Federal investigators unveiled today a series of investment schemes that allegedly preyed primarily on members of The Church of Jesus Christ of Latter-day Saints and may end up bilking church members out of nearly $100 million.
Three people were indicted Thursday on a number of charges, including mail fraud, money laundering and wire fraud. In addition, three other people linked to other schemes were indicted on similar federal charges last year.
Investigators do not believe the six people were working together. Each scheme was separate.
Investigators said these charges are not the first and won't be the last in these types of crimes. Several other schemes are being investigated, according to the FBI.
Utahns are being "financially creamed by these types of schemes," FBI Special Agent in Charge Chip Burrus said.
In fact, Utah typically has a disproportionate share of this type of fraud, investigators said.
Investment fraud isn't unique to Utah, but what is unique is the trust people in Utah normally have with each other because of religious affiliation, U.S. Attorney Paul Warner said.
"One inescapable observation of the prosecutors and FBI agents investigating these frauds is the overwhelming number of victims whose first encounter with the fraudulent solicitor is at a church or religious event, specifically The Church of Jesus Christ of Latter-day Saints," Warner said in a prepared statement.
Among those indicted were Tracy Buhler, Randall Law, Richard Taylor Barlow, Mark Andrew Beach, Ronald Keith Bassett and John Kirk Dixon.
Buhler pleaded guilty in October and was sentenced to two years in prison. Law, who was indicted Thursday, pleaded guilty in 2000 to 34 counts of securities fraud and racketeering in another case. He is in federal custody in Illinois.
Barlow was indicted in December on 76 counts of mail fraud, plus additional counts of tax evasion, failure to file tax returns and aiding and abetting.
The FBI and the U.S. Attorney's Office in Utah said those indicted masterminded prime bank instrument schemes and related high-yield investment programs, or "Ponzi" schemes.
They promised hundreds of residents in Utah and across the nation they would receive high returns, some more than 100 percent a month, if they invested in different programs, including an offshore trading program, a foreign trading currency program called "4NExchange" and another financial investment scheme called "Cannon Capital," according to court documents.
The defendants bilked millions of dollars starting about 1996 to May 2002 from victims across the nation and brought the money to Utah, court documents say. The majority of victims are members of the LDS Church who gained a false trust with the defendants based on their faith, according to FBI spokesman George Dougherty.
Scams designed to take advantage of the LDS faithful are nothing new in Utah. In 1989, the Council for Better Business Bureaus released a report that said approximately 10,000 Utah investors lost an estimated $215 million in the mid-1980s. Many of those schemes were promoted within LDS congregations and involved false claims of connections to the LDS hierarchy.
One of the largest scams of the 1980s involved AFCO Enterprises, which scammed hundreds of people out of mortgages totaling more than $20 million.
U.S. attorneys and the FBI plan to work with the Salt Lake media to launch an education campaign. They will also ask church leaders to actively report fraudulent activity.
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