Affinity FraudTopics Covered:
The States Take Action...
In Florida, the Division of Financial Investigations took action against Texas Club Investments and Associates (TCIA) – a Hispanic-run organization based in Miami that targeted Hispanics. Through advertisements in a local Spanish-language newspaper which read, "Invest from $3,250 to $32,500 and receive profits from $546 to $5,460 per month," Lazaro Rodriguez promised returns of at least 9.8% per month from TCIA oil wells. In fact, there never were any oil wells. According to subpoenaed bank records, funds were used by the perpetrators to pay the returns promised to investors, were withdrawn by them or were used for purposes other than oil production. Almost all of the investors suffered a net loss with the amount of loss depending upon when, how much, and how many times they invested. Approximately $2 million was solicited from about 400 clients. Ultimately, Lazaro Rodriguez was sentenced to five years in prison with 20 years probation and ordered to pay $851,000 in restitution.
The Maryland Division of Securities reports that Metropolitan Investments President Larry Bland appealed to the African-American community to buy shares in his company, which, he said, would benefit the community by providing health and other social services in Metropolitan’s building. In fact, Metropolitan did not own the building and used most of the investors’ money for pyramid schemes and other purposes unrelated to the social interests of the community. A Final Order was issued on June 6, 1997, against Larry Bland to cease and desist from selling unregistered securities, naming Bland primarily responsible for the misrepresentations and omissions made in the solicitations. He was permanently barred from engaging in securities transactions and ordered to pay a civil penalty of $125,000.
The Utah Division of Securities relates that Robert Fain preyed upon fellow members of the Assembly of God Church in Ogden, Utah, through the use of church membership lists. Through his company, Making Good Choices, Inc., Fain sold bogus "royalty interest" in such inventions as a "Mess Free Bird Feeder" and "Vice Script" automobile theft-prevention engraving system. Victims were promised returns of "25% to 100% for years to come." In most cases, no products were ever sold. Losses by church members were approximately $200,000. On February 15, 1997, Fain was sentenced to 15 years in the Utah State Prison.
The Arizona Securities Division tells the story of a 31-year-old mother of three in Scottsdale, Arizona, who received $300,000 from a life insurance policy after her husband died of AIDS. Not knowing what to do with the money, she invested it with Lay Minister Frank Luca of the Eagle’s Nest Christian Embassy, where she was a member. A pamphlet written by the church pastor describing Luca’s "Vision Plan" for funding a new $2 million church building stated:
- "For the past year I have prayerfully sought the Lord for the plan and direction he would have us take in regards to the financing costs of the construction and improvements of the new building.... The plan and direction God has given us is strategic, sound and safe!... In the love of Jesus, Pastor Mike Maiden."
Today, Ms. Short and her family, as well other many other former Eagle’s Nest parishioners, are devastated. Frank Luca pled guilty on September 8, 1997, to operating a Ponzi scheme and has agreed to pay restitution of $11.4 million. Sentencing was set for November 18, 1997.
The Washington Department of Financial Institutions Securities Division receives a constant stream of complaints from shocked and bewildered victims of friends, neighbors, members of clubs and organizations, church members, fellow workers, and even members of their own family. "I attended church with him. We trusted him."; "He was a close, personal friend." These people and thousands like them lose money every year to people they know and trust.