Shawn Merriman was a devoted family man, a diligent Mormon bishop, and, ultimately, a convicted fraudster. Dubbed the “Mormon Madoff”, Merriman, a self-described hedge-fund manager, ran a Ponzi scheme that swindled dozens of his friends and acquaintances, and even his own mother, out of millions of dollars. He used his ill-gotten gains to finance a luxurious lifestyle, purchasing Rembrandt prints, antique cars, and sports memorabilia. In March 2009, finding that he could no longer maintain his elaborate charade, he turned himself in to federal authorities. A year and a half later, he was sentenced to 12 ½ years in prison.

Merriman’s racket is the paradigmatic example of affinity fraud, a kind of investment scam where people “exploit the trust and friendship that exist in groups of people who have something in common.” Unfortunately, affinity fraud has become a common phenomenon among many close-knit groups, including immigrant communities, the Jewish diaspora, and Southern Baptist congregations. Although these groups witness their fair share of intra-communal investment cons, members of the Church of Jesus Christ of Latter-day Saints seem to be particularly afflicted by such schemes. For example, a 2012 article in The Economist stated that Utah, where 60% of the population is Mormon, is the “state thought to have the most affinity fraud per head.”

Many may ascribe Latter-day Saints’ susceptibility to affinity fraud to the open, welcoming nature of Mormon culture, but could something else be responsible for this stumbling block for the faithful? Although no reliable quantitative research has been performed on the subject, anecdotal evidence suggests that the Mormon practice of tithing could be a contributing factor to the high incidence of affinity fraud among the faith’s devotees. While established Church policies provide a substantial bulwark against local leaders appropriating tithing funds for themselves, such policies do not keep leaders from seeing how much members contribute. In particular, at year-end tithing settlements, bishops and ward clerks typically view a member’s donor statement, a document that details the sum total of contributions that a member has made during the year.

While allowing bishops to see how much members have contributed in tithing may seem innocent enough, this practice could be at the root of Mormonism’s affinity fraud problems. If a member is honest when telling her bishop that she is a full-tithe payer, then her bishop can pretty accurately estimate her income. This ability to guess a member’s income provides tantalizing opportunities for the conman in bishop’s clothing – a dishonest ecclesiastical leader, like the “Mormon Madoff” mentioned above, can easily scout out the best “marks” for his future scams. Even if a bishop isn’t trying to entice people into crooked schemes, his knowledge of individuals’ incomes can help him solicit personal loans from affluent congregants, with his failure to repay those loans amounting to something that is akin to fraud.

To its credit, the LDS Church has spoken out forcefully against affinity fraud, with the First Presidency, the managing director of the Church’s Public Affairs Department, and other senior leaders condemning the practice. Elder Dallin H. Oaks of the Quorum of the Twelve Apostles has been especially fierce in his denunciations, decrying “sophisticated thieves in white shirts and ties [who] will ultimately be seen and punished for what they are.” However, while the Church has made great strides in combatting this “pernicious” crime, more could be done. For instance, provisions could be added to the Church Handbook prohibiting ecclesiastical leaders from soliciting investments or loans from members of their flocks, or bishops could be furnished with donor statements showing just the dates, rather than the amounts, of tithing contributions (statements showing tithing amounts could still be furnished to members). In addition, the Church Handbook could be revised to prohibit bishops and clerks from asking for investments or loans from members for a period after their release, or changes could be made to the new online tithing system to keep donation amounts confidential.

While implementing changes like those listed above could certainly aid in combatting the scourge of affinity fraud, such modifications could also help advance the Church’s institutional interests. For one, constructing more safeguards around the tithing process could help insulate the Church’s good name, and the usually exemplary reputations of its local leaders, from association with the misdeeds of a few bad actors. In addition, wealthy members who may have skimped on their contributions due to concerns over affinity fraud or disclosing the extent of their assets could be induced to be more generous in their donations. Finally, the Church disciplinary process could be shielded from conflicts of interest that could arise from ecclesiastical leaders being entangled in financial dealings with the subjects of Church courts. In light of such benefits, and in light of the all-too-prevalent plague of affinity fraud in LDS communities, faithful Church members may be wise to pray for the enactment of additional tithing-related safeguards whenever the Church Handbook is next updated.