Department of Commerce and Regulation
For Immediate Release: August 7, 2001
For more information: Mr. Gail Sheppick, 773-4823 

Commerce Secretary Issues Consumer Warning on Religious Investments Scams

(Pierre) -- David Volk, Secretary of the Department of Commerce and Regulation, today issued a warning to consumers about investment schemes that take advantage of victims’ religious or spiritual beliefs.

These scams generally promise high returns on investments made through a church or other religious organization. In three large cases - Greater Ministries International Church, the Baptist Foundation of Arizona and the IRM Corporation nationwide losses approach $1.5 billion. 

According to Volk, South Dakotans have been victims of these scams and lost approximately $226,000 in the Greater Ministries International Church scheme. "When you invest you should not let your guard down merely because someone is appealing to your religion or your faith," said Volk. "Always do your homework. Be as skeptical and careful when you invest with someone that shares your faith as you would with anyone else."

The largest of these nationwide scams, Greater Ministries, took in nearly $580 million from over 20,000 investors in the United States between 1993 and 1999. The church promised that investors’ money would be doubled through divinely-inspired investments in the foreign currency market and gold, silver and diamond mines in Africa and the Caribbean. 

Greater Ministries church founder, Gerald Payne was subsequently arrested and is scheduled to be sentenced today in federal district court in Tampa, Florida on fraud and conspiracy charges.

By comparison, the Baptist Foundation of Arizona, shut down by Arizona State regulators in August 1999, used a maze of over 120 shell corporations to raise over $590 million from more than 13,000 investors nationwide. In May of this year, three officials involved with the Foundation, including Treasurer Donald Deardoff, pleaded guilty to defrauding investors. 

The IRM Corporation raised approximately $400 million from investors in at least five states through the sale of bogus promissory notes and limited partnerships supposedly tied to the California real estate market. Before being shut down by Michigan regulators in May 1999, over 2,400 victims in Michigan alone - recruited either in-person through church-based organizations or through religious television or radio programs such as the "Back to God Hour" - lost over $80 million. 

"This kind of fraud seems to be on the increase," says Volk. "The Greater Ministries’ fraud illustrates how large, sophisticated and pervasive religious-based investment scams are becoming." Over the past three years, securities regulators in 27 states have taken actions against hundreds of companies and individuals that used religious or spiritual beliefs to gain the trust of investors - over 90,000 nationwide - before swindling many of them out of their life savings.

Volk said that con artists who use religion to promote their scams often:

• Predict imminent financial or social crisis; 
• Claim they will reinvest a portion of the profits in a worthy cause; and 
• Equate faith in their scam to religious faith.

Before making any investment, Volk urges investors to ask the following questions:

• Are the seller and investment licensed and registered in South Dakota? Call the division of securities at 605-773-4823 to find out. If they are not, they may be operating illegally.  
• Has the seller given you written information that fully explains the investment? Make sure you get proper written information, such as a prospectus or offering circular, before you buy. The documentation should contain enough clear and accurate information to allow you or your financial adviser to evaluate and verify the particulars of the investment. 
• Are claims made for the investment realistic? Some things really are too good to be true. Use common sense and get a professional, third party opinion when presented with investment opportunities that seem to offer unusually high returns in comparison to other investment options. Pie-in-the-sky promises often signal investment fraud;  
• Does the investment meet your personal investment goals? Whether you are investing for long-term growth, investment income or other reasons, an investment should match your own investment goals.

Persons having questions regarding investments and investment schemes may contact the Division of Securities by writing 118 West Capitol Avenue, Pierre, SD 57501 or by calling 605-773-4823. The Division's website also contains information for consumers on purchasing securities.