February 12, 2013; Source: Courthouse News
Ponzi schemers seem to always try to include friends, colleagues, and charities in their snares. The federal government recently charged one Brian Bjork, a resident of Missouri City, Texas, with scamming investors out of $39 million in a bond deal while also engaging in a $1 million Ponzi scheme. According to reports, “U.S. Attorney Kenneth Magidson said Bjork was running ‘a scam within a scam’ while working for Friendswood investment advisor Joel David Salinas.” Salinas died, apparently of suicide, in 2011.
Bjork allegedly solicited investors by saying he would reinvest the money in corporate bonds or in pawn shops owned by Salinas. Federal prosecutors says that Bjork kept the money or used some to pay off other investors anticipating some return on the scheme. Where’s the nonprofit in this? Bjork was the treasurer of nonprofit Houston Athletics Foundation (HAF). No surprise, one of the investors in his alleged Ponzi scheme was HAF. Among other nonprofits that also lost money in the alleged fraudulent investment schemes was Hope Village, a program for intellectually challenged people.
Lots of people associated with charities want a big return. Some want to catch up with what they think they should have gotten before the market collapse in 2008 or to recover what they think the market took from them in the recession by participating in the current market’s run-up. They’re vulnerable to scammers who will gladly walk off with charitable funds or the money of people associated with charities.
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For example, in Atlanta, Bishop Eddie Long, the controversial mega-church director, is being sued by several parishioners who invested $1 million based upon Long’s endorsement of an investment operation run by a man who has since been charged with running a Ponzi scheme by the U.S. Securities and Exchange Commission. In another recent example, an insurance agent was convicted of swindling the Tennessee Children’s Home out of nearly all of what would have been an $800,000 bequest, leaving them with just $4,100 from a purchase of $4 million Iraqi dinars.
NPQ has written quite a bit about the ways in which philanthropy and nonprofits have been taken to the cleaners through these kinds of schemes. Following the Madoff meltdown, we even wrote an instructional article about how to avoid them. —Rick Cohen