President George W. Bush, left, shares a laugh with Rev. Kirbyjon Caldwell during a fundraiser in Houston in 2003. (David J. Phillip / AP)
A Houston megachurch pastor and longtime spiritual adviser to President George W. Bush was indicted on Thursday in federal court for having sold more than $ 1 million in worthless Chinese bonds to vulnerable and senior investors, some of whom have lost their lifesaving to the alleged system.
A federal court in Shreveport, La., Returned a 13-count indictment accusing Rev. Kirbyjon H. Caldwell and financial planner Gregory Alan Smith of wire fraud, money laundering and conspiracy, the prosecutors said in a news Release.
The two men were also sued by the Securities and Exchange Commission in the same federal court for alleged violations of financial laws.
According to prosecutors, Caldwell used his influence as pastor of the 16,000-member Village United Methodist Church. Investors wanted to buy historical Chinese bonds issued decades ago.
Caldwell and Smith, a 55-year-old operating a financial management firm in Shreveport, allegedly pledged high returns to investors – sometimes 15 times what they invested – all of them together that they could later be sold for tens of millions of dollars.
In fact, prosecutors said, the gang were collectibles. "These bonds were issued by the former Republic of China before they lost power to the Communist government in 1949," said US Attorney Alexander C. Van Hook in a statement. "They are not recognized by China's current government and have no investment value."
Caldwell and Smith could not be reached on Friday morning for comment immediately. It was not clear if they were defenders or defenders.
The indictment and the SEC lawsuit could mean a humiliating fall for Caldwell, a prominent religious leader who had long been the president's 43rd president as the closest spiritual adviser. After building a close friendship with Bush as Governor of Texas, the 64-year-old pastor led the blessing at Bush's inauguration and officiated the wedding of his daughter Jenna in 2008. That same year, he supported President Barack Obama in his bid for the White House
Caldwell, who began his career as an investment banker and bond broker, has led the Windsor Village church since 1982 when, according to the Church's website, she had only 25 parishioners. In the meantime, the number of members has grown to tens of thousands. Caldwell has also started community development projects in Houston, including schools, an AIDS Outreach Center and a nutrition program.
His financial background has long played a role in his service. His 1999 book, "The Gospel of Good Success: A Roadmap to Spiritual, Emotional, and Financial Integrity," describes how he created his megachurch a "Kingdom Machine" and advises readers on how to create "wealth in God's way." amongst other things.
"This is not a fast-rich-quick scheme," Caldwell told The Dallas Morning News in 1999 in an interview about the book. "It's about being faithful to God and receiving what God has for you," he said, blessing God's words on others.
Historical bonds, such as those allegedly staged by Caldwell and Smith, are a common, if not mature, tool for scammers, according to the US Treasury Department. Railroad bonds and other types of historical bonds are traded among niche collectors, but they are worthless as securities and of no value as investments.
According to ABC13 SEC filings, Caldwell and Smith attracted 29 investors, most of them vulnerable and elderly, telling some that in a few weeks they would be recovering exorbitant returns.
Smith, who has years of experience as a financial planner, told investors that the bonds are "risk-free" and "guaranteed" to have invested $ 250,000 in them, according to the SEC complaint. Once someone has agreed to invest, Caldwell would send them money to a partner or to a company that he and his wife own in Wyoming, according to the complaint.
Some people are gutting their pensions to invest in the bonds, officials said. In one case, Smith told an investor who raised $ 800,000 for the bonds were backed with gold or silver while the bonds were actually in default and there was no liquid market for them, according to the SEC complaint.
Investors did not understand the investment, they ultimately trusted Smith and comforted themselves that a high-level pastor offered the investment, "the complaint said.
When the couple failed to meet the promised payoffs, they invented Excuses that they could not sell them were alleged by officials.
"Instead of investing the funds, the defendants used them to pay for personal loans, credit card deposits, mortgages, vehicle purchases, and other expenses." Van Hook, the prosecutor,
Caldwell and Smith were each sentenced to up to 20 years in prison for fraud and 10 years money laundering and a $ 1 million fine.
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