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Kim Flanigan knew she had to do something. She overheard her mother trying to convince a widow with nine children to invest her life savings in the financial scam. The same scam that Kim had been trying to untangle her mother from for months. ”That was my breaking point,” Flanigan told Ann Curry on the Today Show on Friday.
It was a classic “affinity scheme” Ponzi scam – ringleaders (including an associate pastor of a church in California) recruited nice, church going people who wanted to donate many of their profits to charity. A smaller scale version of the scam that made Bernie Madoff infamous. Their victims, like Flanigan’s mother, then recruited their friends and family, pushing members of their congregations at home to invest. Flanigan herself had been convinced to invest at first, but after the people running the investor group failed to give them clear answers on the details of their investment, Flanigan and her husband became convinced it was a scam. Her brother, an accountant in Washington state, agreed. When their mother and aunt, who was also involved in the scheme by that point, refused to believe them and kept trying to involve other people in the scam the siblings had no choice, they contacted authorities in Washington and their home state of Montana.
“It was difficult,” Flanigan told Curry. But she didn’t have a choice. ”We knew that she wasn’t going to listen to us, that the pull of this group and their mentality was so strong that she would listen to them before she would listen to concerned family members, when we knew she wasn’t going to pull away from it, that the next step had to happen and where I knew something had to be done.”
Flanigan’s mother was drawn into the scheme when she met a few of its members at a “Millionaire Mind” seminar put on by Peak Potentials Training in Washington state. Both of the promised investments that the “investment pool” was supposed to be involved in were phony. One, Tri Energy, Inc., claimed to own four coal mines in Kentucky. The company supposedly needed money to put the mines on line, at which point huge profits would begin to roll in. In reality there were only two mines, neither of which had any potential for profit. The other deal was even more preposterous. It involved financing the movement of a stash of 20,000 metric tons of gold bullion in return for huge profits. That’s twice as much gold as the entire U.S. reserve.
Kim’s testimony and tapes she made of investor conference calls helped to send the ringleaders of the scam to prison for terms ranging from 9 to 20 years. The rest of the investors, including Kim’s mother, were judged to be more victims than perpetrators and were not charged.
