Merriman a Place to Worship and Prey, Steve Raabe and Miles Moffeit, The Denver Post, April 11, 2009

Merriman: a Place to Worship and Prey

By Steve Raabe and Miles Moffeit
The Denver Post
April 11, 2009

http://www.denverpost.com/commented/ci_12111179?source=commented

Federal law enforcement officers approach Shawn R. Merriman's home Thursday as seizure of his assets continued.
Photo by John Prieto

Accused swindler Shawn Merriman may have used his status in the Mormon Church to draw in victims

There's preaching from the pulpit. And then there's the less holy practice of pitching from the pulpit. Arapahoe County investment manager Shawn R. Merriman becomes the latest accused scam artist to use his standing in a church to help attract investors.

Merriman, named in a federal lawsuit this week for allegedly bilking investors of up to $20 million, was a lay bishop in the Church of Jesus Christ of Latter-day Saints.

Church officials in Salt Lake City said Thursday that Merriman was excommunicated from the church two weeks ago for "conduct unbecoming a member."

The practice of swindlers using their religious or ethnic status as a selling tool is known as "affinity fraud."

"As with any financial scam, the key to a successful affinity fraud is trust," said Pat Huddleston, a former federal securities investigator who now heads Atlanta-based Investor's Watchdog, a private investment-advisory firm.

"People will not give their money to someone they don't trust," he said. "If the scammer belongs to the affinity group, his victims identify with him. This flawed logic works especially well when the affinity group is defined by faith. The victim concludes that because the promoter shares that faith, the investment must be safe."

At least five members of the LDS church were among the 38 people allegedly bilked by Merriman's Ponzi scheme, according to several investors.

One investor said Merriman's most seductive quality was the way he wrapped himself in his Mormon faith.

"The way he talked about his faith, I was enthralled with the whole thing," said the investor. "There was this side of him, and I don't know whether it was genuine or just to get the money. But he seemed a righteous religious fellow."

Bishops in the Mormon Church are lay members who lead local congregations, or wards. Merriman was a bishop in his Parker-area church from 2001 to 2006. Federal authorities said his Ponzi scheme began in 1995.

Merriman allegedly used investors' money to purchase expensive works of art, firearms and antique cars. He displayed his art collection, including pieces by Rembrandt, in Mormon churches.

U.S. marshals on Thursday continued to seize cars and art from Merriman's home. A criminal investigation was ongoing, but no charges had been filed.

Salt Lake City securities attorney Mark Pugsley said Mormons are no more likely than any group to perpetrate investment fraud but that they may be more inclined to succumb to it.

"LDS members tend to be very trusting of one another," said Pugsley, a Mormon. "If investors trust somebody, they do less due diligence. You ought to be able to trust the people you worship with.

"But my advice is: Don't let your guard down just because you know somebody."

Steve Raabe: 303-954-1948 or sraabe@denverpost.com