Attorney General plans registry for scammers to combat state's high rate of affinity fraud

In the same way a customer searching for a new laptop might consult Consumer Reports before making a purchase, Attorney General Sean Reyes wants would-be investors to consult a resource listing convicted fraudsters before handing over any money.

"People are extremely trusting in our state," Reyes said. "But that trust can be easily exploited."

It was Utah's high rate of affinity fraud, in which someone takes advantage of a trusted relationship, that led Reyes to team up with lawmakers to authorize a state-run registry of white-collar criminals.

The registry would operate similarly to a sex-offender registry, listing the names, photographs, aliases, birthdates and convictions of scammers with certain first- or second-degree felonies.

The listing is not meant to punish or shame criminals, Reyes said, but simply to provide another tool to help prevent financial loss in vulnerable populations.

And in a critical difference for the registry for sex crimes, the white-collar criminals would not be required to report their listing to employers or neighbors. A name will be removed from the catalog if the criminal pays full restitution.

The attorney general said the largely homogenous culture in Utah, where a majority of people are Mormon, contributes to the state's high fraud levels.

Perpetrators of financial fraud are often wily, narcissistic and manipulative, Reyes said. In a group with shared cultural bonds, like a branch of the Church of Jesus Christ of Latter-day Saints, people let their guard down.

"All it takes is a predator to walk among them" in such a location for a community to suffer great financial loss, Reyes said.

Once they work their way into a tight-knit group, scammers are able to easily exploit bonds among its members. Reyes said the criminals sometimes start with steps to establish credibility within the community, like offering a genuine deal to some of the most respected members.

Then the criminal gets those members to sell the idea to others, unwittingly participating in a fraud. As more people sign on, the theft begins.

The registry is the first of its kind, and other state governments have already expressed interest, the attorney general said.

All information in the registry is already public and appears in court records and news reports. Reyes says his database will be more user-friendly than court records and not subject to alteration, like Google and other search engines.

Despite that, a representative of the American Civil Liberties Union of Utah said he has a number of concerns with the legislation that authorized the registry, which will become official with Republican Gov. Gary Herbert's signature. Herbert has indicated that he plans to sign the bill.

Although a person's misdeeds are already documented, being in a registry "puts a stigma on people that is above and beyond" appropriate punishment, ACLU Utah Legal Director John Mejia said.

Being listed in a registry, he said, is like wearing a scarlet letter, and it may discourage or hinder criminals who want to reintegrate into society. It might also make the criminals a target for discrimination, even though that's not an intended consequence, Mejia said.

In addition, Mejia said he doesn't believe that such tactics are effective. His experience of sex-offender registries shows that they do little to reduce crime rates and may create a false sense of security for citizens, he said.

But Reyes is insistent that his catalog is only meant to help prevent a grandmother's savings from being whisked away by a mastermind criminal.

'The devastation brought by these kinds of frauds is incalculable," he said. Law enforcement estimates are that hundreds of millions to billions of dollars are lost annually to the pockets of "fraudsters, scammers and schemers," Reyes said.

Elderly people are particularly vulnerable to these kinds of scams and could lose a nest egg overnight.

If that happens, "all of your dreams and hopes are dashed," said Reyes, and you may be left unable to afford care for an aging or sick loved one.

Reyes said he included provisions like the removal of scammers who have paid restitution to help encourage criminals to turn their lives around. Fraudsters who don't pay restitution in full but seem to be making a good-faith effort to reintegrate can be removed at the discretion of the state.

"We're not talking about an enormous amount of people, and we're not talking about forever," he said. Reyes estimates the registry of current criminals would list about 100 people, and he said the only lifetime registry members will have committed serious felonies on three separate occasions.