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SALT LAKE CITY (AP) -- Utah's trusting LDS culture has made the state a playground for con artists who find it easy to fleece investors of their life savings, government investigators said Friday in announcing indictments or charges against seven people operating independently.
Those cases and other "affinity" frauds peddled inside church circles and still more cases under investigation in Utah have taken more than $100 million from mom-and-pop investors and even doctors, lawyers and accountants, the law enforcement agencies said.
The most common fraud promises returns of up to 100 percent a month on the rapid buying and selling of discounted notes from the world's top banks. No such "prime-bank" market exists, FBI agents said, but criminals dupe early investors by making monthly "interest" payments from the proceeds of other investors until the pyramid scheme collapses.
"This is a growing problem here in Utah," U.S. Attorney Paul Warner said at a news conference also attended by federal and state securities regulators, an IRS criminal investigator and other agencies trying to spread the word about the prevalence of fraud in Utah.
In this LDS dominated state, Warner said, fraud mostly spreads in social circles among members of The Church of Jesus Christ of Latter-day Saints, which recognizes the problem and says it has a strict policy against the use of church property or functions to promote business or investment deals.
The latest cases are mostly characterized by defendants and victims who are members of the church.
They can be tough to crack because "you have to prove they meant to steal money and defraud people," said Chip Burrus, head of the Federal Bureau of Investigation's Salt Lake City division. He said the "greed factor" also was at work among victims "getting creamed" by ambitious thieves.
"Your parents are losing their life savings," Burrus said.
Two of the defendants already have pleaded guilty to fraud or conspiracy.
Mark A. Beach, Provo, awaits sentencing for operating a phony offshore trust fund that took pretax wages and income from investors who were told they could double their money tax-free. He also sold worthless bonds valued only as historic collectables.
Tracy R. Buhler, 39, Provo, was sentenced to two years in federal prison and ordered to pay restitution to 23 people in Utah and other states. Buhler posed as a lawyer and financial planner and took more than $165,000 for services he never provided, prosecutors say.
In other cases:
--Brian J. Carroll was charged Thursday with wire fraud for operating a prime-bank scheme that promised investment returns up to 1000 percent a year.
--Richard T. Barlow, 66, Salem, was charged in an 81-count indictment last month for operating another prime-bank scheme that took more than $25 million from 650 investors.
--Randall W. Law, 50, already in a federal prison in Illinois for other investment scams, was indicted Jan. 8 for taking $2.5 million from Utah investors in an alleged Ponzi scheme.
--John K. Dixon, who did business in Utah County as Net Solutions, was indicted Thursday for taking $1.5 million, promising investors returns of up to 44 percent over 90 days from nonexistent offshore funds. Dixon allegedly told investors an FBI agent had approved his program as legitimate.
--Ronald K. Bassett, 43, Lindon, was indicted Thursday on five counts of fraud and conspiracy for collecting $37 million from investors for foreign currency trading. He invested less than 1 percent of the money that way, prosecutors said, using the rest for speculative investments that lost $20 million.
"Our citizens for some reason seem to be particularly vulnerable," Utah County Attorney Kay Bryson said. "We have a trusting population."
Thieves also play on the anti-government sentiments of Utah investors, telling them regulators will lie about the legitimacy of the prime-bank market.
Tony Taggart, director of the Utah Division of Securities, said that when he fields calls from investors, many take his denials as evidence that money really can be made that way.
(Copyright 2003 by The Associated Press. All Rights Reserved.)
