OFFICIALS: Ponzi Schemes, Investment Fraud Have Led To Staggering Losses In Utah; Hundreds Of Potential Perpetrators Identified

UPDATED 8:38 P.M. EDT (U.S.A.) Recent Ponzi schemes and cases of investment fraud have cost Utah residents an estimated $1.4 billion, the FBI said today.

About 370 investigative “subjects” — defined as “potential perpetrators” in current cases — have been identified, and the agency and its law-enforcement partners have embarked on a public awareness and education campaign aimed at keeping Utahns safe from scammers.

About 4,400 people have been affected by investment-fraud schemes in the state, the FBI said. The education campaign includes billboards and public-service messages.

Under the umbrella of the Utah Securities Fraud Task Force, the FBI and its partners — including the SEC, the IRS, the U.S. Postal Inspection Service, the Utah Department of Commerce’s Division of Securities, the Utah County Attorney’s Office, the United States Attorney’s Office for the District of Utah and the Utah Attorney General’s Office — have produced a video that encourages viewers to be aware that schemers may target them based on their religious affiliation or interests.

“Affinity fraud is when someone you know — for example a church member, a coworker, or a friendd — takes advantage of you in an investment fraud scheme,” said James S. McTighe, FBI special agent in charge.

Con artists have been known to deliberately target members of the Church of Jesus Christ of Latter-Day Saints, the FBI said.

No group of believers — and no group of people who share a common bond — is immune to the cunning of expert con men, the FBI added.

An investor featured in the educational video said her experience of being duped can serve as a warning to others:

“He was a religious man, so he says, and he really, he really put on the ‘You know I am so guided by the spirit’, and ‘I know I am here to help you’, and ‘just trust me,'” the woman said.

Nothing about a Ponzi scheme is good news, warned the SEC’s top official in Salt Lake City.

“Ponzi schemes always collapse eventually and it’s typically because you run out of newer investors,” said Ken Israel.

How do fraudsters profit from a Ponzi scheme?

“The hallmark of the Ponzi scheme is that you use money from new investors to pay off your old investors and of course put a bunch in your pocket at the same time,” said Keith Woodwell, director of the Utah Division of Securities.

Officials warned the public to be on the look out for “signs of trouble”:

  • The investment offer is unsolicited.
  • It sounds too good to be true.
  • You’re promised big monthly or yearly returns with little or no risk.
  • You’re asked to keep the investment offer secret.
  • The promoter cannot answer specific questions or provide you with written financial documentation.
  • Slick websites and glossy literature can be deceiving, and also be suspicious of documentation that looks unprofessionally produced.
  • The promoter won’t give you time to research the investment.
  • You are told you are one of the lucky few allowed in on the investment.
  • You are required to bring in more investors.
  • The salesperson is not licensed or the product is not registered.

“Con artists who run Ponzi schemes often promise big financial returns and may tell potential investors they operate programs that can sound impressive,” the FBI said. The agency advised investors to do their homework and be skeptical of pitches for programs such as these:

  • Foreign Exchange Currency Trading.
  • Prime Bank Investment.
  • Commodities Investments.
  • Real Estate Investments.

“Research before you invest, the FBI warned, recommending these resources for Utah residents:

Get educated for free at the June 30 “Fraud College” at Utah Valley University in Orem

Watch the Task Force video.

Get more information from the FBI:

NOTE: This story has been republished at a URL that is different than its original URL. Although this post reflects a date of June 13, it is not the original publication date. Click here to read why.

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6 Responses to “OFFICIALS: Ponzi Schemes, Investment Fraud Have Led To Staggering Losses In Utah; Hundreds Of Potential Perpetrators Identified”

  1. While any loss is unacceptable and causes pain, the Utah authorities do not add balance to their reporting. They do not tell us if the $1.4 Billion is accumulated investment loss or out of pocket loss. They do not tell us how many years it took to accumulate the total.

    Tom Petters-$4.5 Billion, Scott Rothstein–$1.2 Billion, Mark Sandford–between $7 and 8 Billion, Bernie Madoff–at least $20 Billion. There is a scientologist ponzi with at least $500 million. Ponzi’s have been popping out of Florida with great regularity.

    Utah was,is and will remain small potatoes next to these crooks. Maybe the spirit is willing but the flesh is weak.

  2. There is faaaaar more going on in Utah that you need to deflect to other scams elsewhere. The google money scam originated there, Anthony Morrison is hiding a scam out of there….the list goes on. It’s a haven for work at home scams.

  3. As I have already posted on the other article to which you replied, Kenneth, what does the magnitude of the ponzi fraud have to do with its ramifications?

    Why should the magnitute of the fraud be so significant? Maddoff lost fortunes for wealthy people and the Utah scams lost less money for less wealthy people. I dont think you will find it any consolation to anyone who has been defrauded that someone else lost even more money to a bigger fraudster. A fraud is a fraud and its criminal ramifactions are the same whether millions or billions are involved. It is not a victimless crime.

    The large number of frauds coming out of Utah, Florida and several other states is a cause for serious concern and dont forget that the sum of lots of smaller frauds can end being very large indeed.

    You sound as if you are saying that a smaller crime “doesn’t count” (although if you are not, accept my apologies) It’s rather like being a little bit dead.

  4. Could you please provide me with a list of people indicted in utah for running ponzi schemes ?

  5. steve Labossiere: Could you please provide me with a list of people indicted in utah for running ponzi schemes ?

    Hello Steve,

    I don’t have such a list. If you type “Utah” — without the quotes — into the Blog search box in the upper-right corner, you’ll be able to find stories about alleged Utah Ponzis. Please know it is not all-inclusive. There are so many Ponzis these days in so many places that I can’t keep up with all of them. I provide news/developments/updates as I’m able.


  6. […] and law enforcement have been warning for years about affinity fraud in […]