Mormon bishop gets prison for Ponzi scheme

Connecticut Post/June 27, 2013

New Haven - He affectionately was known as Bishop Julius among his flock at the Church of Jesus Christ of Latter Day Saints in Trumbull.

But to some of his victims, Bishop Ponzi might be more appropriate.

That's because Julius Blackwelder ran a scheme in which federal and state investigators said he accepted money, most of it from church members and associates, invested it in commodities and a Stratford mansion he was building, and lost virtually everything -- more than $1.5 million, according to Assistant U.S. Attorney Jonathan Francis.

Meanwhile, like Bernie Madoff, he paid back some earlier investors with money from later ones.

"Blackwelder lost money in 50 of the 59 months he traded," Francis said.

On Thursday, Senior U.S. District Judge Ellen Bree Burns restricted Blackwelder's future trading to what might be dealing in cigarettes at a federal prison camp. She sentenced the 59-year-old former Mormon bishop and more recent cross-country truck driver to 46 months in prison as a result of his Feb. 20 guilty pleas to money laundering and wire fraud.

"This scheme is very disturbing," Burns said. "Here's a man who enjoyed the respect of his community and took advantage of it."

The judge also ordered the one-time cabinet carpenter to pay restitution to his victims, who include: John LeCardo, who provided $250,000; Darin Horn, a 36-year-old man who invested $35,000 on his own and $25,000 for each of his two young daughters; a 59-year-old man out $99,779, and the widow of a man who knew Blackwelder for 29 years and lost $22,800 by investing with him. The amount has yet to be determined, since victims claiming losses continue to come forward.

Nevertheless, LeCardo and Horn appeared in court and forgave Blackwelder, who they praised as a "good man" who they believe intends to repay them. A woman, who chose to remain anonymous, was not so forgiving.

She told Burns that the lesson she learned "was to trust no one, not even a person of the priesthood. ... He used his position of trust and authority. I feel like a sheep being led to slaughter by the good shepherd."

The woman further blasted the Mormon church for not taking action.

"I no longer attend church," she said. "I stand before you defrauded and duped."

Blackwelder apologized for actions "that have led to the loss of trust of my friends. This was not intentional."

"Not intentional?" Burns replied.

"I want to correct whatever I can," he said.

David Loyens, a former Bridgeport resident who now lives in Utah, twice advised the court that he would hire Blackwelder immediately and pay him $2,000 a week. But the judge was not convinced to let the bishop go free.

Assistant U.S. Public Defender Sarah Merriam, appointed to represent Blackwelder, urged the judge to sentence the former religious leader to 18 months in prison. She said Blackwelder lost his own money as well as that invested with him.

"Julius lived in a trailer in the parking lot of an abandoned elementary school ... using showers and bathrooms in the old school," Merriam told the judge.

But it was Francis who detailed a 10-year fraud using extensive computer programs documenting a strategy of investing in grains, cotton, oil and meats future contracts and then selling them before their due date. Like Madoff, Blackwelder provided fraudulent account statements, false updates containing fictitious trades and even paid some of his earliest victims off with money from new investors, prosecutors charged.

Additionally, Francis said, a good portion of the money was used to pay for Blackwelder's personal expenses, including the $575,000 purchase and demolition of a home at 348 Housatonic Ave. in Stratford.

In its place, Blackwelder constructed a 7,000-square-foot mansion that included five bedrooms, seven bathrooms a $96,000 heating and air conditioning system, a 16-by-44-foot, in-ground pool and a boat dock.

The riverfront mansion "was not a testament to his hard work or investment acumen; instead, it was a monument to his greed unwittingly built by his victims," the prosecutor charged.

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