Spend like there's no tomorrow, sect told

If the 9000 members of a polygamous Utah Mormon sect felt comfortable borrowing from their bank like there was no tomorrow, it was because for them that was precisely the case.

The world, they had been assured, would be coming to an end shortly.

They gladly used the high-interest funds to finance business ventures, which, if anyone had looked at closely enough, were frankly unreliable.

There was the watermelon farm on which not a single watermelon was ever planted. Then there was the plan to convert military barracks into homes and motels that collapsed when lead paint and asbestos were found.

However, the cashflow has ceased. After years of serving the Fundamentalist Church of Jesus Christ of Latter-day Saints, the Bank of Ephraim has closed. Or rather it was forced to shut after state regulators found it could not handle the loans it had extended.

It was several years ago that the sect took an oath to drain the bank of its money before doomsday. It was only in June that bank president Keith Church discovered the truth.

At the time of its closure, the bank had loans out to sect members of about US$18 million ($25 million), roughly 90 per cent of its total loan portfolio.

The collapse has enraged other citizens of the area unconnected to the sect. Many took considerable losses when the bank closed.

How the Bank of Ephraim allowed itself to get in so deep with the sect is now being investigated.

Mr Church complains that regulators only began moving against it as part of a state-wide effort to chase down polygamists in the run-up to the 2002 Salt Lake City Winter Olympics.

His position is weakened, however, by another unfortunate discovery. His chief cashier, it turns out, had over about 20 years embezzled US$5 million from the vaults of the bank.

 

- INDEPENDENT