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Friday, January 11, 2013

Cheating Conway residents out of $2.5 million in the name of Jesus?

Is it worse when it is a "man of God" who turns out to be the crook? 

I've been thinking about that question while digesting what happened at a Conway church, in which a former pastor pleaded guilty to a scheme that cheated members out of $2.5 million.

Is it worse because he represented himself as a 'man of God'? What if he had simply been the businessman from down the street who convinced them of a deal that seemed too good to be true? They still would be out of the same amount of money and would still be hurting. Their faith in their fellow man still would have been shaken.

About a decade ago when I was covering the real estate market in the Myrtle Beach area for the newspaper, I came across a pretty egregious case. It involved a man who would go into small churches and befriend the parishioners. He'd frequently call upon the name of Jesus and proclaim that he was given skills to help poor people buy homes. He'd pray with them. He'd quote Scripture. He did everything short of putting on a holy collar or robe. And he was able to convince people in several of those churches to buy used mobile homes from his fraudulent dealership.

It was during a period when the manufactured housing industry had gone bust after years of lax lending practices led to an incredible amount of foreclosures. (The same thing happened about 6 years ago in the so-called "stick-built" home market, which was one of the causes of the 2008 financial crash.)

Those manufactured housing foreclosures left a lot of unclaimed bad inventory, a ton of which seemed to just be abandoned. This man was able to grab many of them, I'm still not sure how. And he would sell them to unsophisticated first-time buyers - the people he found in those churches - while pretending to be a "brother in Christ."

Some of the people in those churches were working 2 and sometimes 3 minimum-wage paying jobs, and some of them had pretty good credit. But this man convinced them to buy used mobile homes - some of them were in decent shape, others in horrible shape - as their first step to long-term home ownership, something many of them had been literally praying for.

During that period, if you were the broker or seller, you were still able to make thousands of dollars as soon as the person signed the loan documents, then got rid of any risk by having the loans sold off to other banks or on the larger market. It created incentive for men like him to find unsuspecting buyers - any buyers - no matter their ability to pay, because that didn't matter. By the time the loans went bad and the buyers couldn't repay the terms, he had already made his money and left the scene.

The terms of the loans were outrageous. I sat down with a woman whose interest rate was set at 15 percent - and another at about 20 percent or so. It was akin to buying a house on a credit card. With their meager incomes and those incredible rates, there was no way they could repay those loans, even on used mobile homes, which were also over-priced. He sold those homes to them at prices that were higher than what brand new homes were being sold for on the legitimate market, where prices were depressed because of the foreclosure glut.

All of it started because he was able to convince them that he was one of them, a man also after Christ's heart. When you believe, it is hard to imagine that anyone would be bold enough to go into a church and tell a pack of lies, to use the name of Jesus for ill-gotten gains.

You can't believe someone else would do it, because you never would. The same thing happens when a "man of God" presents a financial scheme that seems too good to be true. You trust him more than you would the expert financial adviser. You believe that he would never purposefully lead you astray. And you may even believe that he has special insight directly from God.

That's why it is sometimes harder to stop those who do harm under the guise of God, no matter if it involves the sexual abuse of little boys, or a Ponzi scheme.

Having said all of that, though. Doesn't that same reality apply to other endeavors that involve trust and personal relationships? When I form a close bond with another person and honesty is at the core of the interaction, aren't I doing the same thing those church members did, opening myself up to another person to potentially derive great benefit from the relationship while also making myself vulnerable?

We often do a double take when a "man of God" is caught in a situation like this, and sometimes we blame faith itself for leading people astray. But I'm not sure that's the proper way to look at it.

An all-loving God didn't cause the pastor to cheat people out of money or that mobile home dealer to set people up in shoddy homes they couldn't afford. And faith didn't lead any of them down the wrong path. Any of us can be taken in any setting. Only fools believe otherwise.

Remember, the world's markets didn't crash in 2008 because of men in pulpits.

That crash was led by men on Wall Street, whom we often also put too much faith in. 

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