- The SEC has filed a complaint against a pastor and a self-proclaimed financial planner who defrauded 29 mostly elderly people of $US3.4 million.
- Gregory Smith has been barred from broker deals but allegedly sold old Chinese bonds on the promise of guaranteed high returns.
- Kirbyjon Caldwell, a Houston pastor and friend of George W. Bush, claims his innocence.
- The bonds in question were issued by the Republic of China, which was overthrown in 1949, making the bonds of no value.
Buyer beware: Don’t invest in any old Chinese bonds.
Two men swindled 29 people out of $US3.4 million in an investment scam, the SEC claims. Kirbyjon Caldwell – who served as spiritual adviser to presidents George W. Bush and Barack Obama – and disgraced financial planner Gregory Smith have been charged for fraud.
The SEC says Caldwell and Smith lured innocent people into investing in old Chinese bonds with no worth, promising large returns. Many of the victims of the alleged fraud are elderly.
The Department of Justice said in a news release that “these bonds were issued by the former Republic of China prior to losing power to the communist government in 1949. They are not recognised by China’s current government and have no investment value.”
The Republic of China lost to the Mao Zedong-led People’s Republic of China in the country’s civil war ending in 1949 and had to flee to Taiwan. The government still operates out of Taiwan, but the US and most other countries don’t recognise the Republic of China as an official state.
ABC 13 posted court documents which showed that the pair claimed investors could receive a return of 15 times their initial investment in just 30 days. Smith, who falsely claimed he had $US250,000 of his own money invested in these bonds, told potential investors that the gains were guaranteed and risk-free.
Court documents also show Smith told an investor of $US800,000 that the bonds were backed by gold or silver. In actuality, the bonds have no market, let alone one backed by valuable metals.
The SEC complaint says that the pair used $US1.8 million of the investor funds for personal expenses. Allegedly, Caldwell made mortgage payments, Caldwell purchased luxury automobiles, and the much of the remaining money landed in the hands of offshore individuals.
Gregory Alan Smith is described by the SEC as “a self-described financial planner who the Financial Industry Regulatory Authority has barred from the broker-dealer business since 2010.”
Smith is the founder of the Greg Smith Financial Group in Louisiana, which has a F rating from the Better Business Bureau. A message on the company website tells clients to “count on us to guide you to a sound and secure financial future.”
Caldwell is the senior pastor at Windsor Village United Methodist Church in Houston, one of the largest Protestant churches in the US, according to Windsor Village’s website. When Caldwell became pastor at Windsor Village in 1982, the congregation had only 25 members, a number that has ballooned to 16,000.
Caldwell’s bio on the church’s website says “In partnership with the Windsor Village Church Family, Caldwell has spearheaded several independently operated nonprofits and community development projects that have impacted the social and economic landscape of central Southwest Houston.”
ABC KTRK in Houston reported that Caldwell spent his Easter Sunday sermon discussing his case and proclaiming his innocence.
“From my mouth to your ears, I am not guilty,” Caldwell told his churchgoers. “The one thing that disturbs me most is [the statement] that I took advantage of people. I’ve spent 38 years helping people.”
According to the Washington Post, Caldwell befriended George W. Bush when the soon-to-be president was serving as governor of Texas. Caldwell led the benediction for both of Bush’s presidential inaugurations and officiated daughter Jenna Bush Hager’s wedding.
The pair are charged with 13 criminal counts – including wire fraud and money laundering – by the US Attorney’s Office of the Western District of Louisiana. Smith is based in Shreveport, Louisiana.
The DOJ press release states that each defendant could face as many as 30 years in prison, a $US1 million fine, and five years of supervised release, among other penalties.
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