SHREVEPORT, La. (KTAL/KMSS) – The pastor of a Houston megachurch has pleaded guilty to conspiracy to commit wire fraud in a multi-million dollar investment scheme, U.S. Attorney David C. Joseph announced Wednesday.
Kirbyjon H. Caldwell, senior pastor of Windsor Village United Methodist Church in Houston, Texas, entered the plea in connection to his role in a multimillion-dollar investment scheme.
Caldwell’ co-defendant, Gregory A. Smith, a Shreveport investment advisor, pleaded guilty on July 23, 2019, to the same charge.
According to information presented in court, Caldwell and Smith conspired to use their influence and status to persuade multiple victims to “invest” approximately $3.5 million with them. The victims’ investments were purportedly in historical Chinese bonds, which are bonds issued by the former Republic of China prior to losing power to the Communist government in 1949. These bonds are not recognized by China’s current government and, accordingly, have no investment value.
Smith began approaching existing clients and acquaintances in the spring of 2013 about what he described as an opportunity to invest in historical Chinese bonds. His usual sales pitch to investors was that Caldwell was (1) putting the bond deal together on behalf of investors, (2) had the bonds in his possession or was obtaining them, and (3) was brokering a deal to sell the bonds.
Smith also promised that by investing money with him and Caldwell, the victims would obtain a partial ownership of the bonds and would quickly receive exponential returns on their investments.
The victims were not told of the true nature of the bonds nor were they informed that no previous investor had ever obtained the promised return on an investment. The victims were encouraged to cash out any other investments they might have if they could not otherwise afford to participate.
After Smith made the fraudulent pitch, the victims were instructed to wire funds to various bank accounts under Caldwell’s control. In 2013 and 2014, approximately $3.5 million was “invested.”
The funds were divided between Caldwell, Smith, and others. Caldwell used the approximately $900,000 that he received to pay down personal loans, mortgages, and credit cards, and maintain his lifestyle. Smith received $1.08 million.
He used this money to pay down loans, purchase two luxury sport utility vehicles, place a down payment on a vacation property, and maintain his lifestyle.
After time passed and investors began to question why they had not received the promised returns, Caldwell and Smith offered excuses, defended the legitimacy of the deals, and assured victim-investors that they would receive the promised returns.
Under the terms of his plea agreement, Caldwell faces between five and seven years in prison, a fine of up to $250,000, and up to three years of supervised release. Caldwell, who has already made partial restitution to the victims, has agreed to pay the remaining balance, $1,951,478.00, before sentencing.
Chief U.S. District Judge S. Maurice Hicks Jr. presided at the hearing and set Caldwell’s sentencing for July 22, 2020.
Smith’s sentencing is scheduled for May 4, 2020.
The FBI conducted the investigation. Assistant U.S. Attorneys Seth D. Reeg and C. Mignonne Griffing are prosecuting the case.
This case was included in the Justice Department’s largest-ever nationwide elder fraud sweep in 2019, which included hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.