Religion News Blog — A federal judge has sentenced a promoter of Christian rock concerts to nearly five years in prsion in a wire fraud scheme that bilked nearly $1 million from investors.
Lauren Baumann, 43, of Downey, California, was the owner of Stewardship Estates, LLC, which collected nearly $1 million in loans, promising investors that the money would be used to host Christian rock concerts.
Federal prosecutors say that in fact, a substantial portion of the investors’ funds was used to pay earlier investors, who thought they were receiving profits from Baumann’s venture.
Baumann also used a portion of the money to pay the rent on Downey’s historic Rives Mansion, as well other personal expenses such as private school tuition for her children.
According to an FBI Press Release, when she pleaded guilty in October last year, Baumann also admitted that she failed to disclose to investors that she had been convicted of securities fraud in 1999 in a Texas federal court and that she had been found liable in a related civil fraud action brought by the United States Securities and Exchange Commission.
United States District Judge Josephine S Tucker sentenced Ms. Baumann to 57 years in federal prison.
Baumann was ordered to report to begin serving her sentence by April 2. The court will also issue an order requiring that Baumann pay restitution to her victims in the scheme.
According to California Watch Baumann was an active member of the Desert Reign Assembly of God:
She told people she had past trouble in Texas but won friends quickly, said pastor Don Metcalf.
“Lauren’s got this persona of being a good, godly person, and she’s very convincing,” he said. “She makes it look like she’s very successful at things.”
Metcalf said he learned later that Baumann was drawing in members of the congregation as investors, including a widow who ended up losing the life insurance money from her husband’s death.
“She used the church to gain access to people,” Metcalf said. “There’s been a lot of people hurt.”
The website quotes Baumann as saying, “I am really just hoping there will just be a way to repay everybody. At the end of the day, God knows my heart. I felt this was what I had to do, is own what I did wrong.”
“I’m basically taking whatever time God determines I have to continue investing my time and my talents into the kingdom,” she said. “I’m still believing there’s going to be prosperity.”
PONZI SCHEME
In a Ponzi Scheme existing investors are paid from funds obtained from new investors, rather than from the promised return of whichever venture the investors thought they were investing in.
This pyramid scheme was named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.
AFFINITY FRAUD
The U.S. Securities and Exchange Commission says affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse. These scams exploit the trust and friendship that exist in groups of people who have something in common.
Examples of affinity fraud (articles)
You Won, Now Give It Back: How Ponzi schemes work (article)
Ponzi’s Scheme: The True Story of a Financial Legend
(book)
What is a Ponzi Scheme? (article)
You Can’t Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work… and Why They’re More Common Than Ever (book)
Religion-based scams take Lord’s name in gain (article)
Affinity Fraud: How To Avoid Investment Scams That Target Groups U.S. Securities and Exchange Commission (article)