John R. Bullis: Pastor charged with selling worthless bonds
Recently a federal grand jury gave a 13-count indictment accusing Rev. Kirbyjon H. Caldwell, age 64, and Gregory Alan Smith, 55, of selling more than $1 million of worthless Chinese bonds.
The grand jury indictment indicated the Chinese bonds were sold to 29 vulnerable and elderly investors. It alleged the two were guilty of wire fraud, money laundering and conspiracy. The federal Security and Exchange Commission sued the two on allegations they violated financial laws.
The prosecutors said the bonds were collector’s items, issued by the former Republic of China prior to 1949. U.S. Attorney Van Hook said “…the bonds are not recognized by China’s current government and have no investment value…”.
Caldwell said, “I am innocent.” He began his career as an investment banker and has led the church since 1982. The church had only 25 parishioners when he began serving and it’s reported the church now has about 16,000 members.
U.S. Treasury Department said historical bond schemes are common. Railroad bonds and other types of historical bonds are worthless as securities and have no value as investments.
The grand jury charged the two defendants used the money to pay personal loans, credit card debts, mortgages, purchase vehicles and other expenses.
It’s reported some people cashed in their annuities so they could invest in the bonds to make three to 15 times returns of the investments. Smith is reported to say the bonds were backed by gold and silver, but the bonds are in default and aren’t sold in a liquid market.
The two defendants could serve up to 20 years in prison for wire fraud and also 10 years in prison for money laundering and face a $1 million fine if they’re found to be guilty.
Caldwell had helped create some community development projects in the Houston area. He wrote a book in 1999 that told how he changed the church into a megachurch.
The two are charged with failing to provide investors with the promised returns and they invented various excuses why they hadn’t been able to sell the bonds. Caldwell said, “the bonds are legitimate, they’re not fraudulent. Everyone who asked for his money back got it, in full, in a very timely manner. The process of the selling is taking a lot longer than I anticipated.”
Did you hear “It is easier to hide your light under a bushel than to keep your shady side dark.”
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.