Vaughn Reeves, a 66-year-old former Pastor from southern Indiana, was convicted
last week on nine counts of securities fraud, according to an Oct. 21
article by The Associated Press. After deliberating for only four hours,
the jury found Reeves guilty of stealing millions of dollars from local
investors who believed he was going to use the money to build and expand
churches. 11,000 investors were defrauded, according to authorities, and
at least eight churches stand to lose their buildings.
Authorities said that Reeves and his three sons persuaded church members
to form teams and sell $120 million worth of bonds backed by mortgages
on 150 church construction projects to other church members. The teams
were instructed to open sales calls with a prayer, to urge investors to
fulfill their "Christian responsibility" by investing in the
projects, and were told to "never sell the facts, sell warm stewardship
and the Lord," according to the AP article.
Reeves and his sons pocketed $6 million of investor funds and bought sports
car, vacation packages and two airplanes, according to court documents.
The Tribune-Star reported that Reeves testified in his own defense and
denied any wrongdoing. He claimed he and his sons were diverting investor
money into online stock trading to "help the weaker churches get
back on their feet" and avoid default.
Prosecutors hold Reeves' scheme as a prime example of
affinity fraud, a type of investment fraud in which scam artists prey on investors who
share a common interest. Often, as was the case with Reeves, the common
interest is a religious one, but affinity fraudsters also prey on people
who identify with a particular ethnic group, language minority, or age group.
Reeves faces a potential two to eight years in prison for each of the
nine counts of fraud. His sentencing is scheduled for Nov. 19. Reeves'
sons' trials are scheduled for early next year.