Meyer Wilson

Recovering Losses Caused By Investment Misconduct

Former Indiana Pastor Found Guilty of Defrauding Church Members

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.

Categories: General, Securities Fraud

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