`Gift' program leaves trail of questions

As Greater Ministries International tries to calm anxious participants in its financial program, two Alabama men say they were taken.

The Tampa Tribune, February 15, 1999
By Michael Fechter

TAMPA - Any doubts left their minds when they saw the file.

Two inches thick, it contained receipts showing how a mutual friend was getting rich through a Tampa ministry.

William Smith and Roy Cotton were sold. Combined, the two Birmingham, Ala., men sent $170,000 to Greater Ministries International beginning last spring.

If the program worked as well for them as it had for their friend, the money would double in about a year, coming to them in monthly ``gift'' payments from the ministry. Smith and Cotton planned then to ``re-gift'' those payments to the ministry to make their balance grow faster. Then they could keep several thousand dollars a month and still see their principal grow.

Christian Social Security, Greater Ministries officials call it.

State and federal investigators call it a Ponzi scheme, a fraud in which cash from people like Smith and Cotton pays previous investors. Eventually, organizers can't keep pace and the Ponzi collapses, wiping out nearly everyone in it.

That's what happened to an Orlando-based program modeled after Greater Ministries. Sovereign Ministries International was formed by Jonathan Strawder, a former Greater Ministries worker whose father and uncle remain active with Greater Ministries. It took in $13 million from 2,100 people before collapsing in early 1998.

On Friday, the U.S. Attorney's Office in Tampa released a plea agreement with Strawder. He will cooperate with the government in exchange for a possible reduction in his sentence. The agreement has Strawder pleading guilty to one count of mail fraud with a maximum five-year prison sentence.

In Smith and Cotton's case, their mutual friend provided evidence that Greater Ministries had genuine returns on its money, the men said. The final touch was Greater Ministries founder and president Gerald Payne's word that a full refund could be had for the asking.

``He assured us that if we ever wanted our money back he'd give it to us,'' Smith said.

Smith, 60, spent 11 years in missionary work and accepted Greater Ministries' spiritual references. Luke 6:37 is the program's foundation: ``Give and it shall be given unto you'' in equal measure.

He planned to use much of the money to support other missionaries and help churches.

Cotton, 65, was in debt and saw a quick way out.

But a bank collapse last July crippled the program. Smith and Cotton haven't seen a dime.

Repeated written requests for refunds have been ignored.

``I'm looking at bankruptcy, at losing my home. I don't know what's going to happen,'' Cotton said. ``None of it's good.''

He and Smith are not alone.

Two Pennsylvania residents complained last year that they lost money in the program. June Smith, unrelated to William Smith, believes she is owed nearly $400,000 from the growth of her investments. Greater Ministries told her she was ``prayed out'' after she repeatedly complained about discrepancies in her balance.

Michael Miller signed an affidavit saying he lost $10,000 and should have received $70,000, according to what he was promised. He said a Greater Ministries representative told him to max out his credit cards to invest more.

Greater Ministries representatives are known to encourage people to run up credit limits because credit card interest is usually about 18 percent while Greater Ministries was to provide a 100 percent gain.

Like Smith and Cotton, Miller said Greater Ministries' promise to refund his money at any time sealed his decision to send money. While the sign-up sheets specify no guaranteed profit, the verbal promise of their money back clinched their decision to join, the men all said.

Thousands of people in Greater Ministries' money-doubling financial program have gone without payment since last fall.

``Please understand this ministry must be careful what is said and what goes into print due to legal hassles,'' Donna Krishak wrote to Smith in December. ``You would be surprised at how many of our own people attack us.''

Krishak's husband, John, is a Greater Ministries elder. The couple handled Smith and Cotton's accounts for the plan called Faith Promises.

While Greater Ministries tells followers like Smith and Cotton that better times are ahead, the combined efforts of state regulators and federal investigators could make life more difficult.

There's a chance Greater Ministries founder Payne is going back to jail next month.

The Tampa native was a repairman at a bankrupt warehouse company when he served five weeks for perjury in 1979.

MUCH HAS CHANGED for him since then. Through religion, Payne transformed himself from blue-collar worker to a globe-spanning pastor with wealth and international interests.

People from all 50 states and abroad have sent money to Greater Ministries' Faith Promises program, and the group has business interests ranging from Kentucky's second-largest hotel to a West African mining operation boasting billions in untapped precious stone and metal deposits.

Trouble is, some government regulators think Greater Ministries is more than a religious operation. They think it is a Ponzi scheme. The organization has been barred from doing business in Pennsylvania, Ohio and California.

Pennsylvania Judge Eunice Ross has given Payne two requirements for remaining free. He must stand before her March 1 and promise to abide by her previous ruling barring Greater Ministries from virtually any financial transaction with state residents. If he doesn't, or if Greater Ministries fails to provide proof it refunded all Pennsylvania money received since an injunction she ordered Nov. 2, Ross said she'll jail Payne for up to six months.

Ross found Greater Ministries in contempt Jan. 20. She'll assess fines March 1 that could reach millions of dollars. Among them, $5,000 for each Pennsylvanian contacted by Greater Ministries after the Nov. 2 injunction. Greater Ministries admitted in court that at least 800 people attended a Nov. 21 meeting in Lebanon County, which could constitute 800 individual violations.

At $5,000 per violation, that's $4 million.

Other fines could be attached for a series of mailings and communication since Nov. 2 in violation of the order.

Greater Ministries' attorney, Al Cunningham, did not respond to requests for an interview about what Payne intends to do.

To abide by the judge's order would violate his religious convictions by ``recogniz[ing] a sovereign greater than Jesus Christ with authority over the church and its ministries,'' Payne wrote last month in an affidavit.

But William Smith, an ordained Presbyterian minister, thinks Greater Ministries' beliefs are more rooted in man and money than in God. He sent Payne a 13-page letter Feb. 1 comparing the ministry's biblical views with his own.

The no-guarantee caveat contradicts Greater Ministries' claim that God inspires the program, Smith said. God's word is a guarantee if the program is truly the product of divine intervention.

``Why do you suppose God is not now being faithful to you and the GMI `Faith Promise' gifting program? Could it be that the GMI program is not of God at all, but of man, and it contains the spirit of error?''

SMITH DESCRIBED HIMSELF as ``extremely evangelical and mission minded.'' He said he gives between $15,000 and $35,000 annually to churches and missionaries. He planned to roll the Faith Promises money over until it doubled, then keep just under half the monthly payment to give missionaries. That would be as much as $10,000 per month.

Smith also claims Greater Ministries misled frustrated followers by painting an optimistic face on dire conditions.

When the ministry began sending out paper ``certificates'' last fall supposedly redeemable for gold or silver, instead of the checks participants had been receiving, there was no mention of financial trouble.

``God is still blessing greatly and more provisions are seen each day,'' the certificates say.

But just two days after receiving those certificates, Cotton and other participants received a Dec. 14 letter from finance director David Whitfield confirming what they had already figured out: There would be no more monthly payments; they were being discontinued.

Greater Ministries explains the trouble in conspiratorial and spiritual terms.

Spiritually, the church formed unholy alliances when it incorporated with the state and won tax- exempt status with the government, Payne said in a ``statement of repentance'' entered in Pennsylvania court on Oct. 25. Those acts denied the role of Christ as head of the church, Payne wrote.

``By His recent judgments on the Church, the Lord has now convicted us of the error and is calling the Church back to Himself,'' Payne wrote.

At the same time, government intrusion and conspiring combined to fabricate the current crisis.

``In the last three years alone, Greater Ministries has had $3.5 million dollars physically stolen from its vault and over $40 million stolen by fraudulent bank closings, misrepresentations, lost entries and missing accounts,'' a Greater Ministries flier entitled ``Churches Under Siege'' said. ``And all with no criminal charges ever being made against any church volunteer for any church related event.''

Greater Ministries is under intense scrutiny from securities regulators and federal investigators.

Along with Pennsylvania, securities regulators in California and Ohio have cease-and-desist orders against the ministry, declaring it the agent of unregistered securities.

Little is known about the federal investigation. Assistant U.S. Attorney Ernest F. Peluso indicated Greater Ministries was under investigation for money laundering and fraud during a 1997 bond hearing for a co-defendant in a conspiracy trial in Tampa. Nine Greater Ministries representatives were listed as unindicted co-conspirators.

Emilio Ippolito, his daughter Susan Mokdad and five others were convicted of conspiracy and obstruction of justice.

Payne told an Ohio hearing he had been before a grand jury in Tampa three times. He claimed to have been subpoenaed for church records by Assistant U.S. Attorney Robert Mosakowski last fall.

After the meeting in Lebanon County in November, Payne said he was purging computer records to stymie the U.S. attorney, and also was not cooperating with an investigation being conducted by postal inspectors.

FAITH PROMISES IS at least the third version of Greater Ministries' money-based ministry. When Florida securities regulators in 1995 sought an injunction against the program, then called Double Your Money, the ministry altered language on the sign-up sheet and changed the name. Before that came the Gold Plan, which turned a $60 investment into $1,600.

``The quicker you get two people in the program, the quicker you get paid through program bonuses,'' said a flier obtained by the Florida Comptroller's office.

The program has been a straight 2-for-1 deal at least since 1995. Gifts to Greater Ministries in $250 increments are returned to participants in 10 equal installments. By the tenth payment, the original quantity put in has doubled or more.

It took off in Mennonite communities of Pennsylvania, Ohio and Virginia. As it grew, its popularity reached into Baptist and nondenominational churches.

``People who support Greater Ministries are believers who believe that, with faith, they will receive back from God double the money that they donate to Greater Ministries,'' Payne wrote in an affidavit for Ohio's regulatory effort.

Regardless of any state or federal suspicion, Greater Ministries' best sales pitch was the lack of anyone crying foul. If it truly was a Ponzi, it would have collapsed years ago, they said.

Payne testified that Greater Ministries could close shop tomorrow and participants still could expect their money back.

``It's not our doing,'' he said. ``It's God's doing.''

Greater Ministries claims an interest in 200 gold, silver, platinum and diamond mines and complex international trading that increases its money exponentially.

If that is true, it raises a question about why Greater Ministries was thrown into a fiscal crisis when it lost $20 million when Colorado regulators and the Federal Deposit Insurance Corp. closed Best Bank of Boulder for insolvency last summer. Payments stopped almost immediately. The ministry stopped accepting checks and asked that all business be done in cash or electronic transfers.

Greater Ministries claims it is poised for its biggest score, in what could be West Africa's largest untapped gold reserve.

But the situation in Liberia only raises more questions.

PRESS REPORTS IN the past month show Greater Ministries retreating from two mining areas, diverting humanitarian aid shipments out of Liberia, and accusing government ministers of corruption.

Seven crates of unspecified relief supplies were sent to Angola instead of Liberia when the Liberian finance minister refused to waive import duty, Star Radio in Monrovia reported Jan. 27.

But the ministry's Web page still features a letter from presidential affairs minister Earnest Eastman declaring Greater Ministries the ``sole agent to monitor and verify'' humanitarian aid to Liberia.

The ministry left the Mano River area after Kamajor militias in neighboring Sierra Leone fired on one of its cargo ships. And it left the Lofa Valley because of a lack of prospects.

Its Liberian point man is Niko Shefer, an Israeli-born South African with a bank fraud conviction in his past. He promises a $30 million Liberian investment program and pledges to open the Greater Monrovia Bank this year.

There was a time when such optimism mattered to Smith and Cotton. But the lack of response from the ministry's leadership to their questions, and their belief that - contrary to assurances - their money is gone forever, now convince them they were taken.