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In the offices of Community Bible Church, pastor Barry Minkow leans over the phone talking to an executive who is trying to raise money for a Christian company. Minkow, after admitting he spent seven years in prison, uses his standard line when he has a hunch that a company's investment deal is a fraud. "We've got $2 million in our church building fund we're looking to invest." (His church actually does, though Minkow can't sign checks.) "You're a Christian company. We're a church. I see a fit."

"Now is really the time to buy," the man on the phone says, encouraged by Minkow's $2 million. Minkow frowns. A minute earlier the executive said he wasn't allowed to solicit funds. Hanging up the phone, Minkow shakes his head. "I don't like that at all."

Minkow smells a fraud. Sixteen years ago, as the famed Wall Street Whiz Kid, Minkow and his company, ZZZZ Best Carpet and Furniture Cleaning Company, swindled the investment community out of $26 million, going from boom to bust by the time he was 20. Minkow's firm was in fact a Ponzi scheme in which money from investors was used fraudulently to pay off a handful of early investors, creating the false impression of high returns. Such investment pyramids eventually collapse, causing most people to lose money. At age 21, Minkow was sentenced to 25 years in prison and ordered to pay back $26 million (which was dismissed by his judge in 2002).

In prison, Minkow earned undergrad and graduate degrees from Liberty University. He now pastors a growing church of 1,200 in San Diego. To atone for his past, Minkow gives seminars to fraud investigators for the FBI. Insurance companies invite Minkow to speak to executives to demonstrate the consequences of white-collar crime. Minkow pulls out his bright orange prison jumpsuit to illustrate.

With his nose for fraud, Minkow helped found the Fraud Discovery Institute, which trains accountants and investigators on fraud-perpetration techniques and ways to expose them.

Minkow is now an investigator himself, uncovering more than $1 billion in fraud in recent months. In his book Cleaning Up, to be released this month by Thomas Nelson, Minkow documents his investigations of eight frauds, all of which were shut down by the government in a 10-month stretch from September 2003 to July 2004. The frauds were perpetrated against Christians, and, he believes, it's only of fraction of what's out there.

Christians are easy targets, Minkow says, and they are increasingly a favorite of perpetrators who are bilking billions from believers and churches. "Can you imagine what this does to churches?" he asks. Minkow has watched as Christians—as investors or scammers—lie and steal tens of thousands of dollars from other believers and, in the process, destroy congregations. Burdened to stop the plague, Minkow is a busy man—investigating fraud when he's not preparing sermons, counseling, or making hospital calls.

Scamming unwary, trusting believers is an age-old tactic, but Minkow believes that now more than ever investors are ripe for the picking. Minkow sees the conditions for what he calls a "fraud perfect storm"—the convergence of factors that make today's investors especially vulnerable.

Lower interest rates and a volatile stock market cannot provide the kind of returns many baby boomers need for retirement. But skyrocketing housing prices in many areas of the country give homeowners hundreds of thousands of dollars in home equity. "The average person doesn't have six figures to invest," Minkow says. "However, when the housing market goes up, they can tap equity, and now the average person becomes a mark."

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January 2005, Vol. 49, No. 1