Ministries leaders arrested
Federal agents arrest leaders of a controversial ministry with a multimillion-dollar financial program.
The Tampa Tribune, March 13, 1999
By Michael Fechter
TAMPA - Wearing a clerical collar and cuffed at his hands and ankles, Gerald Payne and five other Greater Ministries International Church officers appeared in federal court Friday to hear charges that their money-doubling financial program is a fraud.
A federal investigation that lasted at least three years led to a 20-count grand jury indictment focusing on mail fraud and money laundering against Payne, his wife, Betty Payne, John Krishak, Patrick Henry Talbert, Haywood Eudon ``Don'' Hall, David Whitfield and James Chambers.
U.S. Magistrate Thomas B. McCoun III agreed with prosecutors' requests that all but Gerald Payne be freed on bond. Chambers, who lives in Altamonte Springs, was not at the bond hearing. The other defendants are from Hillsborough County.
Prosecutors and defense attorneys declined to comment on the charges.
Talbert goes on trial Monday on state charges he and another Greater Ministries associate defrauded a dozen elderly people of nearly $300,000 in an unrelated scam.
The indictment says Greater Ministries' conspiracy and fraud dates back at least to March 1993. Citing biblical Scripture, the group promised to double a person's money in 17 months or less, with monthly cash payments sent through the mail.
The program remained ``essentially the same'' despite a series of name changes including ``Double Your Blessing'' and ``Faith Promises.'' Greater Ministries offered investors a two-fold return from money made in offshore precious metal and currency trades, the indictment said. The profits were supposed to be used to pay investors and also to pay for religious and charitable activities.
But very little of the money truly was invested, the indictment said. Instead, the cash from later investors was used to make payments to earlier investors, the classic component of a Ponzi scheme.
``The Ponzi scheme is shut down'' while Greater Ministries is free to continue operating as a church, Assistant U.S. Attorney Robert Mosakowski said in court.
The conspiracy and mail fraud counts carry maximum penalties of five years in prison and a $250,000 fine. The money-laundering counts can lead to 20-year sentences and $500,000 fines. Payne faces three separate financial charges, each with a maximum sentence of 10 years in prison and a $250,000 fine.
The ministry once boasted that the ``gift'' program never missed a payment. That changed last summer when Colorado banking officials and the FDIC shut down Best Bank in Boulder for insolvency. That eliminated about $20 million in uninsured deposits from Greater Ministries.
Payments to investors dried up almost immediately.
Prosecutors said they could not estimate the number of people or amount of money involved.
Three factors are believed to have slowed the investigation: a lack of cooperative victims, the absence of an insider willing to show how the program worked, and political sensitivity about the image of the government trampling on a church's First Amendment religious freedoms.
Jonathan Strawder answered the first two concerns.
Strawder signed plea agreements with state and federal prosecutors Dec. 15 admitting that his spinoff program, ``Sovereign Ministries International,'' was a Ponzi scheme. Using the same language and similar promises, Strawder took in $13 million from 2,100 investors during 1997. When his financial flimflam started to collapse, Strawder began cooperating with investigators and tried to recoup investors' original money.
``He [Strawder] was pretty important,'' Assistant Statewide Prosecutor Thomas A. Sadaka said Friday. ``Up until then they didn't have anybody familiar with the inner workings of Greater. He worked heavily in Greater, and had a true understanding of what things were.''
Included in that was ``gobbledygook and ridiculous justification for their contention that they were outside the law's jurisdiction,'' said Strawder's lawyer Joel Hirschhorn.
``What he was lacking was the sophisticated financial personnel and hardware that enabled Greater to continue doing what it was doing for such a long time,'' Hirschhorn said. His young, clean-cut client is ``going to be a very presentable witness.''
Not named in the indictment are Strawder's father and uncle, both active members of Greater Ministries, and elders Jack Carpenter Hudson and Carl Thomas. State banking officials have accused Thomas, a Duluth, Ga., man, and Plant City resident Charles Tomlinson, of serving as fronts for Greater Ministries' attempt to buy a controlling interest in a Broward County bank.
``All we can say is that the investigation is ongoing and continuing,'' said U.S. Attorney's spokesman Monte Richardson.
Payne and Hall exaggerated when talking about the program's scale, the indictment said. They claim to have received $500 million from 100,000 people.
The U.S. Attorney's Office declined to offer a different estimate. Anecdotal information suggests the program is worth tens of millions of dollars.
The group's elders received commission payments they called ``gas money'' for 5 percent of the money each brought in. Chambers received $400,000, the indictment said, which would represent $8 million. Investors were never told about the commissions.
Greater Ministries attracted about 1,000 people to a meeting in Lebanon, Pa., last November.
The minimum investment was $250, but Greater's leaders encouraged people to borrow heavily on their credit cards and sell businesses and give the organization their money.
Greater Ministries spent $1.5 million on its Sulphur Springs headquarters in 1995 and $7 million buying Kentucky's second- largest hotel, the Executive Inn, in 1997. The Executive Inn is singled out for government seizure in the indictment and the headquarters building, at 715 E. Bird St., could be targeted in the document's open-ended language.
The group has spent as much as $6 million in a Liberian gold- mining effort, according to Niko Shefer, a South African businessman who helped Greater Ministries win mining concessions. Greater Ministries touted the venture as the answer to its financial strain during a November meeting in Pennsylvania.
The ministry's leaders said they stood at the precipice of a mother lode - billions of dollars in gold reserves a mere 15 feet below the surface. But little if any profit has resulted so far, said Shefer, who said Greater Ministries is a 40-percent partner with his own mining company.
Shefer, who previously spent six years in a South African jail for bank fraud, said Friday that any profits that might be made from the mining operation would still reach Greater Ministries investors despite the indictments.
The Internal Revenue Service, Secret Service, U.S. Customs Service, Federal Deposit Insurance Corp. and U.S. Postal Service conducted the investigation.
Beyond the federal case, Greater has faced scrutiny from a series of state authorities.
Florida officials asked the court to bar Greater from soliciting contributions in 1995, arguing that the ``gifts'' were unregistered securities. The 2nd District Court of Appeal overturned the injunction in 1997, saying language changes in Greater Ministries sign-up sheets made it clear that the money was a donation, not an investment.
Similar arguments didn't stop cease-and-desist orders in Ohio and California last year. And repeated violations of Pennsylvania's cease-and-desist order prompted a state judge to issue a temporary injunction against Greater Ministries last November.
When that was ignored again, the judge found Greater Ministries in contempt and fined it $6.4 million on March 1.
Two Alabama men hailed the indictment Friday. They say they lost a combined $170,000 investing in Greater Ministries.
Roy Cotton and William Smith filed a civil suit in Birmingham against the ministry last week.
``This thing had to be stopped,'' Smith said Friday. ``People were still giving money.''
Staff writer Sarah Huntley contributed to this report.
