As the case I’m going to describe would indicate, it is a solid myth that divine inspiration can feed your greed.
That is so wrong on so many levels, isn’t it? But some investors apparently didn’t think so.
(this blog post is based entirely on the case described in Wealth Management magazine regarding two Utah con men titled, “SEC: “Divinely Inspired” Traders Were Mere Frauds“)
Thomas J. Robbins & Daniel J. Merriman “lost” $11 million of their clients’ money by investing them in a fake company aptly named “ConTXT”, They claimed their algorithm-from-God (my portrayal, not in the article) would yield returns of 7.5% per week. That’s right, per week. And with no risk! I think you’d even have trouble doing that dealing crack. But I don’t know.
They appeased early investors for failure to achieve these returns by explaining technology was not yet sufficient to manifest their “spiritual revelation”. This while never investing the money and just spending it on themselves, using it all up within months. To keep investors engaged, Robbins & Merriman touted their religious faith and phony large clients like the Mormon church, the Rothchilds, etc.
The article didn’t mention this but a common thought pattern of such crooks is they believe their victims deserve to lose their money for being so greedy as to think they could actually get such outrageous returns. I nearly agree with them in this case; but tell me how that thought can exist in a healthy mind, all at the same time.
So here are the key points, if we’re to learn something from yet another bunch of scammers:
- Both men (four were actually involved) were ex-cons who had met in prison, their attendance in which had been precipitated by prior financial fraud.
- As a result, neither was licensed or registered to give financial advice or sell financial products.
- None of the investors had looked them up on https://brokercheck.finra.org/ before handing over their money. It’s free. It takes one minute.
- The investors were driven by misplaced trust (religion and money never mix well) greed and FOMO (fear of missing out), the worst investor motivators.
- Had they performed some due diligence, none of them would have been victimized.
- Had they focused on their goals and reasonable proven ways to realize them they wouldn’t have had any interest in ConTXT to begin with. (I love that name. What a blatant giveaway. Robbins & Merriman put the “Con” in ConTXT.)
Your Constructive Comments are Welcome!