The SEC doesn’t hold back when it comes to cracking down on fraud charges. Last week a Michigan-based pastor has had his assets frozen and faces a civil fraud charge after he exploited church members, retirees, and laid-off auto workers by coaxing them into investing in a real estate business he claimed was successful.
The pastor in question hosted financial presentations masked as ‘blessed life conferences’ at churches across the country and used faith-based scripture and biblical references to lure in investors. At these conferences, he asked congregants to fill out cards detailing their financial holdings and promised to pray over the cards telling investors they were ‘millionaires in the making’.
The pastor was not alone in this undertaking, both his business partner and his company, Treasure Enterprise, face charges for raising almost $6.7 million from 80 investors who were guaranteed high returns on investing in a profitable real estate company with hundreds of residential and commercial properties.
The pastor and his business partner didn’t stop with just ‘religious conferences’ to raise money. They also spoke on a religious radio station in Flint urging local laid-off auto workers who received severance packages to consult with them for financial increase. Investors were allegedly promised by the pastor and his business partner that they would roll over on their retirement funds into tax-advantage Individual Retirement Accounts and invest them in Treasure Enterprise.
However, no investor funds were ever deposited into IRAs and Treasure Enterprise struggled to make enough revenue to make payments owed to investors.
In total, the company owes $1.9 million in past-due payments to investors, and according to the SEC, Treasure Enterprise was not even registered to sell investments.
In this disturbing fraud case, the SEC noted that the pastor and his business partner “targeted the retirement savings of churchgoers, building a bond of trust purportedly based on faith but actually based on false promises".
While fraudsters may be hard to identify, be sure to protect your company by keeping an active eye on internal controls and risky transactions at every level of your organization.
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