Fleecing the Faithful—Again: Former YWAM Leader Defrauds Many

A Swedish Christian businessman swindled friends, family, and missionaries of millions of dollars

Ken Walker | posted 6/08/2011 09:52AM

When Jan and Henny Pauw visited Le Rucher on a summer missions trip, they never dreamed it would wind up costing them their retirement nest egg. The Dutch couple became ensnared in a faith-based Ponzi scheme that operated for a dozen years before it unraveled.

Nestled on two acres at the base of France’s Jura Mountains and the nearby Swiss Alps, the Le Rucher retreat center opened in 1994 to help stressed-out missionaries recuperate. But Le Rucher became the setting for the promotion of the fraudulent Nordic Capital Investments (NCI), which has created resentment toward Le Rucher co-founder Erik Spruyt. Last October, Swedish businessman Kristian Westergard, the founder of NCI and a close associate of Spruyt’s, was convicted of gross fraud in Sweden and sentenced to prison.

In 1998, the Pauws went to Le Rucher—then associated with Youth With a Mission (YWAM)—with their evangelical church in Ermelo, the Netherlands. An industrial chemist by trade, Jan had never been on a Christian mission. On the couple’s first trip, Spruyt suggested they consider becoming long-term volunteers. Jan replied that they couldn’t afford it.

When the Pauws returned the following summer, Spruyt repeated the suggestion. Jan demurred. Then, they say, Spruyt introduced them to NCI, a special investment fund that paid interest of 15 percent a year (the rate on a contract they later signed). It had the potential to generate enough income to support the couple. Part of the attraction was the promise that some of the fund’s earnings would generate charitable support for select Christian missions. The Pauws invested euros worth $260,000. The following year they moved to Le Rucher as volunteers.

In total, the couple received more than $230,000 before payments ceased. But the principal amount of their nest egg has vanished. They still rue their decision to trust Spruyt’s referral to NCI. In a 2001 e-mail with a sample NCI contract, he said, “If you want to take this seriously then this is the procedure that I recommend to you with the amount you want to invest.”

“All we have now is our old-age pension and a small pension from my work as an industrial chemist,” Pauw says. “Sometimes we think, How could we have been so stupid to believe them? Why did we trust them?

Read the rest of this article at Christianity Today here >>>

Some remarks

I guess what we are reading here is how well affinity frauds work. You gain the trust of the leaders or as a leader you have a natural amount of trust associated with you and from there on it becomes easier to lure in new victims. And for the record this works the same with all these marvelous business opportunities that lure in the small people. It is not surprising that these business opportunities are so often targeted at church communities: there is a naturally higher level of trust.

Part of why this works is that lack of financial understanding, business understanding, innumeracy so you which is being replaced by trust in the person offering you the opportunity. It is for this reason that leaders are targeted first. Once you have the leader over the bridge the rest of the sheep will follow. And for the record, no one is immune and we all run a risk of falling for it.

On Affinity Fraud

Affinity fraud is when one person gains the trust of others because they share the same religion, race, ethnicity, career or other social characteristic and then deceives them in some kind of financial transaction. Now this is not necessarily intentional, as this may also be the result of a misguided participant in one scheme or another, a gifting club or pyramid scheme or the pyramid scheme posing as a legitimate MLM.

In a world of increasing complexity many do not know how to properly investigate the credibility of an offering and trust becomes an increasing factor relied on.

“You can trust me, because I’m like you. We share the same background and interests. And I can help you make money.”

The normal process of cautious skepticism is replaced by social blah blah, and for the record, it works. Another tactic used is to first lure in some prominent members of a group and once that is done the others are pitched using the credibility and good name of the group leaders: the elder, the pastor etc.

With the hierarchy of leaders and followers already established, the investment becomes merely an extension of our desire to belong and be accepted.

The fact that some of the earlier entrants, the ones you know and trust, are receiving good money is not a guarantee that it is all good, that is the essential working of a pyramid scheme, the high INITIAL returns. The case outlined in Christianity Today show that exactly and there are many more known cases throughout history.

What makes those types of scams extra attractive is that  once an affinity fraud victim realizes that he or she has been scammed, all too often the response is not to notify the authorities but instead to try to solve problems within the group. This usually just ensures that the fraud continues without anyone reporting it to the authorities until it is too late to recover funds. Scammers recognize that the tight-knit structure of many groups makes it less likely that a scam will be detected by regulators and law enforcement officials, and that victims will be more forgiving of one of their own members.

Some tips

Some way to revent becoming a victim of affinity fraud are:

    No matter how well you know someone or think you can trust them, always be cautious when it comes to handing over your hard earned money. Ask questions about the scheme and keep on doing that until you understand the scheme. Let them know that you are aware of all the scams that are taking place regularly in today’s world. Just because a person is a fellow Christian, it does not mean that he or she is a good person who will not cheat you, intentionally or out of ignorance.
    Use the Net, call others with financial; insights and not associated with the scheme or seek professional advice, but whatever you do, never step into a scheme you do not understand.
    The strange thing is that many of these schemes promise high yield on low risk or even risk free investments. In the financial world however the principle  is usually exactly the other way around: the higher the returns the higher the risks. Greed is a sin, not just because the Bible tells us it is, but because nothing good can come of greed. It leaves us wanting more and more, no matter how much we already have. Desist from this emotion and you and your money are safe. Know that God will provide you in all your needs which is something different than all your wants.

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Alert: Tax Refund Scam Mail Circulating

Did you receive a Tax Refund Notification email like this?

The sender of the email is using the following address (in my case) www-service@nz.govt.nz.

Delete but most of all do not respond or give any of your details. I just got confirmed that this is a scam from the IRD.

Document Reference (168591)


Marketing Fraud

On the false profits blog an article was published by Robert Fitzpatrick, founder of Pyramid Scheme Alert and co-author of the book False Profits. The main theme of the article is on why people fall for pyramid and Ponzi schemes.

The Evolution of Fraud

01/17/2010 07:21 PM

As business has grown more complex, fraud has evolved and adapted accordingly. Multi-level marketing (MLM), the most common form of pyramid/ponzi fraud, is the product of years of evolutionary adaptation in the scam and swindle field, matching the adaptation of the legitimate marketplace. Public awareness and law enforcement always lag behind new forms of fraud. The success of MLM’s and other financial Ponzi’s at duping millions of people, rich and poor, educated as well as illiterate, shows that public understanding has not caught up to this new mutation.

A study of consumer fraud’s evolution shows three stages that parallel the three levels of development in American business. America evolved from leading the world in manufacturing (now China) to becoming the financial capital of the world (now moving to Asia/Europe/Middle East), to our present status as the world leader of consumer-purchases driven by marketing.

The Three Stages of Consumer Fraud:

(1) Product-based fraud in which consumers are tricked into buying defective or even non-existent products or to pay far more for a product than is worth

(2) Financial fraud in credit, banking, insurance, mortgages, stocks and bonds.

(3) Marketing fraud, in which consumers are induced to personally identify with the fraudulent company and to help it defraud others by becoming part of the marketing program themselves with their own purchases and personal promotions.

All three are in operation today but public awareness is now quite strong in the first stage — product frauds. Regulation is also well established. “Lemon” laws, return policies, product safety rules, and trusted consumer alert publications are available now that help to protect people from the old plague of bad products and price gouging.

The second stage — financial fraud — is still rampant, but public awareness is growing. We now know about crushing credit card terms, unjust banking fees, predatory pay-day loans, and the disaster caused by “sub-prime” mortgages. In 2010, America may even get its first consumer protection law aimed at “financial” products. The new law and the growing anger at predatory lending and banking practices show that public awareness and consumer protection are starting to catch up in this area.

The third stage — marketing fraud — is the highest and newest state of fraud, the one which the public is most vulnerable to, has least awareness of, and has the least legal or governmental protection from. This is area in which Ponzis and Pyramids and multi-level marketing operate. There is not even a dedicated law against pyramid schemes in America. Many other countries also do not have anti-pyramid laws. Canada, for example, has some regulations on multi-level marketing (MLM), and it has anti-fraud laws, but it appears helpless to make the connection between the two. So “endless chain” buy/sell scams that wipe out the savings of 90-99% of participants are safe to plunder Canadians and Americans and are spreading worldwide as “free enterprise.”

Read the rest of the article here >>>

As requested by Robert here some further elaborations.

Marketing Fraud

Marketing fraud as it appears to transpire from the article is an extreme version of what we know as false advertising, whereby claims are made about a product, service or business opportunity that are actually know to be invalid, false and deceptive. In that sense the “marketing fraud” is a species of false advertisement be it a more insidious one.

The modus operandi that transpires from the article is most certainly one that is recognizable. At the same time however it seems to me that the methods used for what is classified as marketing fraud are just what marketing nowadays is all about.

Read the rest of the post at Dierckx & Associates >>>



Wherever a fraud occurs, three elements are always present:

  • opportunity;
  • a perceived pressure;
  • a way to rationalize the behavior;

This is not the place to extensively explain the fraud triangle but there was this article  in the Southland Times that illustrated how things may work out.

A woman was accused of using a two year old cancer victim to fraudulently obtain money. Charges included causing loss by deception, obtaining by deception and theft. She’s been running an appeal for the two year old leukemia patient and kept the proceeds. Her offending according to her own story started because she need money to feed her gambling habit. She claimed to be addicted to betting at the TAB and was placing bets around six times a day for amounts between $5 and $200. The lady in question was pointing at agents claiming to be more responsible in how they monitor punters’ behaviour. The NZ Racing Board does have a responsibility to take proactive measures tio minimise problem gambling and if we are to believe the lady such proactive measures had not been taken.

Perceived Pressures
Financial pressures are probably the most important when it comes to committing fraud. The fact that someone has always been honest appears to be of little to no significance when severe financial pressures exist or are perceived to exist. The six most common financial pressures associated with fraud that benefits the perpetrator are:

  • greed
  • lifestyle issues
  • high bills or debts
  • poor credit facilities
  • personal financial losses
  • unexpected financial needs

This list is not exhaustive and other financial pressures may be found. Furthermore these financial pressures are not mutually exclusive and several may exist at the same time. It is claimed that there is for instance a rise in employee fraud and thefts that relates to the current economic crisis. Pressures are up for many, those that lost their job may have severe pressures, that are still in a job may consider unethical means out of fear for losing their job. 

Closely related to financial pressures are vices: addictions like gambling, drugs and alcohol, and by now even the internet porn addictions.
The relationship is indirect in that it is not the vice itself that makes people commit fraud but the immediate need for cash to finance the habit. Vices are the worst kinds of pressure in that they drive people into an out of control lifestyle where they are immune to reason. This is why they are considered one of the worst kinds of pressures.

The lady pointed at the agents an even her family so as to notice behaviour and intervene. Apparently no-one had noticed the troubles the lady was in and an opportunity opened itself up where agents were, at least according to the lady, lax in relation to their monitoring of potential problem gamblers. Regardless of what the merits of such an argument are, one could just imagine how it may be important for an employer to notice behavioral changes that may indicate that something is wrong but most of all to ensure that there are no unnecessary opportunities to steal and get away with it. An employee with a vice could well become a fraud hazard. Would you recognize a problem employee?

We are more than happy to assist you and your employees for instance with a fraud risk assessment or fraud awareness training, a fraud risk management program, or where you suspect that something may be wrong; why not contact us. We would welcome the opportunity to assist you in getting to the bottom of your concerns and work towards a resolution.

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