Federal authorities indicted a prominent Houston pastor for allegedly selling more than $1 million in worthless Chinese bonds to vulnerable investors.
March 30 (UPI) — Federal authorities indicted Kirbyjon H. Caldwell, a prominent Houston pastor and spiritual adviser to President George W. Bush, for allegedly selling more than $1 million in worthless Chinese bonds to vulnerable investors, including the elderly.
Along with 64-year-old Caldwell, Shreveport financial planner Gregory Alan Smith, 55, was charged. Both are facing 13 criminal counts of conspiracy, wire fraud and money laundering.
According to an announcement Thursday by the Department of Justice, Caldwell used his influence as pastor and Smith used his status as a prominent investor to lure people into investing more than $1 million in worthless historical Chinese bonds issued decades ago.
During a news conference with Caldwell Friday, his attorney, Dan Cogdell, said the “accusations against him are simply false.”
“Reverend Caldwell has been a spiritual force in this city, in this state, in this country for 30 years… these charges are false,” Cogdell said. “If any person deserves the presumption in innocence it’s that man right there.”
Caldwell said during the news conference the bonds are legitimate and dissatisfied investors who asked for their money back were paid in full.
But prosecutors say the bonds, issued by the former Republic of China prior to losing power to the communist government in 1949, are not recognized by China’s current government and have no investment value.
“Smith and Caldwell promised high rates of return, sometimes three to 15 times the value of the investments. Instead of investing the funds, the defendants used them to pay personal loans, credit card balances, mortgages, vehicle purchases and other personal expenses,” according to the statement.
The defendants each face 20 years in prison for the wire fraud counts, 10 years in prison for the money laundering counts, a $1 million fine, restitution, forfeiture and five years of supervised release.
Both are also being sued by the Securities and Exchange Commission on allegations that they violated financial laws. Some people emptied their annuities to invest in the bonds.
Smith told one investor who put up $800,000 the bonds were backed by gold or silver, according to the SEC complaint.
