There is a relatively new SEC case that definitely needs to be added to my growing list of Utah affinity fraud schemes. On February 11, 2015, the Salt Lake City office of the U.S. Securities and Exchange Commission filed a lawsuit and obtained a temporary restraining order against Roger S. Bliss of Bountiful Utah.
This case has all of the hallmarks of a fraudulent scheme, but unfortunately a number of Bountiful residents (probably many were his ward members) lost their retirement savings because they failed to see – or worse ignored – all the red flags.
The SEC Complaint alleges that Mr. Bliss operated an “investment club” out of his large Bountiful home. Members of the “club” would contribute funds for Bliss to day-trade Apple (AAPL) stock for what he represented to be huge profits.
Bliss allegedly told his friends and neighbors that he had an excellent trading record and had never lost money in the last six years [red flag]. Bliss told interested investors that he had achieved annual returns of between 100 to 300% [red flag], and claimed to be managing in excess of$300 million, $260 of which was his own money. Bliss also claimed there is no risk for investors [red flag], and guaranteed they would not lose their principal investment [red flag].
He told people that he taught investment seminars and traded for his own account for about a year until he felt comfortable enough with his proficiency and results to trade with his friends’ money. And what a great friend he turned out to be…
He called his scheme an investment club (purportedly after consulting with an attorney) because he wanted to avoid being registered as a stock broker or investment advisor. This is a big red flag — anyone who claims he or she can buy and sell securities on your behalf without being licensed and regulated by FINRA or the SEC is clearly violating the law.
According to the complaint, Bliss represented to investors and potential investors that when he traded their money he would take “50% of the upside” so that earnings on their investment are split. The remaining 50% of profits were to be shared among investment club members, based on their percentage of equity in the club. So even after the 50% split, Bliss promised investors would earn at least a 100% return on their investment because Bliss he was actually earning a 200% to 600% total annual return on his trading activities [huge red flag]. He told investors that his average profits were about $920,000 per day, and that he was averaging profits of over $2 million per day during 2015 in his investment club. [red flag]
Of course none of this was true. According to brokerage records obtained by the SEC, Bliss lost $3,299,689 over the last three years of trading, and much of the money he received from his “club members” never even made it to his brokerage account. The ending balance on his December 31, 2014 brokerage statement was just $32,362 — far less than the $300 million he told people he was managing in the “investment pool.”
Of course he could not show people the real trading records, so the SEC alleges that he created fake trading records and account statements that showed successful trading. Bliss provided a fake account statement to one investor that showed a balance of over $85 million in the account. The statement showed a profit of over $4.9 million for the first 5 trading days of 2015.
So the question is WHY. Why would so many good trusting people give this man their hard-earned money when the claims he was making were so obviously too good to be true? Why did these people fail to consult with authorities such as the Utah Division of Securities or the SEC to find out whether his scheme was a scam?
I think the answer is simple: Greed. People get so excited about the prospect of outrageous profits like the ones promised by the ironically named Mr. Bliss that they jump in head first without researching the investment opportunity. And people in this state are far too trusting. Just because someone shares your religion does NOT mean they can be trusted with your money. Research the investment opportunity carefully and remember that if it seems to good to be true (such as 200% to 600% annual returns) it almost always is.
If you are a victim of Mr. Bliss’s scam please feel free to share your story anonymously in the comments below.
Copyright 2015 by Mark W. Pugsley. All rights reserved.
You nailed it right on the head. Forget the 200-600%, if somebody tells you that they can get you 10-20% consistently you should know you’re dealing with a crook.
I continue to be amazed at the effect that greed has on the brain. Some “financial adviser” tells you he can get you 10-20% returns on your money and greed kicks in, the brain turns to mush and dumb decisions start being made.
Thanks for a great article.
Great write up. I have known roger bliss for years and he is a prick. He’s not a good guy and I can’t believe so many good people fell victim. But you nailed it on the head with greed!
My only hope is that he gets nailed and serves time.
He seems the model Ward HP Group Leader.
How do Bishop’s pick their High Preist Group Leaders?
Affinities can attract even un-greedy affiliates. His investors FYI are willing to pay his affinity fraud legal fees, so while he enjoys a presumption of innocence, he may spin his way right up to his sentencing. Snow reps him.
I think that saying that all of Bliss’s victims were basically greedy is an oversimplification. In cases such as this one, where the victim may already have an asymmetrical power relationship with the perpetrator of a fraud in which the victim is socially pressured (or expected) to recognize the legitimacy of the perp, it’s likely that social pressure plays a significant role. If you’re a member of a congregation (Mormon or otherwise), there’s social pressure to respect (read: not challenge or question) the leaders of the congregation. This asymmetrical power relationship opens up a world of potential exploitation to the more powerful party, and it doesn’t take much prodding for the less powerful party to feel that they really “should” go along with what the more powerful party is pressuring them to do. Certainly, greed is a likely factor, but it’s entirely plausible for a person to be duped in this kind of situation with factors that are primary, and with greed as a secondary motivator—a ratifying sentiment.
Utah may be special because of the astonishing fact that culturally, people here seem to have the feeling that it’s confrontational or uncooperative to pursue independent verification of claims (as one does when one carries out plain old due diligence). If you don’t take someone’s claims at face value, you must be suggesting that they are lying. That can be very socially risky when dealing with the kinds of tight-knit communities and asymmetrical power relationships that one encounters in hierarchical communities that have very dense social networks, such as a lot of religious congregations (of which Mormon wards are a great example).
I wish everyone involved in this case the best as they work through striving for justice and trying to put their lives and finances back in order.
@Heidi: For non-believers, it’s an easy question to answer, of course, while for believers, it’s a real challenge. For those of us who embrace faith, there is always at least a sliver of the unknowable, and sometimes that sliver can turn into a yawning chasm. A crisis of faith. A confrontation with doubt.
In my limited experience, there’s always a fair amount of “round hole, round peg”, and of course those of us on the inside put a lot of stock in the idea that the eventual decision has to be divinely ratified.
The problem is that even after all of that, the pegs sometimes turn out to be rotten. This then leads to the question: where’s the fault here? Did the leadership who were figuring out the calling rush through the process or misunderstand the divine guidance they were given? (Certainly, human error happens!) On the other hand, did they do everything right and God approved of the rotten peg being put in the hole? If so, why? Or is God involved at all?
Literary allusions to us humans as playthings of the divine are pretty hollow and don’t provide a serious answer, but the thought that a God who cares about us would allow wicked people to wreak havoc on innocent victims seems incongruous, whether or not those wicked people occupy positions in the LDS or another church or enjoy similar positions of trust and respect in secular institutions. We’ll never know Bill Cosby’s final tally—why would God allow so much pain and suffering to be wrought by a person on other persons? How could God allow despots of history (and the present day) to slaughter their people? I’ve never heard a really satisfying answer to that question from any religious tradition, and I’ve studied several.
I guess the point here is that no matter what kind of legitimacy a person may have—even if they appear to be sanctioned by God—even if they are your spiritual leader—even if they are your brother-in-law—there is no substitute for good, old-fashioned due diligence, and there is no person who should be considered so trustworthy that due diligence is unnecessary!
Great comments, PEC. Thank you for your thoughts. I too hope that the victims of this scheme will be able to recover some of their losses, and that other will learn form this sad story. There is no substitute for due diligence in investing!
This posting is directed at Jon Roesler’s comments above.
Your listing of Mr. Debus’s
history here is distorted and is missing a lot of information in order
that you can make your point. The
information you are missing or have distorted include;
First, Mr. Debus was charged with theft from his own
company, Virtual Computer Technologies, Inc. This was at the behest of a
vindictive and psychotic ex-wife. Mr. Debus maintained his innocence throughout
and had to go all the way to the Montana Supreme Court to prove his innocence.
They ruled unanimously that the money that Mr. Debus was charged with stealing
was actually HIS money. Strange world we live in when you can be charged with
stealing your own money.
Second, Mr. Debus was charged with “possession of
stolen property”. Mr. Debus crossed a legal line here, but not an ethical
line. Without proper legal counsel, he accepted stolen property. He pled guilty
and paid restitution. Interestingly, in this case, there was no victim. To this
day, 13 years later, the courts have not identified a victim and the restitution monies still reside unclaimed with the court.
Third, an overzealous, brand-new securities investigator in
NM, named Daniel Tanaka, charged Mr. Debus with securities fraud. Mr. Tanaka
was removed from his position soon thereafter
when he falsely charged members of
the NM legislature and others with fraud. Mr. Tanaka left in disgrace and is no longer in law enforcement.
Mr. Debus was forced to plead guilty, served no jail time, no community service and no probation. He made full restitution ($25,000) to the alleged
victim.
I also want to point out that the poster above has
been trying to extort monies from Mr. Debus. This posting was made only after
Mr. Debus refused to succumb to his extortion attempts. His actions are now
being investigated for criminal activity.
And this posting is directed at R Briski’s comments above:
While it is possible MUCH information is missing regarding the record of Keith Debus as listed above, all of the information given is public record and easily fact-checked by visiting the websites listed. My hope is that others who have been victimized as I myself have will continue to come forward, as the best way to put a stop to this sort of thing is to warn as many people as possible as publicly as possible.
Clearly a nerve has been struck.
Debus and I both know what happened between him and me and the representations he made as having been a commodity trader at Drexel Financial, and he and I both know any claim of attempted extortion is nonsense. Threats regarding investigations of alleged criminal activity on my part, clearly intended to keep me quiet, are not going to work.
Wow, The ignorance of people. The simple answer of why people invested, is/was definitely not greed. Naïve, Yes! But don’t think for a minute that some of those investors weren’t just trying to keep their head above water and survive. Rogers promises were a tiny little light at the end of the tunnel. So, before you all go spouting off thinking you know what’s up and judging people, Check yourself. If you don’t know the circumstances of why people trusted Roger, Keep your comments to yourself. I personally hope Roger and his family go away for a long time. But bashing the investors, Not cool.
It doesn’t take “smart people” to accumulate money. Depending on your upbringing and events life has served, such as the Great Depression that program individuals to act in different ways. If you were attempting to sell stock in the 1930’s, it would be absurd and people would think of you as “dumb”. After reading your statement above, it leads me to believe you may be the less intellectual individual. It’s very unfortunate that these people were taken advantage of in this way, and since I never experience the circumstances that drove them to make this decision, I wouldn’t assume anything other than they were taken advantage of.
The SEC absolutely did NOT account for what money went where. I’ve seen the forensic accounting paper, where they simply name “money spent by Roger” as the amount to balance an equation, what they want the story to say. It actually goes along with what Roger has said all along, so they conveniently don’t give the info to investors, or even to courts until just before sentencing. In all the news they say he lost 3 mill trading, but they never once say they can account for over 10 mill in gains, meaning net even they admit he was positive and not losing. Lucky for them, Roger’s lawyer was incapable of doing anything he should have in order to represent Roger. The government does whatever, spins the story however they want, harasses you and your family/friends, and makes sure you can’t get good representation so they win. You can sit and judge without correct info all you want….but hope they never do this to you or maybe that judging Karma will come right back around when they screw you over.