SHREVEPORT, Louisiana – Renowned Houston pastor Kirbyjon Caldwell and another man are accused of defrauding investors of millions of dollars in exchange for Chinese bonds that had no value, according to a federal indictment.
Caldwell, senior pastor at Windsor Village United Methodist Church in Houston, and Gregory Alan Smith, a former broker and financial planner, are facing nine violations from the Securities and Exchange Commission out of Louisiana.
Click here to find out more about Caldwell's church.
According to court documents, Caldwell and Smith duped at least 29 people into buying bonds for a total of $3.4 million between April 2013 and August 2014.
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 secured the victims due to his connections to prospective investors, whom he told he was an investment advisor and had personally invested hundreds of thousands in the deal.
READ: Kirbyjon Caldwell indictment
File: Indictment of Kirbyjon Caldwell
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.
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, 55, 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.
In 2012, a celebration was held for Caldwell at Windsor Village United Methodist Church.
The celebration was held in honor of the pastor, who had served them with 30 years of service.
Caldwell, a third generation Houstonian, said he was honored to be a part of the church for so long.
Caldwell gained national notoriety when President George W. Bush made him his spiritual advisor.
Through Caldwell's help, Windsor Village grew tremendously from a small southwest Houston church to one of the biggest in the city.