An Uncertain Future in Uncertain Times | Nonprofit Fraud Blog

Reposted from the This Week in Nonprofit Fraud Blog – June 30, 2014

The Ponzi Scheme Preacher
Ponzi Scheme Preacher
Photo courtesy of Paramount Pictures

June 30, 2014: Following months of delay, Baptist preacher Archie Evans has been assigned a July 9th sentencing date after pleading guilty in January 2013 to mail fraud and financial transactions structuring in conjunction with a multi-million dollar Ponzi scheme. Starting in 2004, Evans solicited members of the Myrtle Beach-area Tilly Swamp Baptist Church to invest $2.5 million in Gold & Silver, LLC, an investment company he ran, promising 10-12% returns per quarter. Evans prepared false investment statements showing the promised returns to perpetuate the fraud and recruit new investors. And as with any Ponzi scheme, Evans used money from the new investors to pay off old investors and keep up appearances. By October 2011, Evans had spent or lost all of the money invested. He faces up to 25 years in prison and $500,000 in fines.

See more on this case at Myrtle beach Online

Lessons Learned

  • Often, fraud perpetrators will target a specific group of people who they know will give them the benefit of the doubt, a phenomenon known as “affinity fraud.” In this case, Evans, a Baptist preacher, specifically targeted congregation members who he knew would be likely to trust him.

Raffa Forensic Practice Tips:

  • Beware of promises of investment returns that are “too good to be true” – a common characteristic of Ponzi schemes.
  • Does your organization have a formal investment policy that governs selection of investment advisors and opportunities?

An Uncertain Future in Uncertain times
Church fire

Photo courtesy of State of Alabama’s Fire Marshal’s Office

June 30, 2014: Hrond Arman Gasparian awaits sentencing after being convicted earlier this month of ten counts of wire fraud for defrauding Bell’s Chapel Church out of $400,000 in the aftermath of a fire which destroyed the church in November 2008. Gasparian presented himself as a “man of God” who could secure them a $3 million grant to rebuild the church, if only they would provide him with $365,000 in earnest money and a $35,000 non-refundable broker’s fee. He claimed the money would be kept in escrow, and the church would receive the funds necessary to pay for the ongoing rebuilding within 90 days. When Gasparian never returned the original funds or secured the grant, construction halted and the church was left with an empty plot of land and is now being forced to sell the property or face a December foreclosure. Gasparian faces 20 years of prison and a $250,000 fine for each of the 10 counts.

See more on this case at IndyStar

Lessons Learned

  • Again, an organization finds itself a victim in an affinity fraud case; Gasparian targeted the group by emphasizing his “highly religious” nature.

Raffa Forensic Practice Tips:

  • Advance fees and earnest money are common tools of fraudsters – be extra cautious when you receive a request for such an outlay.
  • Does your organization conduct due diligence on potential business partners, especially those with whom you are entrusting funds?

DON’T BE THE NEXT VICTIM OF FRAUD!

The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.

For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.

You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention:

Lawrence J. Hoffman, CPA/CFF, CVA, CFE, Senior Partner:  Lhoffman@raffa.com
Leslie C. Kirsch, CFE, Manager:  Lkirsch@raffa.com

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