Last week, I had the pleasure of appearing on Coach Ron Tunick’s Coaching Your Business radio show. Toward the end of the show, Coach Ron asked me what investors most need to watch out for these days. Regular readers of the blog can guess the answer. Promissory note scams. We’ve called them an epidemic. We’ve told you not to invest in anything that involves a promissory note unless you get a professional due diligence investigation. Yet, they continue to thrive. Last week, the SEC filed an enforcement action against another alleged promissory note scam: According to the SEC’s press release: (more…)

Case Shows Folly of Relying Only on Regulators for Protection

To be fair to the state agencies, while they are in a position to close a scam sooner rather than later, they cannot stop a scam from starting.

We have posted about the Federal Resources Mortgage case before.  We have used the case to remind readers not to invest in anything that they learn about in church, and to beg pastors not to allow their church to be used in any investment solicitations.  We mention the case again today because Scott Farah, the person at the center of the FRM Pomzi scheme has agreed to plead guilty to mail and wire fraud charges in exchange for a 20 year sentence.  According to the The Citizen of Laconia: (more…)

Another Reason to Avoid Any Investment You Hear About at Church

The leaders of churches, whether clergy or lay leaders, are usually successful, smart, and genuinely devoted to the mission of the community of faith. Unfortunately, they often make the mistake of believing that their business acumen qualifies them to discern whether a proposed investment is legitimate. It does not.

We have been covering the U.S. Securities and Exchange Commission’s (“SEC”) case against Financial Resources Mortgage (“FRM”), Scott Farah, and Donald Dodge, in which the SEC charges the defendants with operating a Ponzi scheme that robbed at least 150 investors of more than $20 million.  Many members of the Center Harbor Christian Church lost money to FRM.  Defendant Scott Farah is the former treasurer of the church.  His father, Robert Farah, is the founder and lead pastor.  We have devoted three posts to this case because it highlights the dangers of investing in anything that you hear about at church or temple. (more…)

Investors Burned by Government Employees’ Toxic Relationship

The loss of 150 nest eggs ripples outward so that it touches the lives of thousands. And to think that it all might have been avoided if a couple of government employees could, in the immortal words of Rodney King, “just get along.”

New Hampshire’s Attorney General has issued a report laying blame on three government agency’s, including his own, for missing the Financial Resources Mortgage, Inc. (“FRM”) Ponzi scheme that bilked more than 150 investors out of at least $20 million.  We blogged about the FRM case on February 11, 2010 and again on April 12, 2010, highlighting the case as another example of why pastors should stay at least a continent away from endorsing any investment opportunity.  In April, the SEC filed enforcement charges against FRM and its principals, Donald Dodge and Scott Farah.  Farah is the former treasure of Center Harbor Christian Church and the son of the founding pastor.  The New Hampshire AG’s office says that the state securities department had enough information to launch an investigation of FRM in 2000.   (more…)

SEC Tags Private Lending Program as a Ponzi Scheme

Before he was King of Israel, David was a shepherd. He protected his flock from bears and wolves. Every pastor needs to remember that bears and wolves are always on the prowl. Unfortunately, some pastors invite them into the flock. The results are always predictable and bloody.

Two months ago we posted about the dangers that pastors run when they turn from the spiritual health and security of their flock and get involved in investments that promise material wealth and security. The SEC has filed securities fraud charges against Scott D. Farah, a former treasurer of the Center Harbor Christian Church in Center Harbor, New Hampshire.  Farah is the son of the lead pastor of the church. (more…)

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