Borg: Investigate your investments
Published 10:39 pm Tuesday, February 3, 2009
Many people might expect to encounter fraud on Wall Street or on TV, but they might be surprised to find fraud in churches.
Joseph P. Borg, director of the Alabama Securities Commission, said he has seen a lot of investment fraud in Christian churches in the state. The Alabama Securities Commission investigates investment fraud and scams and performs audits on investment companies.
“Usually, a con-artist comes into the church and convinces the church and church members to invest money with them,” Borg said at yesterday’s Chilton County Chamber of Commerce luncheon. “They will tell them they have a plan that will help them make a lot of money to do certain projects. But usually they will not be licensed.”
One example was the Daystar Church in Prattville, where Borg said a con-artist had convinced the leadership it could go from a 600-member church to a mega church, and to do it all debt free. The church put up $3 million on its own and pledged its building in the investment deal.
However, it was later discovered that the people orchestrating the deal had spent the money.
“They would spend $5,000 to $6,000 on a bar tab,” he said. “They even bought a bottle of wine for $2,000 by itself.”
That investment deal went awry and caused the church to fold.
Another church investment deal took Borg to Florida for a scheme that tied up $578 million. These are just examples of what Borg calls affinity fraud, an investment scam that preys upon members of identifiable groups, such as churches, the elderly, ethnic groups and professional groups.
Borg said the only reason why some of these people would invest in these schemes is because their church supports it.
“I would ask them why they would invest, and they would tell me because everyone else in the church was doing it. The pastor recommended it,” Borg said.
Borg said people need to investigate before they invest. His office can help anyone who is curious about an investment.
“We can check to see if the company is licensed to sell investments. We can check to see if the investments are registered,” he said. “If the company isn’t licensed or the investment isn’t registered, then you shouldn’t invest.”
For more information, contact the Alabama Securities Commission at 1-800-222-1253 or log on to www.asc.alabama.gov.