Another LDS-related “affinity fraud” case

I’ve posted a few times before (here and here) about “affinity fraud” cases involving Latter-day Saints, that is, financial fraud cases that in part prey upon Mormons via their religion, much as Bernie Madoff’s frauds preyed heavily upon Jews and Jewish organizations.

Well, another example has cropped up:

Like those caught up in other get-rich scams — from Bernard Madoff’s $65 billion Ponzi scheme, which initially snared wealthy Jews, to an alleged $4.4 million fraud aimed at deaf people — Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.

What’s interesting is that the people perpetrating the fraud aren’t LDS themselves — they’re just taking advantage of them:

Jones, Jennings and Simburg, none of whom is a Mormon, exploited this vulnerability for at least four years, offering a cocktail of spirituality, exclusivity and the promise of high returns.

“The guys who did this were geniuses in a way,” says Dana Carney, an assistant professor of management at the Columbia University Graduate School of Business in New York, who has written about investor psychology. “This has the flavor of a cult. They hit all these vulnerabilities. There was religion; we trust like people, especially religiously like people. With the nightly calls, there was an illusion of transparency. They took advantage of the sunk-costs phenomenon: The more people invest in something, the more connected they feel.”

Be sure to read the whole thing.  ..bruce..

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