Ministering to his flock - or fleecing them?

The Rev. Riley's 'gifting' program might be a scam

Houston Chronicle/February 19, 2005
By Allan Turner

Sally Riley was hopping mad at the devil. Speaking in tongues, brandishing a wooden staff to vanquish God's enemies Old Testament-style, the co-pastor of the nondenominational Secret Place International Church reached a crescendo as she warned that sooner or later all good Christians would find themselves assailed by Satan.

Pink slips, cancer, crack cocaine, knuckleheaded kids - the devilish assault would be brutal. But God would prevail, toss the evil one into a fiery lake and reward his children in spades.

From a wing chair on the sidelines, the Rev. Sean Riley exhorted his wife to greater heights, clapping, shouting and swatting the air as if delivering a knockout punch to an unseen adversary.

"These hard times are small potatoes," Sally Riley assured her flock. "We've been surrounded and battered by troubles, but we've not been demoralized."

To some, the midweek service might have seemed unremarkable, a generic, if theatrical, admonition on the rigors of a Christian life. But for the Rileys, captains of the Humble storefront church and an international television ministry, the sermon resonated with meaning.

Pyramid scheme alleged

Riley, 37, a minister's son who strayed into drugs and alcohol before returning to Christ, now faces the biggest challenge of his life.

Earlier this month, authorities charged him with promoting a pyramid scheme to bilk the faithful and others out of thousands of dollars.

If indicted and convicted, Riley, a dapper man whose wardrobe is highlighted by an oversized gold-colored pendant, could serve up to two years in prison.

"He will not be indicted," a testy Sally Riley snapped when asked after Wednesday's night service if her spouse had hired an attorney. She refused further comment, directing a trio of staff members to eject a reporter from the building.

When agents of the Harris County District Attorney's Office served search warrants at the church, 7211 FM 1960 West, and the couple's Lee Road mobile home in early February, they confiscated more than $8,000 in cash, computers and computer records, and forms linked to Elite Activity, an allegedly illegal "gifting" scheme with national branches.

Thousands of dollars in $100 bills - the minimum sum needed to enter the group - were found on Riley's person, a district attorney's investigator attested.

Riley, son of the late Humble minister Don Riley, founded the Secret Place in 1999. Since 2001, the church has leased space adjacent to a liquor store in the Foxwood Place Shopping Center. The church's televised services are seen in 200 million homes in Africa, Eastern Europe and Asia, the church Web site claims.

Riley's sermons often address contemporary topics such as career, marriage and overcoming setbacks as well as emphasizing men's "rightful place as leaders and high priests in their homes."

According to a petition for the search warrant, church employees tipped the district attorney's fraud division to the alleged scam, giving investigators DVDs in which Riley urged viewers to "get a grip on prosperity" by joining Elite Activity.

Elite Activity's Web site contends it "is not about a business or an opportunity or selling or pulling people by the sleeve or some kind of illegal pyramid. It's simply A FRAME OF MIND that once applied and shared with like-minded people becomes so POWERFUL, it makes achieving PROSPERITY and HAPPINESS a part of our daily lives."

'No promises or guarantees'

To enroll, the posting advises, participants must give $100 to Elite Activity and recruit two other members. Because the money is given with no assurance of financial gain, the site contends, the undertaking is legal.

"There are no promises or guarantees of a return of any kind!" it notes. But, at another point, it entices: "You can receive $800, $2,000, $4,000, $8,000, $16,000, $32,000, and $48,000 in gifts - Over and over again!!"

Despite claims of legality, Elite Activity meets Texas' definition of an illegal pyramid scheme, said Assistant District Attorney Valerie Turner. Federal law also bans such frauds.

"Pyramids will inevitably fail" as it becomes increasingly difficult for newer members to recruit additional participants, Turner said. While promoters, and possibly early participants, can reap handsome sums from the newcomers, most members lose their money.

"People don't realize how quickly it gets out of hand," added Assistant District Attorney Russel Turbeville, who has spent 26 years in the consumer fraud division. "They don't recognize how impossible it gets to recruit new participants."

Suspicion of fraud

Texas law mandates a 6-month to 2-year state jail sentence for the offense.

"And that's served day for day," Turbeville warned.

Riley's alleged offense falls into the most basic category of pyramid frauds, the Ponzi scheme, said James Kohm, the Federal Trade Commission's chief of staff for the bureau of consumer protection.

Such cases, named after the early 20th century master con artist Charles Ponzi, who amassed a fortune by manipulating foreign postal coupons, generally involve the simple exchange of money, with no pretense of manufacturing a product or using the collected money to purchase stock.

"These tend to be small," Kohm said. "They tend to move around, to be semi-secretive. Sometimes they have masterminds, sometimes they develop from spores of an original group started by somebody who was involved moving from one city to another."

Such frauds frequently target church groups, social clubs or other close-knit groups whose members' trust can be exploited for wrongdoing, he said.

Last year, municipal or state authorities in Arkansas, South Dakota, Ohio and South Carolina warned of such frauds, some linked to Elite Activity, occurring in their areas. The scope and structure of Elite Activity have not been determined.

In late 1999, local authorities charged 44 people for participating in the "Jubilee Celebration Paradigm" pyramid scheme, which raked in as much as $10 million across the nation. At one Houston meeting, undercover operatives witnessed $2 million change hands. Members, who were required to pay a $2,000 entry fee, were assured they ultimately could receive $16,000.

In the Riley case, documents filed with the court said, an undercover officer witnessed the minister participate in an Elite Activity promotional meeting held at his church.

In the confiscated DVDs, described in court documents, Riley explains that the Elite Activity program provides for 15 positions, divided into freshmen, sophomores, juniors and a senior. Once a senior received $800, he could leave or advance to a second, more costly program. Ultimately, he said, a participant could receive more than $83,000.

'Papa Doc' and 'Mama Doc'Riley advises participants in the recorded session to subscribe to a computer database to track their progress through the Elite Activity system. He also advises them to assume false names. He and his wife, he said, had assumed the names "Papa Doc" and "Mama Doc," court documents reveal.

Like his wife, Riley, who is free on $2,000 bond, refused comment on his case after Wednesday's service.

When asked how he was faring, he responded: "I'm blessed."