushing this idea of faith in God and faith in this investment plan are synonymous, one and the same.
NELSON: Well, exactly how did they lure people in? Did they prey upon their faith? Is that it?
BORG: Absolutely.
NELSON: Suggesting they weren't good Christians if they didn't want to donate?
BORG: Exactly. This was -- (UNINTELLIGIBLE) is, we're one of you and, therefore, by having faith in God, this is God's Social Security system plan, as Gerald Payne would put it. God wants his people to be wealthy, so invest with us. It's a program just for the faithful.
NELSON: Mr. Borg, would you stand by there for just a moment? I want to bring in one of the investors who we have managed to contact by telephone. It is Bill Smith. Mr. Smith, are you there?
VAN SUSTEREN: How did you get involved in investing in this scam?
BILL SMITH, SCAM VICTIM: Well, I had heard about Greater Ministries for about three or four years. I always heard of it as Greater Tampa Ministries. And a friend of mine and were at a Christian organization, didn't have anything to do with Greater Ministries, but some of the fellows there were talking about the Greater Tampa Ministries and what they had been doing.
NELSON: Did they come to you?
SMITH: No.
NELSON: You went to them, then?
SMITH: Yes. We called one of the fellows down in Mobile, Alabama and met with he and his wife at a Cracker Barrel in March of '98 and he showed us 2 1/2 years of his statements where he had received 10 percent every month and at that particular time, he was receiving about $40,000 a month and I talked to his wife about it and they were putting money aside for their grandchildren's college education.
And he gave us a form that his brother Leo, a CPA, down in Florida had put together...
NELSON: Mr. Smith, I'm going to have to cut to the chase here, how much money did you actually in this?
SMITH: $79,000.
NELSON: Over a period of how long?
SMITH: About eight months.
NELSON: Now, you have told us that you do not consider yourself to be a victim. You've lost 80,000 why were you not a victim of this? And did you not feel hoodwinked?
SMITH: Because I did do my due diligence and I understand what scripture principles are, and I stepped off those scriptural principles, these biblical principles, and began walking by sight and hearing what other Christians were doing instead of what the Bible really says.
NELSON: All right, Mr. Smith, thank you for joining us to explain your half of it. Let's go back now to Joe Borg in New York, the Alabama security commissioner. Anything in there surprise you?
BORG: No not really because all these scams have certain basics: wealth on Earth, credit in heaven, and a promise that by doing this you are free from guilt of greed. It is a very attractive package.
NELSON: First of all, are there a lot of them around? BORG: Yes.
NELSON: And what advice do you give people who are listening to this broadcast to be able to identify them and avoid them?
BORG: There are many of these around. And there are spin-offs almost every week. Use common sense. First thing to do is use common sense. If it sounds too good to be true, it probably is. Second, understand the difference between giving and investing. What I give to the church, that is giving. If I'm expecting a return that's an investment.
Do your homework. Look at the financials, look at the perspectives. Understand what they are investing in. Most importantly, before any investment can be sold, the salesman and the product must be registered with the state securities regulators. Check with your state securities regulators to make sure whoever is pitching this has a license to sell securities.
NELSON: And also, don't be intimidated with questions about your religious faith, I think would also be another piece of advice, right?
BORG: Very true.
NELSON: Thank you. Joe Borg, the Alabama security commissioner joining us, and also to Bill Smith, one of the investors who talked to us a moment ago.
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