With all of the fraud causes currently being prosecuted in Utah courts, the state’s new white-collar crime registry will find itself quickly populated with the names of people investors should steer clear of. A law creating the registry goes into effect this month as a result of legislation aimed at preventing the kinds of scams that have cost Utah victims billions of dollars in recent years.
Cases of “affinity fraud” have become unfortunately common in Utah, and lawmakers and law enforcement officials are hopeful a database much like the state’s sex offender registry will give consumers easy access to information they should have before they put trust in someone pitching a way to make big money fast.
Many of the cases currently being adjudicated involve schemes in which victims had something in common with the perpetrator, whether they were neighbors, members of the same church congregation or linked by some social or business relationship. The FBI estimated that in 2012, more than 4,000 Utah residents lost a net total of $1.4 billion to “affinity” schemes. While we enjoy the benefits of a culture in which we are inclined to trust our neighbors, a quick scan of current court dockets shows not all of our neighbors are trustworthy.
There’s the case of a real estate-oriented Ponzi scheme based in Fountain Green involving more than $100 million in losses; there is a loan modification fraud case in which six Utahns have been indicted for taking more than $33 million from investors nationwide; a Riverton company is being prosecuted for a retirement account fraud that allegedly took more than 5,000 people for more than $24 million; a Kaysville insurance agent is accused of misappropriating $72 million taken from hundreds of local investors while, also in federal court, a company based in Washington, Utah, is accused of swindling hundreds of people out of a total of $66 million in yet another alleged Ponzi scheme.
In that case, lawyers claim the perpetrator made prominent notice of his LDS faith and attracted investors from Mormon congregations in the San Diego area, many of whom have lost their life savings as a result.
The new fraud registry is unique in the country, but so is the prominence of such crime in our community. “Utah’s unique personal interweavings and close relationships offer a rich environment for predatory behavior and financial crimes,” said Utah Attorney General Sean Reyes, a proponent of the new law. The registry could be a valuable tool for investors given the fact that many of those accused of fraud have records of past transgressions.
The database is intended to enhance transparency in the investment world, not to serve as a rogue’s gallery to publicly shame those who have blatantly abridged the trust of others. But such shame is nevertheless justified given the devastating effect such crimes have on those who fall victim.
Many of our commercial transactions are governed under the premise of “buyer beware.” The new registry simply offers prospective investors more awareness of the backgrounds of those who prey on their trust in order to pillage their savings.