2nd ministry called Ponzi scheme

The Tampa Tribune, August 16, 1999
By Michael Fechter

LONGWOOD - State officials are trying to shut down a ministry's gift program, claiming the it is nothing more than a $14 million Ponzi scheme.

State officials are investigating a ministry's gift program that is a virtual copy of Greater Ministries International.

Attorneys for Sovereign Ministries International appear to be cooperating with state regulators. The attorneys agreed to freezing the ministries' bank account and to the state's demand that the organization cease financial activity.

Sovereign Ministries International was founded by a nephew of a founder of Tampa-based Greater Ministries. .State officials, who call Sovereign Ministries a Ponzi scheme, say it took in about $14 million from at least 2,200 people from May to December.

Greater Ministries is under federal investigation to determine whether its gift program, ``Faith Promises,'' is a Ponzi, in which the earlier participants are paid with money from newer recruits.

Like Greater Ministries, Sovereign claimed Biblical inspiration for its program. Luke 6:38 is the principal verse. In essence, it says God rewards those who are generous toward the church.

Like Greater Ministries, Sovereign said it could double an investor's money. Greater's program takes 17 months, Sovereign's a year. Sovereign also offered returns of 2.6 to 1 and to match a $10,000 donation with $10,000 per year forever.

Jonathan Strawder started Sovereign Ministries last May, less than two months after Greater Ministries won a court battle removing it from scrutiny by state securities regulators. Louis Strawder, his uncle, is an original officer of Greater Ministries, where Jonathan Strawder worked briefly.

The 2nd District Court of Appeal ruled that older versions of ``Faith Promises'' were securities because they promised people a return on their investment. Greater Ministries then removed guarantee language and added disclaimers that the program is a gift to the ministry, with any return determined by a supreme deity.

State officials argued in vain that language was all that changed, and that donors maintained the same expectation of payment.

Sovereign's program is more like the earlier versions of ``Faith Promises'' held to be a security, said Gil Robinson, Central Florida regional director for the Department of Banking and Finance. A criminal investigation into the program continues, said Robinson, whose department is part of the state Comptroller's office. Department attorneys submitted two internal Sovereign documents as evidence when the state sued Sovereign in Seminole County on March 27. One is a pledge form in which donors acknowledge they ``do not expect any repayment or profit other than what God shall bestow in His supreme discretion.''

The other is minutes from a November trustees meeting featuring a glossary of terms. Principle should be called an ``offering'' or ``initial gift.''

Compounding or rolling over an investment is a ``regift'' and any return is a ``blessing.''

The form's language, claiming the investment was a charitable gift to the ministry was simply ``a conscious effort to evade securities laws,'' the suit said. ``The investors, at all times, expected and were promised a fixed rate of return on their investments based on the efforts of Sovereign and Strawder.''

Sovereign and Greater Ministries had some differences. Sovereign ran no church and supported no missionary work. Unlike leaders of Greater Ministries, Strawder lived large, buying two Porsches, a Land Rover, a boat and a motorcycle.

As quickly as it rose, Sovereign fell. In February, Strawder wrote investors in ``God's appointed ministry'' to say payments would be postponed because NationsBank closed out Sovereign's account. Sovereign generated too much activity, and the bank couldn't afford to keep up, he wrote.

``It is inevitable that the enemy of God will double his efforts to put stumbling blocks in the way to hinder the progress of any and all who would serve Him. We are no exception,'' Strawder wrote.

Strawder didn't contest the state's suit and is selling the cars and other goods to help pay investors, said Joel Hirschhorn, his attorney. Hirschhorn called Strawder well-meaning, but young, a victim of sorts. Sovereign Ministries is independent from Greater Ministries, Strawder's former employer from whom he ``took an idea and ran with it,'' Hirschhorn said.

``He had been led to believe there was nothing inappropriate about Greater and so he started on his own venture.

``Sometimes children look up to their uncles and their fathers and misinterpret or don't get correct messages,'' Hirschhorn said.

Sovereign officials did use Greater Ministries as a reference of sorts to skeptical investors, said Nicholas Miller, a member of a Seventh-day Adventist Church in suburban Washington.

Church leadership challenged how they would create such large returns.

``Their primary response was that there is an organization already doing this - Greater Ministries - and we are doing the same thing they are doing,'' Miller said.