Religious fraud

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Religious fraud is a term used for civil [1] [2] or criminal fraud carried out in the name of a religion [3] [4] or within a religion, e.g. false claims to being kosher [5] [6] or tax fraud. [7]

Contents

A specific form of religious fraud is pious fraud (Latin: pia fraus), whereby one employs lies and/or deception in order to convince others of the truth of one's own religion or specific religious claims. Sometimes these involve 'white lies': the perpetrator may think it more important to make others accept a certain belief than that the method is truthful; this end justifies the means of a lie. [8] A well-known example is the Shroud of Turin, a late Medieval fabrication that supposedly was the clothing in which Jesus would have been buried in the 1st century. [9]

There have been many instances of religious institutions carrying out fraud throughout history. The Roman Church sold indulgences to reduce the punishment an individual would face for their sins, leaders of a Florida church were convicted of investment fraud, and more recently the largest collapse of a religious financial institution in U.S. history called the Baptist Foundation of Arizona.

Law enforcement calls this affinity fraud, which means targeting victims through a common bond, religion or ethnic communities. Though religious fraud is more specified in that it only relates to affinity fraud done through the common bond of religion and that the perpetrators motivated the people of that common bond in the name of religion.. Authorities have taken multiple measures throughout history to remit this behavior. Their more current strategy relies on educating the public about the schemes used in affinity fraud cases.

Relation to Affinity Fraud

According to the U.S. Securities and Exchange Commission, affinity frauds target members of identifiable groups, such as the elderly, religious, or ethnic communities. [10] The common form of fraud that takes place in the name of religion is affinity fraud. As the church leaders use religion to motivate their church body to invest fraudulent schemes that benefit the leaders and make the investors eventually worse off. This means that religious fraud's relative to affinity fraud is that affinity fraud is a common tactic used to conduct religious fraud.

Examples

Conditions for Fraud

One reason that church fraud takes place comes from their accounting practices being inadequate. For example, allowing a single individual, or a small group of individuals with aligned interests to have complete control over the church's bank account can lead to temptation and theft. [16]

Dr. Donald Cressey's fraud triangle is a representation of that factors that are take place which induces an individual to commit fraud. The first thing is that the individual has to be incentivized, such as materialistic desires, or an inability to repay debt. The next corner for an individual to partake in fraud is their perceived risk of doing so, which is dubbed opportunity. This matches with the pattern where one person is in charge of counting the money--there is less perceived risk-- they are more likely to commit fraud. The third part of the triangle is rationalization, once the other two parts have been satisfying, the perpetrator of fraud must rationalize what they are doing is the right thing. [17]

Authority Action

One method of action that authorities are taking to try and stop religious fraud from taking place is by giving religious communities the necessary information to avoid crossing path with fraud. For example, "On September 1st, 1999 State securities regulators issued a warning about con artists that were targeting religious communities." [18] Additionally, the Office of Investor Education and Advocacy created a document that detailed how to avoid affinity fraud, which in part teaches how to limit religious fraud by giving crucial information to investors. [19]

Related Research Articles

<span class="mw-page-title-main">Ponzi scheme</span> Type of financial fraud

A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, this type of scheme misleads investors by either falsely suggesting that profits are derived from legitimate business activities, or by exaggerating the extent and profitability of the legitimate business activities, leveraging new investments to fabricate or supplement these profits. A Ponzi scheme can maintain the illusion of a sustainable business as long as investors continue to contribute new funds, and as long as most of the investors do not demand full repayment or lose faith in the non-existent assets they are purported to own.

<span class="mw-page-title-main">Pump and dump</span> Form of securities fraud

Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements (pump), in order to sell the cheaply purchased stock at a higher price (dump). Once the operators of the scheme "dump" (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small-cap cryptocurrencies and very small corporations/companies, i.e. "microcaps".

Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution. In many instances, bank fraud is a criminal offence.

Penny stocks are common shares of small public companies that trade for less than one dollar per share. The U.S. Securities and Exchange Commission (SEC) uses the term "Penny stock" to refer to a security, a financial instrument which represents a given financial value, issued by small public companies that trade at less than $5 per share. Penny stocks are priced over-the-counter, rather than on the trading floor. The term "penny stock" refers to shares that, prior to the SEC's classification, traded for "pennies on the dollar". In 1934, when the United States government passed the Securities Exchange Act to regulate any and all transactions of securities between parties which are "not the original issuer", the SEC at the time disclosed that equity securities which trade for less than $5 per share could not be listed on any national stock exchange or index.

Email fraud is intentional deception for either personal gain or to damage another individual using email as the vehicle. Almost as soon as email became widely used, it began to be used as a means to defraud people, just as telephony and paper mail were used by previous generations.

In business, a boiler room is an outbound call center selling questionable investments by telephone. It usually refers to a room where salespeople work using unfair, dishonest sales tactics, sometimes selling penny stocks or private placements or committing outright stock fraud. A common boiler room tactic is the use of falsified and bolstered information in combination with verified company-released information. The term is pejorative: it is often used to imply high-pressure sales tactics and, sometimes, poor working conditions.

<span class="mw-page-title-main">United States securities regulation</span> Law and regulations that relate to Securities

Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).

Affinity fraud is a form of investment fraud in which the fraudster preys upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or successfully pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.

Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information. The setups are generally made to result in monetary gain for the deceivers, and generally result in unfair monetary losses for the investors. They are generally violating securities laws.

Telemarketing fraud is fraudulent selling conducted over the telephone. The term is also used for telephone fraud not involving selling.

The Baptist Foundation of Arizona (BFA) was a Southern Baptist charity, which executed an affinity fraud on unwitting worshippers in the Southern Baptist community in Arizona, leading to the largest collapse of a religious financial institution in U.S. history. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets.

<span class="mw-page-title-main">Microcap stock fraud</span> Form of securities fraud

Microcap stock fraud is a form of securities fraud involving stocks of "microcap" companies, generally defined in the United States as those with a market capitalization of under $250 million. Its prevalence has been estimated to run into the billions of dollars a year. Many microcap stocks are penny stocks, which the SEC defines as a security that trades at less than $5 per share, is not listed on a national exchange, and fails to meet other specific criteria.

Greater Ministries International was an Evangelical Christian ministry that ran a Ponzi scheme in an affinity fraud that had taken nearly 500 million dollars from 18,000 people by the time it was shut down by federal authorities in August 1999. Headed by Gerald Payne in Tampa, Florida, the ministry bribed church leaders around the United States. Payne and other church elders promised the church members double their money back in 17 months or fewer, citing Biblical scripture. However, nearly all the money was lost and hidden away. Church leaders received prison sentences ranging from 121⁄2 years to 27 years.

Operation Broken Trust, the largest investment fraud sweep by the Federal government of the United States, was conducted between August 16 and December 1, 2010. The stated purpose of the operation was to "root out and expose" investment scams within the U.S. and to educate the public. It was announced that the operation involved 343 criminal cases with damages of $8.3 billion and 189 civil cases with damages of $2.1 billion; more than 120,000 victims were affected.

A staged crash, or crash for cash is when criminals maneuver unsuspecting motorists into crashes in order to make false insurance claims. The cars generally suffer little damage in relation to the large demand that is then fraudulently submitted.

The Mantria Corporation Ponzi scheme has been described as the "biggest green energy scam" in United States history. A Federal judge in the Securities and Exchange Commission's civil case found Mantria had scammed more than $54.5 million “by egregiously, recklessly, knowingly, and shamelessly perpetrating a fraudulent scheme” that used “misrepresentations, omissions, and blatant lies to induce unsuspecting and unwitting victim investors to liquidate the equity in their homes and take out bank loans to invest in Defendants’ scheme, which was nothing more than smoke and mirrors.” On November 16, 2009, the U.S. Securities and Exchange Commission charged four people who targeted those nearing retirement age who were seeking real estate and "green" investments. Many of these securities were offered by Mantria Corporation.

Mass-marketing fraud is a scheme that uses mass-communication media – including telephones, the Internet, mass mailings, television, radio, and personal contact – to contact, solicit, and obtain money, funds, or other items of value from multiple victims in one or more jurisdictions. The frauds where victims part with their money by promising cash, prizes, and services and high returns on investment are part of mass market fraud.

Ghana has one of the highest rates of cybercrime in the world, ranking 7th in a 2008 Internet Crime Survey. The most popular form of cybercrime in Ghana is cyberfraud and is typically achieved via credit card fraud. However, recent decreases in universal credit card usage has seen the expansion of other cybercrimes such as blackmail and hacking. This growth in crime has warranted a government response, with policies specifically addressing the cyberspace being developed. This has necessitated various studies including a cyber security maturity study which was inaugurated by the Ministry of Communications and conducted by the Global Cyber Security Capacity Center (GCSCC) of the University of Oxford in collaboration with the World Bank.

References

  1. ↑ Civil Law: Using Secular Law to Assure Observance of Practices with Religious … K Greenawalt - South California Law Review, 1997
  2. ↑ On Balance: Religious Liberty and Third-Party Harms. JC Lipson - Minnesota Law Review, 1999
  3. ↑ Privilege, Posture and Protection Religion in the Law; Weiss, Jonathan. Yale Law Journal. 593 (1963-1964)
  4. ↑ Profit without honor: White-collar crime and the looting of America. SM Rosoff, HN Pontell, RH Tillman
  5. ↑ Kosher Fraud Statutes and the Establishment Clause: Are They Kosher? MA Berman - Colum. JL & Soc. Probs., 1992
  6. ↑ University of Dayton Law Review (1997-1998). Can Kosher Fraud Statutes Pass the Lemon Test: The Constitutionality of Current and Proposed Statutes; Lindsay, Karen Ruth Lavy
  7. ↑ The effect of religiosity on tax fraud acceptability: A cross-national analysis. S Stack, A Kposowa, 2006
  8. ↑ Weiland, P. (1858). Kunstwoordenboek, of verklaring van allerhande vreemde woorden, benamingen, gezegden en spreekwijzen, die, uit verscheidene talen ontleend, in de zamenleving en in geschriften, betreffende alle vakken van kunsten, wetenschappen en geleerdheid, voorkomen (in Dutch). Rotterdam: D. Bolle. Retrieved 10 June 2018.
  9. ↑ Robert Tod Carroll (24 January 2014). "pious fraud". The Skeptic's Dictionary. Retrieved 10 June 2018.
  10. ↑ "Affinity Fraud | Investor.gov". www.investor.gov. Retrieved 2022-11-07.
  11. ↑ "Indulgence". Columbia Electronic Encyclopedia, 6th Edition: 1. March 2021.
  12. ↑ Tingle, Elizabeth (July 2014). "Indulgences in the Catholic Reformation". Reformation & Renaissance Review: Journal of the Society for Reformation Studies. 16 (2): 181–204. doi:10.1179/1462245914Z.00000000056. hdl: 2086/11650 .
  13. ↑ Blum, Debra E. (2001-05-03). "Florida Church Leaders Convicted of Fraud". Chronicle of Philanthropy. 13 (14): 44.
  14. ↑ Fager, Chuck (1999-10-25). "Baptist Foundation Faces Investment Fraud Charges". Christianity Today. 43 (12): 18.
  15. ↑ "Top Ten Scams". Clergy Journal. 78 (2): 24. November–December 2001.
  16. ↑ "Church Fraud Is Estimated To Increase To $110 Million Dollars A Day | Bento". bentoforbusiness.com. 2017-06-15. Retrieved 2022-11-07.
  17. ↑ "Fraud Triangle". Corporate Finance Institute. Retrieved 2022-11-07.
  18. ↑ "NASAA State securities cops warn about religious "affinity fraud" -". NASAA. 1999-09-01. Retrieved 2022-11-07.
  19. ↑ Affinity Fraud How To Avoid Investment Scams That Target Groups (No. 017 ed.). SEC. 2009.
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