SHREVEPORT, La. – The man who is a co-defendant with Houston Pastor Kirbyjon Caldwell in a case accusing them of defrauding investors of millions of dollars pleaded guilty Tuesday to wire fraud.
Gregory Alan Smith is a Shreveport, Louisiana, investment advisor. Caldwell is senior pastor at Windsor Village United Methodist Church in Houston.
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The pair told investors that the historical Chinese bonds, which reportedly have been in default since 1939 and aren't recognized by the current Chinese government, could provide exorbitant, risk-free returns on their investments and that the bonds would be sold by Caldwell to a third party or redeemed by the Chinese government, court documents state.
The indictment states Smith recruited the victims through his connections to prospective investors, telling them he was an investment advisor and had personally invested hundreds of thousands in the deal.
Caldwell then told investors to wire the money to a bank account controlled by his attorney or an account of a limited liability company of which he is a member, the indictment reads. Caldwell is accused of then transferring the money to his personal account, the personal account of Smith or a Mexican business associate.
READ:Â Who is pastor Kirbyjon Caldwell?
Caldwell and Smith promised investors they would be paid and offered a wide range of excuses for why they were not seeing returns, according to court documents.
Caldwell, 64, received $760,000, which he used for personal expenses, including mortgage payments, the indictment claims.
Caldwell's limited liability company also received $1 million, of which $175,000 was transferred to Caldwell, according to the indictment.
Smith received $1 million of investor funds, which he used for luxury vehicles, the indictment claimed.
None of the investors received any money back, according to the court documents.
Smith faces five to seven years in prison, a $1 million fine, restitution, forfeiture and five years of supervised release.
His sentencing is scheduled for Dec. 11.
Caldwell, who pleaded not guilty in April, will start his trial Dec. 2.
His attorney said earlier this year that Caldwell is "100 percent innocent."
Attorney Dan Cogdell released a statement Tuesday about Caldwell, saying: "We are aware that Greg Smith entered a plea of guilty today. That said, Smith’s plea of guilty has no effect on Pastor Caldwell’s belief that he committed no crime. At all times, Pastor Caldwell believed in the legitimacy of the transactions he was involved with. Simply put, at no time did Kirbyjon Caldwell ever intend on defrauding anyone. We look forward to our day in court for the full truth to come out."
Caldwell announced in a Facebook post earlier this month that he has prostate cancer.