Faith and mammon

How do you keep a massive fraud from regulatory reach for six years? Find suckers who distrust the authorities more than they do you.

Forbes Magazine, September 6, 1999
By John Gorham

MICHAEL MILLER REMEMBERS the day in late 1996 when he met his pastor, Merl Calkins, in front of the post office in tiny Confluence, Pa. In Calkins' hands was a Priority Mail package stuffed with $100 bills. The clergyman made no attempt to hide the package and instead seemed to wave the money tauntingly under Miller's nose.

What was a pastor doing receiving $100 bills through the mail? Calkins, a former member of the Pagans motorcycle gang who had been "born again," said the cash came from a Tampa-based church called Greater Ministries International. Its pastor, Gerald Payne, 63, promised to double investors' money within 17 months. Greater Ministries claimed it could do so through trading in precious metals and foreign currencies, as well as investments in gold and diamond mines in South America and Africa. The "Faith Promises Program" was the plan's name and its returns were so spectacular that Greater Ministries promised to use excess profits to fund missionary work as well as homeless shelters and rehab programs. Miller refinanced his home and other properties and sold land to put $65,000 into Faith Promises.

Today Miller is out nearly half of his $65,000 and biker-pastor Calkins is not talking.

In fact, thousands of fundamentalist Christians are missing as much as $100 million in funds they sent to Greater Ministries over the past six years, law enforcement authorities estimate. They say that Faith Promises was nothing more than a giant Ponzi scheme, in which early investors were paid with money taken in from later investors.

The reason you have never heard of this massive fraud has more to do with its victims than regulators. Many are members of fundamentalist Christian congregations who distrust government and the media. Despite devastating financial losses and pending criminal litigation by the U.S. Attorney for the Middle District of Florida, they remain reluctant to speak against the church and founder Payne. Those who do, like Miller, are ostracized. Some believe that Payne himself is being victimized by the government.

By the early 1960s the Tennessee-born Payne was in Tampa. Except for a 1964 arrest for disorderly conduct, Payne's life was uneventful. He started up a local contracting business and says he began to take religion seriously.

But in the 1970s recession struck. Payne's financial obligations, including child support, started to mount. In the mid-1970s Payne allegedly began submitting phony invoices to one of his clients. Eventually he got caught and tried to lie his way out of it to a grand jury. That stunt got him sentenced to four months in prison in 1979.

Sometime after prison, Payne became a full-time preacher. Payne's sermons had an aw-shucks country style that inspired trust. At first most of his sermons focused on helping drug addicts and the homeless, but ultimately he started preaching about the evil of governmental control.

In 1988 Payne teamed up with one Haywood Eudon Hall and eventually began promoting an investment plan that would take in "gifts" and return "blessings" until "maturity" at which point the "gift" would be returned, two dollars for one. In effect it was a cross between a zero coupon bond and an interest-bearing bond, offering both appreciation and a coupon. There was plenty of Scripture quoted in pitch letters mailed out to other pastors around the country.

Said Hall to a group in an Ohio hotel in 1997: "God said blessed are the poor in heart, not poor in money. God wants the preacher to drive a nice car like your doctor does. AMEN!"

Typically, Greater Ministries' pitchmen and local preachers would discuss the plan in small meetings held in homes or at restaurants. Prospective investors were told that the returns on their "gifts" were tax-free because of the church affiliation. Greater Ministries insisted that because the contributions were gifts and not investments, they weren't subject to securities regulation.

Many of Greater Ministries' customers were believers in a confused philosophy that holds that white Christians can declare themselves to be sovereign citizens, exempt from the rule of a corrupt U.S. government. Payne embraced the idea. Indeed, a white supremacist from Tampa, Charles Eidson, based his Tampa Freedom Centre in Greater Ministries' headquarters at one time. Eidson is currently serving a 57-month prison sentence on federal fraud and other charges.

This antigovernment message struck a chord among Mennonite and Amish communities in Pennsylvania, Virginia and Ohio. Many Amish, for example, refuse to participate in the Social Security system. It also struck a chord with Worship Center Ministries in Lancaster, Pa., an interdenominational church composed mostly of former Mennonites. According to its pastor, Samuel Smucker, some two dozen congregants invested with Faith Promises. And, incredibly, this was not their first Ponzi. In 1995 the congregation was burned by the $354 million New Era Philanthropy scheme.

After the regional meetings, prospective investors were instructed to send in cash or money orders in $250 increments and, after six months, they were told, they would start receiving monthly returns of $50. In most cases profits were automatically "re-gifted."

Cash was sent directly to Greater Ministries headquarters, a four-story former bank building in north Tampa. A small room called the "money room" was set aside for counting the loot.

Greater Ministries paid 5% commissions to high-ranking church officials or elders who acted as go-betweens in rounding up clients, according to authorities. So-called courier services, some run by elders, also got a $10 fee per money transfer. One church director, James Chambers, is alleged to have brought in some $8 million, earning himself $400,000.

As the affair rolled on, Payne developed other products and services: a Greater Ministries debit card, an herbal research center that claimed to treat cancer, a Kentucky hotel and interests in an island that was to be the home of a sovereign nation for Payne's followers. There was also a Web site selling coins, jewelry and Christian music CDs.

Payne himself was a frequent traveler and often carried a pistol, say investigators. Besides his rallies in numerous states, he spent time in Europe and Africa. According to the Internal Revenue Service, he had bank accounts in the Cayman Islands and Switzerland.

Ultimately, word of Payne's scheme leaked out, and state securities regulators accused Greater Ministries of selling unregistered securities. Greater Ministries was barred from doing business in Ohio, California and Pennsylvania, but it ignored the ban and was fined $6.4 million by a Pennsylvania court. It wasn't until Greater Ministries' primary bank, Colorado's BestBank, was shut down in July 1998 that Payne's operation collapsed. He alleges that his church lost $18 million it had on deposit.

In March the U.S. Attorney's office in Florida indicted Payne and six of his cronies on multiple counts of fraud and money laundering. Investigators are still unraveling the case. In early August federal marshals and local police seized and sealed the entire contents of Payne's Greater Ministries church in Tampa. It seems that Payne's little church was a den of sinners.

In April Patrick Henry Talbert, 51, church director, was convicted of bilking 11 elderly ladies in Florida out of $256,000, in a separate scam. He was sentenced to ten years in prison.

Jonathan Strawder, 26, who worked for Greater Ministries for several months two and one-half years ago, was sentenced in June to five years for running a Greater Ministries knockoff called Sovereign Ministries.

Niko Shefer, 48, an Israeli citizen and South African businessman, formed a venture with Greater Ministries in 1998 to mine diamonds and gold in Liberia. Shefer had spent seven years in a South African prison for bank fraud. He claims the venture dug one mine that proved unsuccessful. Strawder and Shefer have not been indicted in the Greater Ministries case.

Payne? He lives in Tampa with wife Betty. Both are out on bail awaiting trial. His aw-shucks image has been sullied. In 1997, customs officials in Atlanta found 26 videotapes in Payne's luggage depicting bestiality, investigators allege. Payne's lawyer denies that the tapes exist.

As for his fleeced flock, prayer is in order. Greater Ministries' Web site reports that because of the federal seizure, services will be held in the parking lot.