(UPDATE) Erik Spruyt, who at the time the article was written was under suspicion of fraud, has subsequently been acquitted. In 2013 Mr. & Mrs. O’Donnell and others filed a civil suit against Mr. Spruyt and Mercy Ministries in France. The French court ruled on January 16, 2017 as follows: "The court ... dismisses all claims against Mercy Ministries and Mr. Spruyt brought by Mr. and Mrs. O'Donnell" and others. Financial judgements were rendered against the plaintiffs in the French court proceedings. --The Editors

When Jan and Henny Pauw visited Le Rucher on a summer missions trip, they never dreamed it would wind up costing them their retirement nest egg. The Dutch couple became ensnared in a faith-based Ponzi scheme that operated for a dozen years before it unraveled.

Nestled on two acres at the base of France's Jura Mountains and the nearby Swiss Alps, the Le Rucher retreat center opened in 1994 to help stressed-out missionaries recuperate. But Le Rucher became the setting for the promotion of the fraudulent Nordic Capital Investments (NCI), which has created resentment toward Le Rucher co-founder Erik Spruyt. Last October, Swedish businessman Kristian Westergard, the founder of NCI and a close associate of Spruyt's, was convicted of gross fraud in Sweden and sentenced to prison.

In 1998, the Pauws went to Le Rucher—then associated with Youth With a Mission (YWAM)—with their evangelical church in Ermelo, the Netherlands. An industrial chemist by trade, Jan had never been on a Christian mission. On the couple's first trip, Spruyt suggested they consider becoming long-term volunteers. Jan replied that they couldn't afford it.

When the Pauws returned the following summer, Spruyt repeated the suggestion. Jan demurred. Then, they say, Spruyt introduced them to NCI, a special investment fund that paid interest of 15 percent a year (the rate on a contract they later signed). It had the potential to generate enough income to support the couple. Part of the attraction was the promise that some of the fund's earnings would generate charitable support for select Christian missions. The Pauws invested euros worth $260,000. The following year they moved to Le Rucher as volunteers.

In total, the couple received more than $230,000 before payments ceased. But the principal amount of their nest egg has vanished. They still rue their decision to trust Spruyt's referral to NCI. In a 2001 e-mail with a sample NCI contract, he said, "If you want to take this seriously then this is the procedure that I recommend to you with the amount you want to invest."

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"All we have now is our old-age pension and a small pension from my work as an industrial chemist," Pauw says. "Sometimes we think, How could we have been so stupid to believe them? Why did we trust them?"

Trust Betrayed

The Pauws are not alone. A leader with Petra People—a web-based advocacy group formed to press for further investigation and demand return of money to investors—told Christianity Today that court records show that NCI victimized more than 100 investors.

In 2010, Sweden brought criminal action against Westergard, charging him with defrauding 29 plaintiffs, including his son-in-law, a member of the Swedish Parliament. Prosecutor Gina Kezovska said an investigation showed that over a 10-year period, Westergard signed contracts totaling $17 million. The Swedish court imposed a four-year prison sentence, ordered Westergard to repay $4.5 million, and banned him from business for eight years. Westergard, whose attorney did not respond to CT's interview request, is appealing the fraud conviction. The court said Westergard had used new investors' money to pay original investors "dividends" to maintain the illusion of profitability—the classic mark of a Ponzi scheme.

"The invested monies have not been placed on the financial market or in any investment pro-gram but rather have primarily been used for Kristian Westergard's and others' overhead as well as the reimbursement of other investors," the judges wrote.

"The crime is judged to be gross as the perpetrators have targeted a larger group comprised mainly of individuals, [who] in many cases have suffered significant damage …. [It] has been of a particularly dangerous nature as Westergard's actions have been extraordinarily devious in nature."

NCI's methods mirrored the 1990s-era Foundation for New Era Philanthropy, a Pennsylvania-based scam that victimized hundreds of individual Christians, seminaries, and other charities. Its founder, John G. Bennett Jr., is on probation after serving his prison sentence.

Todd Johnson, director of the Center for the Study of Global Christianity at Gordon-Conwell Theological Seminary in South Hamilton, Massachusetts, says, "It's crystal clear the Swedish case is not the whole picture. It's different people, different victims, and different contexts."

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In the case of NCI, its long association with numerous YWAM leaders has prompted Petra People to call for further investigation by YWAM. But YWAM International Chairman Lynn Green says investors made private decisions and YWAM has no organizational involvement or responsibility in the case.

"If you've lost a lot of money in a scheme you thought was going to make you a lot of money, anger and getting even are understandable human emotions," Green says. "I appreciate that and wouldn't want to be in their shoes, but I really don't know why it's being directed at YWAM."

Trial testimony and NCI documents reveal a significant link to select people in the YWAM network. For years, Spruyt and Westergard were influential YWAM leaders in Europe. Spruyt said that Westergard introduced NCI at Le Rucher in 1995 during a meeting of 50 YWAM representatives. NCI, imitating the name of a European-based group of private equity funds (Nordic Capital), promised high-yield, risk-free returns. The promise of handsome financial returns from someone they knew was music to their ears.

NCI said it planned to invest in financial instruments and government bonds issued by Western European banks, promising risk-free trades based on bank securities. To enhance NCI's cachet, one document cited minimum investments of $10 million while saying some traders required $100 million.

Other documents show that in 1999, Stichting Mercy Ministries Netherlands, a YWAM associate, invested $117,000. Starting in 2001, YWAM Thailand, through leader Stephen Goode, invested $62,090. Goode also invested $250,000 in personal funds. Through YWAM connections, an American businessman invested funds from the sale of his business and then encouraged 12 other people to invest a total of $400,000.

All of this money is gone.

A Long-Term Swindle

The NCI con went on for years, ensnaring such victims as former YWAM leader Kelly O'Donnell, a U.S. native now living in France, and Donna Seymour, another expatriate who resides in England. Both testified at Westergard's trial.

O'Donnell and his wife, Michele, lost about $200,000, nearly half the $430,000 the couple (both consulting psychologists who served at Le Rucher) sank into NCI. Initially, the investment looked promising. Their first interest check arrived on time in 2001 and provided a down payment on a house. Once they let their guard down, the one-year contract they signed in 1999 that promised a 15 percent annual return seemed reasonable. (At the time, a 10-year French government bond yielded 5 percent.)

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Spruyt saw problems with promising such high returns. In an e-mail to Westergard that referenced a contract coming due in April 2002, he commented, "Part of the problem [with this client] is the high returns. Next time simply offer a much lower return and maybe give a bonus once the programme runs and the funds are available."

In 2006, the O'Donnells suspected something was amiss when they tried to terminate their contract. Westergard first offered promises, followed by different explanations for why he couldn't return their money.

After talking to other investors, the O'Donnells learned that their interest payments and principal were at risk. "[Investors] knew interest payments were faltering, but we weren't privy to that," Michele says. "We've learned quite a bit how naive we were."

Although Kelly consulted experts before investing, he says it boiled down to trusting Spruyt. "We didn't fully understand it, but we decided to go with it." He said that today investors are in "a post-Madoff environment," a reference to the imprisoned New York financier who swindled more than $65 billion from clients. But before the Madoff scandal, he says, "Our eyes were very different."

Seymour, a native of Florida, invested in NCI in 2003, three years before the start of divorce proceedings that caused her additional financial strain.

Seymour learned about NCI from the O'Donnells. They were all living in England. Seymour is particularly upset over Spruyt's silence in 2005, when payments started to dwindle, prior to her renewing a contract in 2006.

"I have had to severely cut back on all sides," she says of her losses. Awarded more than $1 million and attorney's fees by the Swedish court, Seymour's investments came from an inheritance and a real-estate sale. Now doing temp work in addition to a part-time office position, the resident of Cuxham, Wallington, says her two children will have to rely on loans for college. Spruyt's statement to Seymour that his family foundation used NCI contracts to generate income to pay for his own children's college education was a key factor in her investment decisions. In an e-mail concerning NCI, Spruyt told one investor, "I myself have received the full interest for ten years. I have been able to let my children go through university debt free."

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"I showed this to a friend of mine who knows about the banking industry, and he said it looked okay," Seymour says. "At the end of the day, I could see I invested because of trust."

Defrauding the Church

The NCI case exposes a harmful trend growing within the worldwide church 16 years after the collapse of the infamous New Era fund.

Gordon-Conwell's Johnson estimates that rates of fraud and theft in Christian circles globally are rising at a rate of 5.9 percent annually, while Christianity is growing much more slowly, at 1.3 percent a year. This means faith-based fraud and theft "are growing at a rate 4.5 times greater than Christianity as a whole," Johnson says. The current annual cost projection: $34 billion. He calculated this number by analyzing extortion in secular environments and then applying it specifically to Christian finance.

This amount of financial fraud outstrips the $31 billion given annually to missions worldwide. The following are examples of misuse of U.S. Christian investors' funds that have publicly surfaced since 2009:

• A broadcaster in Minneapolis used Christian radio to pitch a phony currency investment program totaling $190 million. Though named in civil complaints, he has not been tried on criminal charges.

• A Christian businessman in Rochester, New York, conned Catholic churches and groups out of $25 million in a fraudulent mortgage scheme.

• This February, the Securities and Exchange Commission charged an Amish entrepreneur in northern Ohio with fraud after his mid-2010 bankruptcy filing. The government alleges that he lost nearly half of the $33 million raised from 2,600-plus investors, mostly Amish.

News of frauds seems not to travel far. The first NCI presentation at Le Rucher occurred the same year the $135 million New Era scam was exposed in 1995. Johnson says that NCI victims basing investment decisions largely on trust in a Christian colleague is a textbook example of why affinity fraud works.

Johnson says a key reason fraud keeps occurring is "innumeracy," a term denoting mathematical illiteracy. Not only are many individuals confused by such terms as "rate of return" or "compound interest," Johnson says, they also fail to understand that higher returns mean higher risk. Christians are as vulnerable as anyone else to getting fleeced by fellow believers. "It's a human activity," Johnson says. "Muslims con Muslims, just as Buddhists, Jews, and Hindus [do the same]. No one is immune. We have to keep these cases in front of believers. They're lulled into a false sense of security."

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Investor Doubts Grow

NCI payments didn't come to a complete halt until 2007. Yet as early as 2001, Spruyt raised questions about tardy payments. That year, he e-mailed Westergard to pose questions about overdue interest that caused Le Rucher to fall behind on a $720,000 bank note.

"The amount is, at least for us [and our board] a very high amount, and the fear is that we have lost these funds without a guarantee that they will come back to us," wrote Spruyt, noting that they would soon be two months behind.

'Muslims con Muslims, just as Buddhists, Jews, and Hindus [do the same]. No one is immune. We have to keep these cases in front of believers. They're lulled into afalse sense of security.'—Todd Johnson

"I have kept my board members at bay, but it is getting difficult to explain it all. As an organization we have breached our five-year contract with the Dutch lender who is not threatening but actually making steps to reclaim the property."

In 2005, Spruyt repeated similar doubts in an e-mail to Westergard, questioning whether NCI could meet pending payments that summer. Three years later, in April 2008, Spruyt in a letter alerted authorities that Westergard had probably broken the law. Then in 2010, Spruyt took the witness stand and testified as a prosecution witness in the Swedish court proceedings against Westergard.

Spruyt declined CT's requests for an interview. A spokesman for the Mercy Ministries board, which oversees Le Rucher, said, "At no time during any of these matters has Mr. Spruyt been charged with any wrongdoing. We consider this matter fully investigated and prosecuted by proper authorities and closed." Spruyt attorney Calvin Huge told CT that his client was also defrauded by NCI. (Spruyt was not a plaintiff at the Swedish trial.)

But Kelly O'Donnell believes Le Rucher's co-founder has more explaining to do. O'Donnell told CT that, based on court evidence, he believes Spruyt was far more than a communication link for NCI, as Spruyt testified. O'Donnell says Spruyt's description of himself as a "pool administrator" in e-mails could not mean that he only pooled questions, as Spruyt testified last fall, because Westergard twice called Spruyt a "partner" in letters to potential investors.

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Other court evidence lends support to O'Donnell's assertion. Spruyt's daughter Maryn e-mailed a Swedish investigator in 2008, saying, "A few years ago [Westergard] asked my father to assist NCI with administration and communication with investors that my father brought into contact with NCI. My father agreed to do so free of charge." Also, Jan Pauw told CT that Spruyt and Westergard jointly described to him financial benefits that would supposedly flow to ministry from NCI investments.

On a 2001 visit, Pauw says, Westergard talked about NCI's generous support of Mercy Ships, at the time a branch of YWAM. "In 2007, when a friend started to question Kristian's integrity and got suspicious of fraud, I ardently defended him," Henny Pauw says. "I told him, 'He cannot be engaged in fraudulent activities. Look what good he does: he has been supporting Mercy Ships and other Christian projects.' " Mercy Ships has denied any financial transactions with NCI.

On another occasion, Pauw says, Spruyt handed him a list of Mercy Ministries projects that would receive Le Rucher financial support. Among them: ethnic reconciliation work in South Africa, a family resource center at YWAM's University of the Nations in Hawaii, and land development in Niger.

While NCI leaders may have promised such benefits, YWAM's Green insists no transfers took place. No YWAM affiliates appear on the partial list of 24 charities the Swedish prosecutor says received charitable payments from NCI.

"YWAM is very decentralized," Green says. "We are accountable in the nations where we work … with boards that consist of local Christians in good standing. They are in turn accountable to authorities in those nations.

"I didn't know any leaders who knew anything about it. They were doing this as private individuals in a business outside of any ministry." Spruyt was involved with YWAM when he helped to start Le Rucher, but Green says Spruyt organized it with an independent board. When Spruyt eventually told Green he was leaving YWAM and taking the assets of Le Rucher, his comments led Green to believe that this had been Spruyt's intention from the start.

"They have developed a very good debriefing center," Green says. "YWAM personnel go there for debriefing, and they have trained some YWAM people in debriefing. But [NCI] has nothing to do with YWAM, except some YWAMers were victims of this. It's a real shame."

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Where's the Money?

If defrauded investors have their way, Sweden's verdict won't be the last one involving NCI. Jan Pauw has pressed officials in the Netherlands for further legal action. But in May, Dutch prosecutors said Spruyt was "very naive" yet acted in "good faith." They will not investigate further.

Unlike the Madoff and New Era investment scams, there is no court-appointed administrator for NCI to make public a full accounting of funds or recover funds. There has been no bankruptcy proceeding to force a full, public disclosure. In New Era's case, the administrator required early investors to return funds, cutting losses overall.

Rand Guebert, a former business consultant who wrote a 113-page report about the NCI fraud at the O'Donnells' request, hopes European governments will further investigate and identify all parties from 12 nations who profited from the scheme.

Guebert says government investigators "have the power to examine bank records and see where the money went. I think it's very important to tell people where the money went."

At a minimum, a full accounting of the missing money would bring Jan and Henny Pauw some peace of mind. They told CT that if the truth comes out, other Christians would learn from their great financial misadventure.

Ken Walker is a freelance writer in West Virginia.

Related Elsewhere:

Previous Christianity Today coverage of YWAM includes:

Youth with a Passion | In its first 50 years, YWAM has deployed four million workers in 240 countries. Now it sets its sights on 152 remaining unreached people groups. (December 8, 2010)
Indigenous Indignation | Investigators accuse YWAM of squelching tribal cultures. (March 13, 2008)
YWAM Director Describes Shooting, Forgiveness | Peter Warren discusses response of families and future impact on the program. (December 19, 2007)

Previous coverage related to fraud includes:

Harold Camping's Rapture Campaign: Can He Be Sued for Fraud? | As an atheist group asks the California attorney general for action, legal scholars say efforts are almost certainly doomed. (June 3, 2011)
Christian Microfinance Stays on a Mission | While scandals rock the microfinance industry, Christian nonprofits diversify their efforts to help the poor. (May 27, 2011)
Fraudbuster Busted? | LA Weekly reports that Barry Minkow is still having trouble with truth telling. (October 15, 2010)
Church-Based Affinity Fraud | Why not to trust your pastor/mortgage officer. (December 6, 2007)

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