5 Ministries elders guilty of conspiracy

The Tampa Tribune/March 13, 2001
By Michael Fechter

They removed their ties and belts as if they were at home changing clothes. But they left the federal courtroom in the custody of U.S. Marshals, who took the leadership of an ``anointed'' church to jail.

For Gerald and Betty Payne, Haywood ``Don'' Hall, Patrick Henry Talbert and David Whitfield, Monday's conviction on federal conspiracy and fraud charges marked a cataclysmic end to a money-doubling financial program that appeared unstoppable three years ago.

Gerald Payne claimed Greater Ministries International had been anointed by God to enrich Christians. It would continue until Jesus returns. And the defendants' lawyers argued their clients truly believed this and meant no harm to anyone.

Twelve members of a federal jury saw the harm, though. They saw the five in videotaped meetings mixing prayer and praise with boasts of unimaginable wealth from hazy international trades and mining. Those investments either didn't exist or ended in failure.

Jurors saw that the money - estimated at nearly $500 million since 1993 - is gone, bankrupting investors who bought the pitch and mortgaged homes or cashed in retirement accounts to join. ``This is one of the largest Ponzi-type schemes ever investigated,'' Internal Revenue Service spokesman Dave Burris said after the verdict.

A Ponzi scheme is a fraud in which established investors are paid with money from newer investors. Jurors showed more emotion at the verdict than the defendants. Several wiped away tears as the decision was read aloud.

``I know that the jurors was crying when they were polling the jury,'' defense attorney Ron Smith said. ``I think that means they were pressured.''

His client, Gerald Payne, was ``devastated'' at being convicted on 19 felony charges, Smith said. Betty Payne, Talbert and Whitfield faced 16 counts each, and were convicted on all of them. Defense attorney Sharon Samek won the case's only acquittals. Don Hall wasn't part of Greater Ministries during the time the money laundering and financial counts took place, she argued successfully.

``Perhaps the jury was sympathetic with the gifters who lost money even though it was a faith- based program and nobody pressured them'' to put money in, Samek said. Defense attorneys emphasized the church's more traditional activity; a feeding program for the homeless, a rehabilitation program for addicts and financial help for missionaries.

But a videotape offered by the defense also showed Payne advising his followers about Greater Royal Island, a Bahamian tropical isle where he planned to establish an independent, ecclesiastical island nation. Before prosecutors could ask, U.S. District Judge James D. Whittemore ordered the five jailed during a sentencing investigation.

News of the verdicts prompted relief among victims and state securities regulators throughout the country. In Pennsylvania, Securities Commission Enforcement Director Michael Byrne was preparing a news release urging victims there to file bankruptcy claims before a March 30 deadline.

``Many of these people have been told that somehow Greater Ministries would repay them from the gold, platinum and diamond mines,'' Byrne said. ``And they believed it.''

Byrne started tracking Greater Ministries in 1995. The church ignored a cease-and-desist order secured by the state, and a subsequent $6.4 million contempt fine.

The church continued soliciting new investors after the fine and after federal indictments were issued in March 1999. That prompted Byrne's counterparts in Ohio and Alabama to come to Tampa and secure a civil injunction that August.

Authorities seized the church, giving prosecutors access to a wealth of videotaped solicitation meetings and internal meetings that may have provided the most damning evidence.

Greater Ministries reacted by comparing its plight to the Branch Davidians, many of whom died in a showdown with the federal government in 1995. An image of the Waco compound inferno popped up on the church's Web site. Even Monday, the church's Web site confidently predicted acquittal on all charges.

``Their witnesses did provide testimony that Greater indeed had gold and diamond mines as well as other investments around the world,'' the Web site said. ``Give praise to the Lord for it is his victory.''

The church did have one major legal victory, in 1997 when it stopped Florida securities regulators from monitoring its work. Because sign-up forms for the church's ``Faith Promises'' program called the money a gift with no guarantee of return, and be cause it cited the scripture of Luke 6:38, Florida's 2nd District Court of Appeal ruled the program was not a security.

Any expectation of profit, the court ruled, shifted to a supreme deity. Alabama Securities Commissioner Joe Borg said Greater Ministries' success has prompted a string of copycat programs.

``It's very unfortunate but the use of uniting God in the name of financial gain is popping up all over the country,'' Borg said. It's an intoxicating mix that makes otherwise cautious investors drop their guard. ``People worry about being greedy,'' Borg said. ``But you're doing the Lord's work and you're get ting money? That's the best opportunity of all. After all, if God is involved, how can it go wrong?''

It started to go wrong for Greater Ministries in July 1998 when regulators seized $20 million in uninsured church deposits from an insolvent Colorado bank. Rather than a ``petty cash'' fund, as elder John Krishak described it, this was all the church had left.

Krishak and Altamonte Springs resident James Chambers each entered guilty pleas to one conspiracy count last fall. Their sentencing is set for April 16.

Monthly payments to participants, long the staple that gave the program legitimacy, dried up immediately after the bank's collapse. Church leaders blamed the government, hinting at a conspiracy to stop a church that was growing too powerful.

Church leaders have dabbled in antigovernment rhetoric, using it to thwart investigations, to market their program to people's fears and sometimes, out of sincere belief.

Talbert, for example, spent four months in jail in 1997 after refusing to acknowledge the court's jurisdiction. He claimed diplomatic immunity as an ambassador from the Kingdom of Heaven. Eventually, Talbert was sentenced to 10 years in state prison for a 1999 racketeering and securities conviction in state court.

In the same spirit, Payne accused IRS agents of breaking into his church in 1996 and stealing $3.5 million. He told followers he had proof but never provided it. Florida banking officials refused to allow a church supporter to buy a controlling interest in a Broward County bank in 1997, because the buyer, Carl Thomas, claimed to be a ``sovereign citizen'' outside state scrutiny. The state said Thomas was acting as a front to aid ``unlawful activities'' for Greater Ministries.

People who lost money in the program now wait for a federal bankruptcy trustee to complete the hunt for assets. He hasn't found many. Investors can hope for pennies back on the dollar.

That's better than nothing to Pastor Stephen Smith of Danville, Va. He testified that he lost $55,000 from a second mortgage on his home that he gave to Whitfield after the bank collapse in 1998.

He told jurors that he made it clear to Whitfield the money was an investment, not a gift, and that he could not afford to lose it. Jurors weren't allowed to find out that Smith, a father of six building a new church, lost his home and his cars as a result. ``There were times that I didn't know how I was going to feed my family,'' he said Monday.

The damage challenged his faith and prompted him to offer his resignation to his own church elders. They declined. Smith, 38, expressed satisfaction at the verdict but said he won't ``rejoice in anyone's downfall.'' God allows troubles into people's lives to make them bitter or make them better, he said. It took a while, he acknowledged, but he and his family opted for better.

``The good news is that we have come through it and our faith is intact and we're stronger,'' he said. ``I do not rejoice that these men convicted [Monday] may not see the light of day. I hurt for them.''