Online searches for fraud produce abundant references to cases with Utah connections. In fact, there are many which refer to the Beehive State as the “fraud capital of the world."
While we'd all like to think we are smart enough to not become a victim of fraud, in truth, some of these schemes are so sophisticated they can dupe the brightest consumers. Fortunately, there are ways people can protect themselves, such as checking out potential buyers, sellers, contractors, service providers and investment providers at the Better Business Bureau.
Verifying business legitimacy is important, even when you know and trust the people involved. In 1986, a panel discussing the reasons behind Utah’s high rate of affinity fraud concluded that religious connections often played a role, as did a cultural focus on appearances. After all, people focused on keeping up with the Joneses across the street are more likely to fall prey to get-rich-quick schemes.
In years since, experts have also noted that close-knit groups of religious affiliates may also be a breeding ground for scams, fraud and marketing schemes, according to The Economist.
The scope of the problem is bigger than many realize. In 2010, the Salt Lake office of the FBI reported active fraud cases at that time totaled $1.4 billion in losses.
There are too many Ponzi schemes and large-scale frauds with Utah connections to name, but here are a few of the more prominent cases to date:
- Jeremy Johnson of St. George, Utah, swindled consumers using an online marketing scheme that offered a free CD-ROM on how to get government grants, then charged accounts each month without consumer knowledge, according to The New York Times. The amount Johnson defrauded: more than $275 million. The 10th Circuit Court of Appeals recently upheld his conviction but ordered a review of his sentence. He is being held in a Safford, Arizona, prison.
- In 2011, Kurk Branham Barton was indicted for a scam that in part, preyed on BYU Football alumni. The Ponzi scheme targeted former athletes and the amount defrauded exceeded $50 million, according to an ESPN report.
- According to information from the Utah Attorney General's Office, Dwight Shane Baldwin used investor funds to purchase distressed debt supposedly secured by real properties. Baldwin promised investors large returns within short periods of time with little to no risk. In April 2016, Baldwin pled guilty to seven felony charges.
- Although the amount of money taken wasn’t as big as some of these other fraud schemes, Tom Andrews of Nephi, Utah, took advantage of friends and neighbors in a shocking case. Andrews, convicted and sentenced in December 2016 to 97 months in prison (the maximum amount) was also ordered to pay $8.3 million in restitution to former clients, according to a newspaper report. Andrews used personal relationships to steal nearly $9 million in retirement funds of neighbors, close friends and family.
- Curtis DeYoung of Draper, Utah, was the CEO of American Pension Services. He stole more than $25 million from roughly 5,400 people, the highest number of victims the U.S. Attorney's Office has seen for years in Utah, according to a media report. DeYoung pled guilty to mail fraud and making a false declaration to a court in a plea arrangement where prosecutors agreed to drop 16 other fraud charges.
- Robert Holloway developed a clever Ponzi scheme based on computer software for a commodity trading program. Holloway was sentenced to serve "25 months in prison for orchestrating a $33 million Ponzi scheme resulting in $15.2 million in losses to investors," according to a statement from the U.S. Department of Justice.
If these instances of fraud make you nervous or worried that you too could fall victim, your concerns are valid. Fortunately, you can help prevent becoming another victim.
Visit the Better Business Bureau’s website to vet any company, individual or project before you spend money or invest. From deceptive sales practices by fraudulent home security or solar energy reps, to talent agency scams, to too-good-to be-true investment opportunities, the Better Business Bureau provides tools and information to help you avoid becoming a victim.