Mormons Scammed in $50 Million Gold Deal

Tuesday, September 01, 2009 , , , 2 Comments

There is nothing wrong with faith but blind faith leads to things like this.

Mormons Become Victims in $50 Million Scam to Sell Gold Bullion (Bloomberg):

Henry Jones delivered the good news in a conference call with Tri Energy Inc.’s investors: The gold deal the company had been working on for years was about to pay off.

Jones, 55, a record producer in Marina del Rey, California, and his two partners had raised more than $50 million from 735 investors, which they said they were using to broker the sale to Arab buyers of 20,000 tons of gold owned by a group of Israelis. They promised to triple investors’ money -- if only Tri Energy could overcome some last-minute glitches.

All the company needed to close the deal, Jones said on the Dec. 20, 2004, conference call, taped by one of the participants, was a “safe-passage letter” that would cost $450,000. A few days later, on another call, he said Tri Energy had to come up with $100,000 to open a “commission account.” Then, on Jan. 15, 2005, a new request: The bank handling the deal wanted $125,000 to conduct an audit.

Like those caught up in other get-rich scams -- from Bernard Madoff’s $65 billion Ponzi scheme, which initially snared wealthy Jews, to an alleged $4.4 million fraud aimed at deaf people -- Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.

While the delays and pleas for more money never stopped, the charade did.

Oh Lord (pun absolutely intended).

While some Tri Energy claims were implausible -- the 20,000 tons of gold was more than twice the total U.S. bullion reserve, the largest in the world -- investors rarely wavered in their loyalty. One even invested more money after his brother, despondent about being conned, committed suicide, prosecutors say.

“These deals sounded totally outlandish to me,” says Stephen Cohen, an SEC lawyer in Washington who worked on the case. “But it was obvious that the people on their conference calls were very sincere. They really cared about each other. They prayed for each other. They talked about their families. They just wanted to believe.”

And what did we learn from this, kids?

I might recommend the following verse:

"In this you rejoice, though now for a little while you may have to suffer various trials, so that the genuineness of your faith, more precious than gold which though perishable is tested by fire, may be found to praise and glory and honor at the revelation of Jesus Christ. Without having seen Him you love Him; though you do not now see Him you believe in Him and rejoice with unutterable and exalted joy." (1 Peter 1:6-8 RSV)

If, you know, that's any consolation. Jesus was a carpenter, not an investment adviser. If he were, certainly he would have recommended that investors do their research before leaping into any scheme, too good to be true or otherwise. Hell, a simple Google search would have revealed what a sham this was - is Google not allowed in Mormon culture?

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Monica said...

These sweet but misguided individuals are not representative of all Mormons! Believe me. We're taught to use our heads, not just prayer. We're taught not to go on blind faith. Faith and reason actually can go together. Sadly, people of any faith can let go of the "reason" part, and then things go wrong.

And we most definitely use Google.


In 1999, at the ripe old age of 18, I had the pleasure of spending several months in Salt Lake City (don't ask me why I chose SLC, I think it had something to do with the punk scene and the Utah Jazz) and blowing all of those Mormon stereotypes out of the water. In fact, the younger Mormons we met while out there were some of the nicest, brightest people I've ever met in my life.

I think the point is that it doesn't matter. Look at Madoff victims, same uniting thread.

It is disgusting that someone would even think to take advantage of faith like that but not all that surprising. It's how cults form so why should investments be all that much different?

Glad to hear you all use Google and thanks for being a good sport about this :) surely you understand that my point was not to offend the Mormon faith itself but the blind faith ANY denomination can inspire...