The Fastest Growing Fraud in America
arah Presnell did not think she would ever come home from the hospital. Before she went in, the Tennessee woman got her finances in order for her elderly husband and disabled daughter. She cobbled together $25,000 from the couple's savings and her daughter's meager earnings from bundling silverware at a restaurant and sent it to Gary McNaughton, an Elyria church leader recommended to her by relatives.
As promised, he sent her a check for $250 the next month. The first check would be the last.
McNaughton, former youth assistant at Church of the Open Door, sits in jail without bond. The 51-year-old Canadian was charged last month in federal court with fraud and tax evasion, accused of selling $17 million in bogus securities. He allegedly tricked 200 people from 1999 to 2003. Many of those people attended the church or had relatives who did, prosecutors say.
Authorities say scams that sprout in church pews and beneath steeples are among the fastest-growing frauds in America. In 1989, the North American Securities Administrators Association found that 15,000 people lost $450 million over five years in schemes centered at churches. Those numbers have ballooned. The association found that 80,000 people were victimized between 1998 and 2001, losing nearly $2 billion. "I've seen more money stolen in the name of God than in any other way," Deborah Bortner, the group's former president, says in a news release on its Web site.
Bob Webster, spokesman for the securities administrators group, said fraud linked to religion thrives as society grows more threatening and people more cautious. One lasting place of trust is the church.
"People tend to let their guard down there," Webster said. "Con artists realize that. Outsiders look to penetrate the circle of trust."
Under the name Haven Equity Co., McNaughton promised clients interest rates as high as 20 percent annually on investments and told them their principal was guaranteed, which it wasn't, according to court records.
Church of the Open Door, incorporated in 1950, boasts 1,800 people at Sunday services, a rambling campus and a school that enrolls 640 children from pre-kindergarten through high school.
The interdenominational church never invested money in Haven Equity and had no involvement with the sales, Open Door's attorneys said.
"The church was only in the business of religion," attorney Kate Ryan said.
But the pastor at the time, David Walls, and other church leaders invested their own money and recommended the investments to church members, according to court records filed by the investors' attorneys. Walls left the church in 2003 and could not be reached for comment.
Presnell, the Tennessee woman, and James and Dorothy Jevack of Medina said the only reason they invested their money was because they believed it was connected with the church.
"Open Door's public venue and promotion of the scheme provided a ripe environment for unscrupulous shysters," according to court documents filed by the Jevacks, who lost close to $200,000 and sued the church.
Lorain County Common Pleas Judge Christopher Rothgery dismissed the couple's suit, saying the church did not have anything to do with McNaughton's business. The Jevacks are appealing the decision.
The Jevacks declined to be interviewed on the advice of their attorneys. Other victims would speak only anonymously because they are embarrassed they were duped.
Some victims believe the church should not be held liable. "Any judgment against the church will turn me upside down," said Seth Stevens of Amherst, who blames himself for being naive and McNaughton and his Canadian partner, Andrew Lech, for deceiving him. Stevens, who lost almost all of his $750,000 investment, is still a member of Church of the Open Door.
David Miller, executive director of Yale Divinity School's Center for Faith & Culture, said clergy have to be especially careful not to endorse businesses. But he also said it is common for a church to tap its members' expertise to conduct adult education classes or other programs, which may generate clients for the members' businesses.
In a deposition, McNaughton said the investment business had nothing to do with his job at the church. McNaughton said he told investors that he was not a financial planner and that he would be sending their money to Lech, a stock trader in Canada whom he had done business with since the late 1980s.
Lech is in jail on contempt of court charges for refusing to give information in one of the civil cases filed by investors. Criminal charges related to the investments are pending.
McNaughton filed for bankruptcy last year, citing debts of more than $1.1 million. As for the Presnells, they were forced to sell their home of 27 years for a smaller house and abandon their dream of securing health insurance for their 56-year-old daughter, Diana, who has cerebral palsy.
Sarah Presnell said she was grateful to recently receive a check for $1,980 from Lech's settlement in a class-action case in Canada. "I've never lost my faith in God," she said.
(Molly Kavanaugh and John Caniglia are reporters for The Plain Dealer of Cleveland.)
Judge Says Worship Song is OK at Public School
A New Jersey elementary school student's First Amendment rights were violated when her school district barred her from singing a religious song at an after-school talent show, a federal judge has ruled.
The parents of Olivia Turton sued the Frenchtown Elementary School District Board of Education in May 2005. Administrators had denied the then-second-grader's request to perform "Awesome God," saying its lyrics amounted to the "musical equivalent of a spoken prayer."
U.S. District Court Judge Freda L. Wolfson issued a 26-page decision Monday (Dec. 11) calling the district's actions inappropriate, saying Olivia's song was one student's "private speech" and could not legitimately be perceived as a public school's endorsement of religion.
"We're excited for Olivia that she'll be able to sing her song," said the Turtons' lawyer, Demetrios Stratis. "A student doesn't lose her First Amendment rights just because she walks onto school property.
To suggest that she, at 8 years old, is going to proselytize to this audience is nonsense, and the court saw through that."
The song in question, by Christian writer Rich Mullins, includes lyrics such as the verse: "Our God is an awesome God/He reigns from heaven above/with wisdom, pow'r and love/Our God is an awesome God."
Olivia, now a fourth-grader, will sing "Awesome God" at the next installment of the "Frenchtown Idol" talent show in May, Stratis said.
Stage Set for a Costly Legal Property Fight
in Episcopal Church USA
A possible legal battle over millions of dollars worth of church property looms in the aftermath of votes on Sunday by a group of Episcopal churches in Virginia to leave the Episcopal Church USA
ECUSA) and associate themselves with conservative Anglican groups in Africa.
The votes, which affect about 10 percent of the 90,000 Episcopalians in the Diocese of Virginia, came in response the denomination's growing acceptance of homosexual relationships. Another factor in the decisions was those churches' rejection of the authority of recently installed presiding bishop Katharine Jefferts Schori, who supports openly homosexual New Hampshire Bishop V. Gene Robinson.
Eight parishes, including two of Virginia's largest, announced Sunday that their members have voted to leave the U.S. branch of the world Anglican Communion. Leaders of Truro Church
in Fairfax and The Falls Church
in Falls Church, which have roots back to the 1700s, have led the way in establishing a conservative alternative to ECUSA.
According to the Washington Post, those two parishes -- both of which voted 90 percent or more to severe from the denomination -- will form the core of a Virginia-based mission of the conservative Episcopal Church of Nigeria, whose archbishop has called the growing acceptance of homosexual relationships a "satanic attack" on the church.
In interviews with Associated Press, Truro leaders spoke sadly of the denominational demise they have witnessed in recent decades, but positively of ministry in the future. Rev. Marshall Brown, associate rector of Truro Church, expressed sorrow that Truro Church had to leave the Episcopal Church, which he said has been sick and dying for decades.
"I grew up in the Episcopal Church, and I've just watched it kind of die, piece by piece," Brown said. "The whole controversy of sexuality unfortunately is just kind of the last petal to fall ...."
But of the overwhelming vote to leave the American branch of the Anglican Communion, lay leader Jim Oakes said "we have heard resoundingly from our congregation that they want to severe those ties with the Episcopal Church -- and [they] think it's important that we continue our ministry in a different way."