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Founders of a defunct Provo credit services company defrauded a California man out of hundreds of thousands of dollars by persuading him to take out a home loan, promising a 30 percent profit and lying about their business acumen, according to the Utah Department of Commerce.
But Mike Hale's willingness to part with his money also was a test of faith.
According to the state, Mascot Financial LLC owner Samuel Duane Aston earned Hale's trust by emphasizing his membership in The Church of Jesus Christ of Latter-day Saints and that he was a priesthood holder with a temple recommend, a benchmark of worthiness that requires members to assert, among other things, that they are "honest in their dealings with their fellow man."
"Religion teaches you to welcome outsiders and help them out and that if you live a Christian life you will be rewarded," said Wayne Klein, director of the state's division of securities.
"The kicker is it also teaches forgiveness. People think, 'surely someone wouldn't be so low as to use faith as a means of ripping me off,' " he said.
Yet religion is an all-too-common device in Utah scams, and not just among Mormons, Klein said. Of the 53 fraud cases brought by the securities division in 2006, five identified religion as means to find victims or allay their concerns.
"We see it way too often," Klein said.
Hale could not be reached for comment. Nor could Aston or his former business partner, Scot Stobbe, who do not have listed phone numbers. An administrative hearing has been set for July 5 for the pair to defend their actions, which carry fines of up to $900,000.
The Provo men are accused of one count each of securities fraud and fraudulent practices, including using religion to bilk Hale out of $234,000 - his original investment minus $38,000 in interest payments and $77,000 that was returned after the deal unraveled.
According to commerce documents, Hale took out a $340,000 home loan and, in August 2006, invested the money in Mascot's "Turbo Charged" plan. Aston and Stobbe claimed the money would be used by its parent, Champion Capital, to purchase promissory notes generated by Mascot's down-and-out clients who borrowed money to pay the credit service financing fee.
The pair also allegedly claimed that:
* Mascot had been in business for 10 years with branches in 20 states, when in fact state records show it was registered in 2001 and had one address;
* 30 percent of Mascot's promissory notes were paid within 30 days and the default rate was less than 5 percent;
* Aston had operated successful businesses his whole life, omitting that he filed bankruptcy in 1992 and 1996, and that Stobbe filed bankruptcy in 1990 and 2003;
* All of Aston's older children had invested money in Mascot, including a daughter who threw in $60,000.
Two months after Hale handed his money to Mascot, the Utah Division of Consumer Protection revoked Mascot's credit services permit and fined Mascot $245,500 after the company acknowledged charging and receiving up-front payments from 232 clients for credit services.
As part of a deal to avoid multiple felony charges, Aston paid $25,743 toward victim restitution.
On Nov. 1, Stobbe sent out an e-mail titled "The Dawning of a New Day," in which he explained that Mascot had been shut down and replaced by a company called Freedom Strategies. Soon after Hale demanded his money back. According to the state, he is still owed $234,000.