Megachurch pastor Kirbyjon Caldwell, from Houston, Texas, is facing up to 30 years in prison and up to a $1 million fine for allegedly scamming nearly $3.5 million from investors. His co-conspirator and financial advisor, Gregory Smith, is also facing the same charges of wire fraud and money laundering.
The money-making scheme was simple: sell old Chinese bonds and offer amazing returns, up to 15 times the original investment. The problem? The bonds aren’t worth anything, at least according to the U.S. government. The investors trusted Caldwell and Smith, but they did not receive the money they were promised.
Caldwell told ABC News, in an exclusive interview, that he’d refunded $1 million to those that wanted their money back, and said that he’s “completely innocent.”
However, the Securities Exchange Commission said that the investors were not paid back. The money that Caldwell and Smith raised from their scheme supposedly went toward personal expenses, to buy vehicles, and pay mortgages. They also used the money to pay on personal loans and credit card debt, detailed the federal complaint available through Magnolia Reporter.
Caldwell used his position of power as a megachurch pastor to sway investors, reportedly telling investors to “remain faithful” and using religious references to keep them at bay.
The historical Chinese bonds that the pastor sold were from pre-1948, which were issued under a different government than the current government of the People’s Republic of China. Therefore, the bonds are not recognized as having any real value.
In fact, there was a federal case in 1998 when the SEC deemed 1913 Chinese government bonds to have no investment value, according to Denver Business Journal. The man selling the bonds was forced to stop selling them, and his assets were frozen.
Furthermore, the U.S. Foreign Claims Settlement Commission ruled in the 1970s that the 1913 Chinese bonds did not have to be repaid by the Chinese government.
However, Caldwell’s lawyer, Dan Cogdell, said that “At no time did [Caldwell] conspire to commit a crime with anyone.” Also, they claim that there is proof to show the bonds are legitimate, detailed Houston Business Journal.
The pastor is not new to the spotlight. He served as the spiritual advisor to President Bush and leads one of the largest congregations in the country. Cogdell expects the trial to last a year, and it’s rumored that Caldwell is planning to turn himself in and post bail.