A 50-year-old Canton man facing a life sentence after masterminding a multimillion-dollar Christian-based investment scam was apparently trying to arrange to have U.N.-backed armed commandos bust him out of the federal prison, according to court testimony Tuesday.
An FBI special agent also testified during a sentencing hearing in Dallas federal court that Gregory Setser was coordinating efforts from his Seagoville prison cell with his wife, Cynthia, to hit up some of the same 1,700 investors he was convicted last summer of ripping off - for a $300 "fee" to join him in a class-action lawsuit against the government that they hoped would restore all their lost money.
The bizarre developments in Mr. Setser's case came in a selection of surreptitiously recorded jailhouse phone calls between him, his wife and other associates from July to as recently as Jan. 9.
Prosecutors sprung the recordings on the court moments before U.S. District Judge Barbara Lynn was to sentence Mr. Setser.
A federal jury convicted him of collecting about $170 million in investments through a sham import company, IPIC Investments. The company, which started in Texas in 2001 and later moved to California, was supposed to buy cheap, foreign-made products and sell them to major U.S. retailers. Auditors later found that practically no products were bought.
Between 2001 and 2003, initial investors, such as televangelist Benny Hinn, were paid by later investors in a classic Ponzi scheme. Once he ran out of investors, Mr. Setser's swindle collapsed, losing at least $60 million.
Once the government seized control of Mr. Setser's empire, Mr. Hinn returned $165,000 in profit that he made off a $300,000 investment. His ministry never invested any money.
Mr. Setser used his connections to people such as Mr. Hinn to lure hundreds of other investors. His family, in return, enjoyed what prosecutors described as an "utterly grotesque lifestyle," including multimillion-dollar homes, a 100-foot yacht, a helicopter and luxury cars.
Mr. Setser faces up to 385 years in prison.
On Tuesday, Judge Lynn was in the middle of debating with attorneys whether a far shorter sentence would erase the "slightest faint hint of hope that he would ever get out of prison" alive when prosecutors called an FBI agent to the stand and played the recordings.
The agent testified that he knew of no actual plan involving armed men acting on behalf of Mr. Setser. But he said the FBI had received the recordings late last week and was still investigating.
FBI Special Agent Matt Segedy said they chronicled conversations from July 2006 to Jan. 9 between Mr. Setser, his wife, and a man who purports to be a U.N. diplomat. The "diplomat" claimed that he could get 19 "commandos" to help break Mr. Setser out of prison.
Agent Segedy said the man "surfaced late in the IPIC investigation" but did not elaborate. The man is not affiliated with the U.N., the agent said.
The agent told prosecutor Jeff Ansley during questioning that Mr. Setser was also heard constructing a plan to solicit money from other Seagoville inmates' families.
Mr. Setser, according to the FBI agent, also talks about paying off a judge, but it's unclear whether it's a U.N. official or someone else. The agent testified that Mr. Setser also mentions Scotland Yard but doesn't say in what context.
The recordings, which were at times inaudible over the courtroom audio system, contained titillating pieces of information - "paperwork on the ammo on the plane"; "we're going to call British Airways"; "everything's on schedule"; and "they're sending 19 commandos in to get you."
Mr. Setser is also heard talking to his wife about plans to re-establish contact with some of his old investors to get more money for a class-action lawsuit. Describing the plan to get them repaid, Mr. Setser is heard saying: "I don't care if these people like me, but if we get their money back, they'll think I hung the moon."
At one point, a frustrated Cynthia Setser can be heard talking with her husband about the task of resoliciting investors.
"I need you out," she tells him.
"I know, I want out of here, too," he replies.
In light of the new jailhouse recordings, Judge Lynn ordered the hearing to continue today.
"It was a surprise to me," Donald Templin, Mr. Setser's attorney, said of the recordings. "The judge correctly gave us more time."
He has asked the judge for a sentence of 20 years or less, arguing that it amounts to a life sentence, given Mr. Setser's poor health and high blood pressure.
Earlier in the hearing, Mr. Setser got a chance to address Judge Lynn personally. In a written statement, which the judge read, Mr. Setser detailed the "criminal acts of government officers" who raided his California home in 2003, ending his lavish illegal empire. He characterized the evidence they seized as "fruits from a poisonous tree."
The former ceramics salesman was notably more subdued when speaking to the judge. "The pain that I've seen ... was never my intention," he said. "I've always worked very hard. I'm sorry for the people who suffered. It's been difficult for my family. I just want to thank you for your fairness."
Also convicted in the scheme was Mr. Setser's sister, Deborah Setser. She was supposed to be sentenced Tuesday, but it was delayed for a day because of the new developments in her brother's case.
Mr. Setser's son, Joshua, and wife, Cynthia, both struck plea deals in exchange for their testimony about the family's financial dealings.
On Tuesday morning, Joshua Setser received two years in federal prison and six months of home confinement. He was also ordered to repay about $60 million in restitution.