When Forrest and Lee Bomar became tired of the volatility of their stock investments a few years ago, they turned to their church for guidance.
The Baptist Foundation of Arizona, an investment program that targeted Baptists and purported to lend money to build Baptist churches and retirement homes, had just sent them a postcard. The offer: a fixed-rate investment that promised a competitive return and the spiritual bonus of "doing God's work" with their money.
Over a period of years, the Bomar's invested 90% of their life savings--money that's now lost to what securities regulators call "God fraud."
"It seemed like the best of two worlds," said Forrest Bomar, a retired telephone worker from Palestine, Texas. "Between Lee and I, this money represented 65 years of work and savings."
The Bomars are by no means alone. The Baptist Foundation victimized some 13,000 people, state regulators charge, hitting faithful in every state and several foreign countries. And it's just one of many such frauds that use God's name to prey on the religious.
This type of fraud is proliferating at an alarming rate, state securities regulators said at a recent news conference.
Over the last three years, about 90,000 Americans have lost roughly $1.8 billion to frauds that use God as a lure, according to the North American Securities Administrators Assn., a group representing state securities regulators nationwide.
Those numbers have soared since securities regulators last looked at the problem. In a 1989 study, regulators found that $450 million had been lost by about 15,000 investors over a five-year period.
"In a shorter period of time, more people were scammed and a greater amount of money was lost," said Marc Beauchamp, executive director of the securities administrators association. "It is a major concern to state securities regulators."
As with most types of frauds, the statistics probably understate the problem. Regulators count only the frauds they've uncovered and say there undoubtedly are many that haven't been detected.
The surge in religion-oriented frauds is attributed to several factors, including an overall rise in so-called affinity scams, regulators said. To target their pitches, affinity-scam promoters use some specific knowledge and a sense of belonging and trust within a group--be it a church or fraternity, school or profession. Unsuspecting victims often are used to help sell the bogus investment through word of mouth.
