22 years for Hammond Baptist church con man

Former Hammond Baptist Church deacon sentenced for defrauding investors

"A pastor would introduce him, and he would take the pulpit. He would then give what was supposed to be independent financial advice about honoring God with your money and getting out of debt," prosecutors wrote. "In this position of authority and respect, Kimmel preached that according to the Bible, God wants people to invest."

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Jim's picture

If you invest:

  • Don't expect to make giant unrealistic returns. 
  • Diversify 
  • Only invest in instruments (equities) that trade in a market (like the NYSE)
  • Don't borrow to invest
  • Invest via a reputable broker. I use Wells Trade because I work for Wells Fargo, but other very good options are Etrade and Schwab
  • Invest regularly over time
  • Buy securities that pay a regular dividend: Examples: GIS, KRFT, or XOM. (This is not investment advice ... do your own research)
  • Consider a broad ETF like SPY
JohnBrian's picture

According to the article one con man (the former pastor) got 12 years while the other con man (the former deacon) got 22 years.

A former Hammond Baptist Church deacon was sentenced Thursday to 22 years in prison and ordered to pay more than $16.5 million in restitution after being convicted in federal court of defrauding hundreds of investors.

Schaap is serving 12 years in prison after pleading guilty in 2012 to having sexual relations with a teenage church member.

The title of this thread seems to confuse the 2!

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dgszweda's picture

 

Jim wrote:

If you invest:

  • Don't expect to make giant unrealistic returns. 
  • Diversify 
  • Only invest in instruments (equities) that trade in a market (like the NYSE)
  • Don't borrow to invest
  • Invest via a reputable broker. I use Wells Trade because I work for Wells Fargo, but other very good options are Etrade and Schwab
  • Invest regularly over time
  • Buy securities that pay a regular dividend: Examples: GIS, KRFT, or XOM. (This is not investment advice ... do your own research)
  • Consider a broad ETF like SPY

Jim, I would say the better advice is to be well educated, and be willing to loose the money.  Many of your ideas above are not hard fast rules in my opinion.  For example, don't borrow to invest is too vague.  Anyone who has a balance on a credit card (even a 0% credit card), has a car loan or a mortgage payment and invests in their 401K is effectively borrowing to invest.  Most large successful investors borrow to invest.  Many people, including myself invest in instruments that don't trade in a market.  And I have made good money.  But I am also very aware of what I am doing and the risks involved with clear understanding that I could loose the money.  I would just be careful laying out recommendations like these.

Bert Perry's picture

Per dgszweda's comment, it might be noted that you don't have to be "willing" to take a risk.  You are taking a risk every time you breathe, no?    So we might slightly modify the statement to note that we simply choose the risks we are willing to take.

And regarding the issue of borrowing to invest, well, yes, as long as I've got a mortgage or credit card, technically correct.  That said, I think the big issue Jim's getting at is actually getting a loan with the shares as collateral.

Aspiring to be a stick in the mud.

Bert Perry's picture

It's worth noting that Hammond is a strongly blue collar area, and that I'd expect that any church that expects its members to ignore the obvious implications of Schaap's "polishing the shaft" sermon is going to be....even lighter on white collar workers than you'd expect in a place like Hammond, if you catch my drift.  So what this guy did is, as far as I can tell, to take the savings of people whose retirements were already decimated by the bankrupticies of steel mills and such.  Pretty darned cruel.  

Another thing that ought to serve as a warning--a warning that unfortunately is not available to ordinary investors--is that at 10%, this salesman's "take" was about five to ten times higher than the typical overhead on a mutual fund.  Anybody that understands the world of finance is going to realize that's a "tell" about how a company works.

Aspiring to be a stick in the mud.