Kirbyjon Caldwell, famed Houston megachurch pastor, sold millions in worthless bonds, feds charge
A Houston megachurch pastor and longtime spiritual adviser to President George W. Bush was indicted in federal court Thursday on claims that he sold more than $1 million in worthless Chinese bonds to vulnerable and elderly investors, some of whom lost their life savings to the alleged scheme.
A federal grand jury in Shreveport, La., returned a 13-count indictment accusing the Rev. Kirbyjon H. Caldwell and financial planner Gregory Alan Smith of wire fraud, money laundering and conspiracy, prosecutors said in a news release.
The two men were also sued by the Securities and Exchange Commission in the same federal court on allegations that they violated financial laws.
According to prosecutors, Caldwell used his influence as the pastor of the 16,000-member Village United Methodist Church to dupe investors into buying historical Chinese bonds issued decades ago.
Caldwell and Smith, a 55-year-old who operates a Shreveport-based financial management firm, allegedly promised investors sky-high returns — sometimes 15 times what they invested — assuring them all along that they could be later sold for tens of millions of dollars.
In reality, prosecutors said, the bonds were collector’s items. “These bonds were issued by the former Republic of China prior to losing power to the communist government in 1949,” U.S. Attorney Alexander C. Van Hook said in a statement. “They are not recognized by China’s current government and have no investment value.”
Caldwell and Smith could not immediately be reached for comment Friday morning. It was not clear if they had retained defense attorneys or entered pleas.
The indictment and SEC lawsuit could mark a humiliating fall from grace for Caldwell, a prominent religious leader who long held the 43rd president’s ear as his closest spiritual adviser. After developing a friendship with Bush when he was the Texas governor, the 64-year-old pastor led the benediction at both of Bush’s inaugurations and officiated his daughter Jenna’s wedding in 2008. The same year, he endorsed President Barack Obama in his bid for the White House.
Caldwell, who started his career as an investment banker and bond broker, has led the Windsor Village church since 1982, when it had just 25 parishioners, according to the church’s website. In the time since, membership has swelled into the tens of thousands. Caldwell has also launched community development projects in the Houston area, including schools, an AIDS outreach center and a nutrition program.
His financial background has long played a role in his ministry. His 1999 book, “The Gospel of Good Success: A Road Map to Spiritual, Emotional and Financial Wholeness,” discusses how he transformed his megachurch into a “Kingdom-building machine” and advises readers on how to “create wealth God’s way,” among other things.
“This is not a get-rich-quick scheme,” Caldwell told the Dallas Morning News in a 1999 interview about the book. “It’s about being faithful to God and receiving what God has for you,” he said, and being “a blessing on God’s terms to others.”
Historical bond schemes like the one Caldwell and Smith are alleged to have orchestrated are a common, if unsophisticated, tool for scam artists, according to the U.S. Treasury Department. Railroad bonds and other types of historical bonds are traded among niche collectors, but they are worthless as securities and without value as investments.
According to court documents from the SEC posted by ABC13, Caldwell and Smith lured in 29 investors, most of them vulnerable and elderly, telling some they stood to rake in exorbitant returns in a matter of weeks.
Smith, who had years of experience as a financial planner, told investors that the bonds were “risk free” and “guaranteed” and that he had invested some $250,000 in them himself, the SEC complaint states.
Once someone agreed to invest, Caldwell would have them wire money to an associate or to a company he and his wife controlled in Wyoming, according to the complaint.
Some people gutted their annuities to invest in the bonds, officials said. In one instance, Smith told an investor who put up $800,000 that the bonds were backed by gold or silver, when in fact the bonds were in default and no liquid market existed for them, according to the SEC complaint.
“Although many investors did not understand the investment, they ultimately trusted Smith and took comfort in the fact that a high-profile pastor was offering the investment,” the complaint reads.
When the pair failed to provide investors with the promised payouts, they invented elaborate excuses for why they had been unable to sell them, officials alleged.
“Instead of investing the funds, the defendants used them to pay personal loans, credit card balances, mortgages, vehicle purchases and other expenses,” Van Hook, the prosecutor, said.
Caldwell and Smith each face up to 20 years in prison on the wire fraud counts and 10 years for the money laundering counts, as well as a $1 million fine.
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Raise your hand if you are shocked that a prominent Christian leader swindled old folks who trusted him out of their life savings, to pay for his extravagant lifestyle.
Sounds like some other religious shysters named Graham and Bakker.
It’s sad that this storyline is so commonplace anymore that nobody cares to even discuss it.
The last paragraph. Money laundering. It seems just so GOP.
As far as those who lost their money to another christian shyster; Well, gawd bless em'.
Preying on the elderly, how Christ like of them. /s
Scum, 20 year prison sentence seems light. Life is a better sentence IMO.
Ah, it doesn't matter. His followers will claim that God has forgiven him, and to hell (literally) with his victims. All the fundamentalist crowd seems to care about is that by proclaiming faith, that means the thief, child molester, rapist, whatever is forgiven and gets a get out of hell free card. They don't give a crap about the victims; rather, they seem angry that the victims actually stood up for themselves and exposed these pastors as the scum they are. It seems so immoral to me.
If the priest at my Mom's church had done something like this, he'd have been removed from the church and then left town in shame. I'm sure his congregation would pray for him, but that wouldn't mean they'd consider him worthy of leading a flock any longer, or worthy of any type of respect. The article I read about this said that megachurches aren't worse than smaller churches; we just hear about it more with megachurches. I'm not sure I agree with that, although I have no statistics to back up my view. The megachurch pastors seem so obviously into it for the money, the power, the fame ... pastors of smaller churches have their flaws as well, I'm sure, but they don't have the opportunity to become millionaires by suckering their congregations, and they don't have "followers" as if they were a Kardashian.
I remember a local pastor at a mega church in the town I grew up in back in the 1990s, who had been accused and charged with various indiscretions, like public masturbation, public exposure, and DUI. He is still the pastor at the same church. It kills me that people can be so stupid as to pay this shyster money and attend his services.
I just found an interesting article about him, written by someone who used to work for the local paper that covered the stories. It seems that Pastor Pitts has been somewhat successful in having some of those stories removed from google, so this guy rehashed the events for the public record. It’s interesting to read the comments on this article, with people chiming in to both defend the pastor and condemn him. Btw, his church is in Maumee, Ohio, where the Nazi who drove his car into a crowd of people in Charlottesville came from.
L Ron Hubbard once said that if you want to get rich start a religion. He did and died rich and he has many totally ignorant followers to his cult that will someday be recognized as a true religion, just like all of today's popular religions started out as. However some people don't bother to go through the hassle of all of that. People like this and the Peter Popoff's and the Kenneth Copeland's and Creflo Dollors's, just screw over little old ladies and men directly using the present day sky fairy and make 10's of millions of dollars or more with what's already there for them to scare or promise people with. Anyone want to buy a vile of prayed over water? Send me $20 and God will repay you $1,000 for it, I promise you! It's nothing more then a much more complex and expensive version of an old carny scam or an old patent medicine salesman selling a magically elixir out of the back of a wagon that cures everything from gout to cancer for just a dollar a bottle and is mostly just booze and opium, on steroids and the usual suckers are lining up to sacrifice their grocery money and the money they were going to leave their grandchildren to pay these hucksters for the promises from a being that simply does not exist. It would be easy to call them stupid fools, but the real truth is that they are just sad victims of very experienced con-men and women who had better pray that there really is not a god.