Home Alts News SEC Charges Pastor and Broker in Alleged Scheme to Defraud Elderly Investors

SEC Charges Pastor and Broker in Alleged Scheme to Defraud Elderly Investors

The Securities and Exchange Commission has charged the pastor of one of the largest Protestant churches in the country and a financial planner in a scheme to defraud elderly investors by selling them interests in defunct, pre-Revolutionary Chinese bonds.

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The Securities and Exchange Commission has charged the pastor of one of the largest Protestant churches in the country and a financial planner in a scheme to defraud elderly investors by selling them interests in defunct, pre-Revolutionary Chinese bonds.

The SEC’s complaint alleges that in 2013 and 2014, Kirbyjon Caldwell, senior pastor at Windsor Village United Methodist Church in Houston, and Gregory Alan Smith, a self-described financial planner, told investors that the bonds were worth millions of dollars, when in fact they were merely collectible memorabilia with no meaningful investment value. Smith was barred by FINRA in 2010.

Caldwell and Smith raised at least $3.4 million from 29 mostly elderly investors, some of whom liquidated their annuities to invest in the scheme. Caldwell and Smith are alleged to have taken approximately $1.8 million of investor funds to pay for personal expenses, including mortgage payments in the case of Caldwell, and luxury automobiles in the case of Smith. Offshore individuals received most of the remaining funds.

“Our laws do not tolerate materially misleading statements to exploit vulnerable investors who, in this case, looked up to a prominent pastor,” said Eric Bustillo, director of the SEC’s Miami Regional Office. “Caldwell took advantage of his victims, encouraging them to remain faithful even as he and Smith broke that faith, stealing from elderly investors in an outright fraud.”

The SEC encourages investors to check the backgrounds of people selling investments by using the SEC’s investor.gov website to quickly identify whether they are registered professionals and confirm their identity.

The SEC’s complaint alleges that Caldwell and Smith violated the registration and antifraud provisions of the federal securities laws, and seeks civil penalties, disgorgement, and other forms of relief.

In a separate complaint, the SEC charged attorney Shae Yatta Harper of Monmouth Junction, New Jersey, with, among other things, aiding and abetting Caldwell’s and Smith’s antifraud violations.

Harper agreed to settle the SEC’s action against her without admitting or denying the allegations. She agreed to pay a $60,000 civil penalty and is suspended from appearing or practicing as an attorney before the SEC but can request reinstatement after five years.

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