Several years ago, Rev. Seamus Mackrell, a Catholic priest, noticed a rash of demoralized churchgoers among the patients he met at Chilliwack General Hospital.
Situated amid farming and ranching communities in the lush Fraser Valley - British Columbia's Bible Belt - Chilliwack General was hardly alien ground for the area's many parishioners, but there was something different about these convalescents.
"They were coming in with depression and all sorts of stress-related injuries," says Father Mackrell, spiritual caretaker at Chilliwack General. "When I'd sit down with them, I'd find out that it was all because of fraud."
About half an hour west along the Trans-Canada Highway, Rev. John Haycock, a Presbyterian minister at an Abbotsford hospital was also seeing a dispirited lot.
When Rev. John Haycock, left, and Rev. Seamus Mackrell approached the British Columbia Securities Commission, God's Fraud Squad was born. (John Lehmann/The Globe and Mail)
When the priest and the minister compared notes, they were struck by what they saw. The wave of religious con victims coincided with a rise in what securities commissions throughout North America consider one of the most serious scam threats facing investors: affinity fraud.
Roughly one in 20 Canadians have been swindled in various investment frauds, according to a report released Tuesday by the Canadian Securities Administrators. But one of the toughest scams for securities agencies to crack is affinity fraud.
In affinity fraud, con artists ingratiate themselves among trusting church, ethnic, cultural or professional groups.
The North American Securities Administrators Association places affinity fraud eighth on its list of top 10 threats to investors.
"There's a real reluctance to report fraud within the religious community," said Wayne Redwick, director of education initiatives at the British Columbia Securities Commission. "There's no way a government organization like ours can get access to various churches."
So when Father Mackrell and Mr. Haycock approached the commission to do something about it, God's Fraud Squad was born.
Since 2003, financed by fines and penalties that the BCSC levies against delinquent companies and individuals, Father Mackrell and Mr. Haycock have been travelling to churches throughout the Fraser Valley - and as far away as New Mexico - spreading their peculiar gospel: how to identify and report the fraudsters who consider religious flocks easy prey.
"When they came to us, they were preaching to the converted," Mr. Redwick said. "We were looking at ways of getting into church communities and we were about ready to give up."
With more than 70 workshops under their belts, the pious pair have honed their presentation with a mix of humour and eye-popping numbers. "We know how to keep them interested," Father Mackrell said. "I'm part Scottish and he's part Dutch. So we tell the audience that we use the same business card because we're too cheap to print two."
But the act of affinity fraud, they say, is nothing to snicker at. Scammers have bilked millions from B.C. parishioners over the past decade.
From 1995 to 1997, Gary Stanhiser, a man posing as an ex-pastor and investment adviser, sucked $11-million from 300 investors in the Fraser Valley's Seventh Day Adventist community.
Between 2001 and 2005, another con man selling fake securities cheated the Fraser Valley's Mennonite community out of about $3.5-million.
Most often, the scammers employ Ponzi, or pyramid, schemes, in which money from new investors is used to pay earlier investors. The last to join generally lose the most.
Churchgoers make perfect targets because they largely comprise seniors and tend to treat fellow parishioners with unbridled trust.
Rev. Willem van der Westhuizen, senior minister at St. John's Presbyterian Church in White Rock, invited God's Fraud Squad to make a presentation last year after one of his parishioners was defrauded of $49,000, according to a local newspaper report.
"We don't like to see our members get hurt," he said. "We're considering inviting them back again."
Victims of fraud - especially those belonging to churches - are usually hesitant to report the scam, either out of embarrassment or hope that they'll get their money back.
Mr. Haycock recently worked with an Abbotsford pastor who had vowed to do missionary work in Africa with the interest he made on an investment that turned out to be fraudulent. "Even when the B.C. Securities Commission came to him, he wouldn't admit it because he was afraid that he wouldn't get his money back."
Even after the con artists are found out and jailed, the victims often don't quite recover. One in five of those who are scammed report that they withdraw from social activities or experience depression, according to the Canadian Securities Administrators survey.
To catch a thief
Fraudsters often spend years building trust with church groups before they start pitching investment opportunities. But even the stealthiest swindlers have a few calling cards in common.
They offer an investment venture available only to members of a certain denomination.
They say they are an ex-pastor who's taken up faith-based investments as a way to better serve God.
They offer high returns (240 per cent in one case) with low risk.
They warn that outside advisers are untrustworthy.
They insist that faith-based investments are unregulated by securities commissions.
They dwell upon a common religious bond to sway trust.
Source: British Columbia
Securities Commission
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