According to state securities regulators, investment frauds that take advantage of victims' religious or spiritual beliefs are rising dramatically. In some cases, investors are being promised sky-high returns, sold bogus promissory notes and are victims of the classic Ponzi scheme (continually soliciting new investors in order to make interest payments to previous investors). The North American Securities Administrators Association
(NASAA), estimates that over the last three years, about 90,000 Americans have lost roughly $1.8 billion to frauds that use religion as a lure.
Con artists who use religion to promote their scams often:
- Predict imminent financial or social crises, in some cases based on their reading of biblical prophecy;
- Claim they will reinvest a portion of the profits in a worthy cause; and
- Equate faith in their scam to religious faith.
Before making any investment, the Better Business Bureau and state securities regulators urge investors to ask the following questions:
- Are the seller and investment licensed and registered in your state? If they are not, they may be operating illegally. Call your state securities regulator to find out. To get the name and number visit www.nasaa.org or look in the white pages of your telephone directory under "government."
- Has the seller provided written information that fully explains the investment? Make sure you get a prospectus or offering circular, before you buy. The documentation should contain enough clear and accurate information to allow you or your financial adviser to evaluate and verify the particulars of the investment.
- Are claims made for the investment realistic? Some things really are too good to be true. Use common sense and get a professional, third party opinion when presented with investment opportunities that offer unusually high returns in comparison to other investment options.
- Does the investment meet your personal investment goals? Whether you are investing for long-term growth, investment income or other reasons, an investment should match your own investment goals.
Remember, before you do business with a company, always contact your Better Business Bureau (www.bbb.org) for a reliability report.