By Bernd Debusmann Jr
To his listeners, William Neil “Doc” Gallagher was known as the “Money Doctor” – a charming financial guru who advertised his services on Christian radio, broadcast all over the American conservative ‘Bible Belt’ that stretches across North Texas.
His adverts often concluded with a familiar slogan: “See you in church Sunday.”
“Doctor Neil Gallagher is a premier true American, with integrity in all his pursuits,” a narrator says in a corporate video posted to YouTube. “His life’s passion is to help people retire safe, early and happy.”
The three-minute video goes on to extol the benefits of the octogenarian’s “visionary style”, claiming he had guided more than 1,000 people to financial independence through his firm, Gallagher Financial Group, while also publishing a book, “Jesus Christ, Money Master”.
In reality, Gallagher was anything but. Instead, he was a fraudster who amassed $32m (£24m) in a Ponzi scheme that mostly targeted retired victims between the ages of 62 and 91.
In Ponzi schemes, earlier investors generated “returns” by taking money from later investors, who are often promised considerable profits with little risk. These schemes rely on a steady flow of new joiners giving money to those already invested in order to continue. When that doesn’t happen, the scam collapses.
His two companies, Gallagher Financial Group, Inc. and W. Neil Gallagher, Ph.D. Agency, Inc. were ordered shut by the US Securities and Exchange Commission in March 2019. Last month, he was given three life sentences in prison by a judge in Texas’ Tarrant County, in addition to a 25-year sentence he had already received in Dallas in March 2020.
Gallagher promised his victims returns of between 5% to 8% of their investment annually. Instead, they received nothing, with Gallagher spending most of the funds on personal and company expenses and to make payments to earlier investors. To hide the fraud, he also provided fake account statements showing false balances.
The BBC was unable to reach Gallagher’s attorney for comment.
While Gallagher’s scam garnered national media attention, his methods were far from new. Ponzi schemes are named after a notorious swindler from the 1920s, but versions of the scam date back to at least the mid-1800s. The medium Gallagher used to attract victims – Christian radio – has also been popular for decades, and has remained so even in the face of stiff competition from newer forms of media.
Instead, Gallagher’s nearly 200 victims highlight a different trend: elder fraud, a crime that the FBI believes is growing, costing billions of dollars each year.
It was the worst case of elder fraud she’s seen in her career, Lori Varnell, the chief of the Tarrant County District Attorney’s Elder Financial Fraud team, told the BBC.
“These are individuals who worked their whole lives to save this money up. It was personal,” Ms Varnell said. “They’re devastated. It wasn’t just the money. It was a betrayal.”
To reach his victims, Gallagher promoted his company’s services in churches and through Christian radio, an umbrella term that encompasses thousands of stations across the country that broadcast Christian-oriented programming, from sermons and talk shows to music and news.
Dating back to 1920 – the year commercial radio was first aired – Christian radio remains immensely popular in the US. More than 20 million listeners tune in each week, according to the Radio Advertising Bureau, an industry group.
Ms. Varnell said she wasn’t surprised that Doc Gallagher would use Christian radio to dupe his victims.
Once Gallagher established a sense of trust with his victims, they are less likely to “pay as much attention to the details” of what was happening, said Ms Varnell.
This tactic is a prime example of ‘affinity fraud’, said David Fleck, a former Los Angeles prosecutor. In these schemes, fraudsters target members of an identifiable group, ranging from religious or ethnic communities to certain professions.
In many cases, they use members of the group to unwittingly help advertise the scam to others and help convince people of its validity.
Mr Fleck recalled one incident in which he prosecuted a man who was a member of six different churches. After gaining their trust, the man stole the identities of 25 different people he met at church, bought houses in their names and then collected cash from renters.
In another example, a California man was arrested in 2017 for defrauding more than 200 Armenian immigrants of $19m by promising to invest their money in lucrative technology stocks.
“You see it among all cultural groups and expatriates from all sorts of countries,” Mr Fleck said. “Affinity fraud permeates all con games. It just makes it so much easier for the con artist.”
Officials say that the elderly are a particularly vulnerable affinity group. According to the FBI, millions of elderly Americans fall victim to fraud each year, accumulating more than $3bn in losses annually.
Jeffrey Cramer, a former federal prosecutor, said that the elderly are often lucrative targets for fraudsters who assume they have ample savings.
“For the most part, they have more money because they’ve been working longer. Their house probably has equity and they’ve got a 401k [retirement savings],” Mr Cramer explained. “There’s no sense trying to scam a 20-year-old. Someone in their 60s or 70s may have multiple investments and a house that’s worth five times what they paid for it.”
Mr Cramer’s assessment was echoed by Ms Varnell. In Gallagher’s case, he also took advantage of “generational differences” among his victims, in addition to their faith, she said.
“These are people who believe that when a man shook your hand and looked you in the eye, that was fine,” she said. “They’re built to believe people, because you don’t lie. That’s against the Ten Commandments.”
Fraud experts believe that only a fraction of all cases are reported. In instances that do go to court, victims are unlikely to see much – if any – of their money returned. The scammer often spends the money as quickly as it comes in, using it to continue making fraudulent payments or attempting to hide it in offshore accounts.
In the Gallagher case, a court-appointed receiver was only able to recover approximately 14 cents on the dollar. Gallagher had spent much of the remainder, while the rest was laundered and remains unaccounted for.
While the financial costs of frauds can be devastating for victims and their families, the real impact often runs deeper.
“It takes an emotional and psychological toll,” said Mr Cramer. “There’s an embarrassment element when you’ve worked 20, 30, 40 years and you’ve got literally nothing to show for it.”
In court, many of Gallagher’s victims spoke of that psychological toll. Among them was Susan Pippi, a 74-year-old who, with her husband, lost hundreds of thousands of dollars to the scheme.
“I don’t trust anybody anymore,” she said in a statement released by Tarrant County prosecutors. “Except for God and my family.”
But these sorts of frauds are unlikely to go away, said Ms. Varnell. A “concerted onslaught” of fraudsters – many of them abroad, are stealing the retirement funds of Americans at a rate of “millions every single day”, she said.
The elderly and their families must be on the lookout for warning signs.
“If you purport to be a Christian, and someone’s approaching you in the Christian realm, you should be extra suspicious,” she said. “Be no less suspicious if you’re Jewish, or Muslim, or whatever. If someone is approaching you on religious grounds, you should be very suspicious.”
Mr. Cramer, for his part, said that affinity frauds are likely to become more common as younger, more tech-savvy generations come of age on social media.
A fraudster can reach a much larger audience – but hide behind an account and disappear into the ether.
Illustrations by Angelica Casas