Saturday, March 26, 2016

Amish & other Christian affinity frauds

By Greg Wright
Certified Fraud Examiner
Certified Financial Planner™

I’ve received over 90 responses[i] to my Dec. 20, 2015, article “Amish on Amish Fraud.” An anonymous comment earlier today prompted my writing this post:

“While victims have lost millions of dollars, there is a much larger story here, as you pointed out in your December writing. The subterfuge of this sad episode compromises the character -- and the cause -- of evangelism. This crime affects several hundred investors while the fraud of this crime impacts the ultimate destinies of many thousands of people.”

Another victim also wrote this earlier today:

“Do you know that if Earl Miller of 5 Star is found guilty by the FEDS, He will spend the rest of his life paying back all the investors !!”

Redmond mug shot
A few days ago, another affinity fraud victim called to bring me up to date on Mr. Thomas H. Redmond, Jr.  You may recall my article[ii] of March 26, 2015, “Is you financial advisor a crook?” Mr. Redmond pled guilty in 2013, was sentenced to 15 years, and was required to pay restitution of $460,121.  Apparently he was released from prison last May and has been in contact with church members at his former church.  The lady said that many in her church and missionary groups had not easily survived the financial loss caused by Redmond.  She wondered if he would be able to pay them back.

Once a fraud victim learns that a fraudster has come to the attention of prosecutors, they hope that they will be able to recover their lost funds.  “(…)hope springs eternal in the human breast.”[iii]   

These events reminded me of the Veros Partners’ financial recovery.  You might recall that months ago the SEC brought charges against Veros, its president, and two associates for engaging in fraudulent offerings.  The SEC obtained an emergency asset freeze to halt the scheme and attorney William Wendling Jr was appointed to handle the liquidation and recover funds for the investors.  Later, I wrote about Wendling selling a major Veros asset without first having it appraised, and that his legal fees totaled $390,375.26.

The attorneys appointed by the courts to help victims are often paid very handsomely.  However, my experience has been that fraud victims are fortunate to recover 10% of their losses.  Many never receive a dime.

Juanita Hoagland
The Indianapolis Public Library confessed and convicted fraudster, Juanita Hoagland, was sued by the State of Indiana to recover the $450,000 she admitted embezzling.  After serving five months in prison, she filed for bankruptcy and was able to negotiate the judgment amount down to five cents on the dollar. 

A hotbed of affinity fraud is the state of Utah.  It is so prevalent in Utah that the SEC has a financial fraud investigating task force office in Utah.  Apparently, Mormons are so trusting of other Mormons that Utah is known for having one of the highest levels of financial fraud in the U.S. 

Several weeks ago Utah lawmakers authorized an on-line database containing the names of convicted white collar criminals.  Utahns can now check not only if there are convicted sex offenders living near them; but, they can also check about convicted fraudsters.  The Utah Attorney General said, “Utah’s unique personal interweavings and close relationships offer a rich environment for predatory behavior and financial crimes in our state.”[iv]

I teach church groups and Seniors how to find out if their financial advisor has had his licenses suspended, revoked, had multiple consumer complaints or been charged by a regulator. The advisor may have hidden this part of his background. The audience learns how to use free internet sites when conducting a background check on financial advisors.  Contact me for a free seminar on your organization.

I use these same techniques to check out volunteer speakers at the Community Outreach For Financial Education (COFFEE), a non-profit organization that teaches financial literacy.[v]

The real victim of church-related “affinity” frauds is the damage to the Body of Christ. 

Happy Easter to the Amish, Mormon and other Christians. 

Wednesday, March 2, 2016

Inheritance hijacking by attorney

By Greg Wright
Certified Fraud Examiner
Certified Financial Planner™

Stephen W. Schuyler mug shot
Sarah Wilding trusted her attorney to give the remainder of her estate to her church’s building fund.  Elder attorney, Stephen W. Schuyler had other uses for the money.  Only recently, it finally came to light that Schuyler had over-charged and diverted as much as $500,000 from some of the 130 estate cases he was administering.

East Lynn Christian Church is a small Anderson Indiana church.  Following Sarah Wilding’s death on April 20, 2012, Schuyler paid her final expenses and distributed funds and assets to her named beneficiaries.  That was the plan.  The remainder, $145,003, was to go to the church building fund toward paying off the 2005 sanctuary expansion. 

The church was aware that Sarah had made a final gift to them, and they sought payment from Schuyler.  He stalled and requested the court approve yet another payment for additional attorney fees.  Undeterred, the church pressed him to close the estate and pay them.  Schuyler’s check bounced.

Finally, the police and prosecutor investigated.  They ascertained that, in addition to Wilding, other estates had been looted.  They identified four other estates specifically, and 130 unsettled estates that were eventually assigned to other attorneys.

The East Lynn Christian Church filed a civil complaint against Schuyler and his girlfriend, Kem Golden, for conversion of $164,101 from the Wilding estate. In addition to the civil complaints,

Charges have been made that involve the estate of Frances Clem from 2010 to 2014 of $156,790. Other victims may include other churches, and the local Humane Society. 

Unsurprisingly, Schuyler’s law license was suspended indefinitely, and he is facing 13 felony counts. 

Since supervision may be lax or even non-existent, there are probably similar cases in other communities that have simply not been reported.  The deceased had counted on a trusted attorney to carry out their final requests and not to loot the estate.  But, the lawyer treated the estate assets like his personal piggy bank.

Inheritance hijacking is not that rare.  Thieves who target the elderly and the dead are cunning and patient.  The vulnerable elderly within us are perfect targets – 20 percent are victims.

Strongly consider not waive the requirements that executors be bonded, as many attorneys suggest.  Consider not giving your attorney authority to be your executor.