Crime

Former Pastor Faces Ponzi Scheme Charges in Ind.

INDIANAPOLIS (AP) — Karen and Fred Lamb tried to do their homework before investing their savings in an Indiana company’s fund to help churches build or expand. After talking with church friends and checking out Alanar Inc. on the Securities and Exchange Commission’s website, they decided the firm’s goals and beliefs meshed with their own.

“It was a good place where Christians would be investing in the work of other Christians,” said Karen Lamb, a 55-year-old Terre Haute housewife.

More than five years later, the Lambs still are waiting to get most of their $53,000 investment back. Now a former pastor is going on trial for what authorities call a multimillion-dollar scheme that preyed on thousands of parishioners who thought they were helping build churches but were actually buying the man and his sons planes and sports cars.

Vaughn Reeves, 66, faces 10 counts of securities fraud. Jury selection was to begin Tuesday in Princeton, Ind., about 25 miles north of Evansville.

Authorities say Reeves, founder and owner of now-defunct Alanar, and his three sons duped about 11,000 investors into buying bonds worth $120 million secured by mortgages on construction projects at about 150 churches. The men diverted money from new investments to pay off previous investors, pocketing $6 million and buying two airplanes, sports cars and vacations, according to court records.

Officials say the scheme operated mainly in Indiana, though church members in other states, including Florida, Michigan, Maryland and Oklahoma, also were victimized.

All four men have pleaded not guilty. An attorney for Vaughn Reeves did not return calls from The Associated Press seeking comment.

Experts say the Alanar case is a prime example of affinity fraud, in which scammers prey on people who share a common interest, such as religious affiliation, ethnicity or even age.

The SEC doesn’t track cases of affinity fraud separately, but Lori Schock, director of the agency’s Office of Investor Education and Advocacy, estimates investors have lost hundreds of millions of dollars to such schemes in the last two years. Many victims never report the crimes because they are ashamed to tell authorities they’ve been duped, Schock said.

A warning on the SEC website says schemes have targeted retirees, blacks, Jehovah’s Witnesses and Armenian-Americans. Schock said recent schemes have gone after bus drivers in California, Latin Americans in Miami and Mormons in Utah.

Investigators say Reeves and his sons assembled teams of church members to sell bonds to other church members, urging them to fulfill their “Christian responsibility” by supporting church construction projects during the early part of the decade. The teams were given training materials that instructed them to open sales calls with a prayer and to quote scripture.

“Never sell the facts, sell warm stewardship and the Lord,” urged materials quoted in court documents.

Five years after a federal judge froze Alanar’s assets, Bradley Skolnik, the Indianapolis attorney who has served as Alanar’s court-appointed receiver since 2005, has repaid about $35 million to investors who lost nearly four times that. He expects another payout of about $10 million late this year or early next.

The money, he said, comes from about 150 churches across the country that issued the bonds. Some were able to pay off their debt, but Skolnik said about 20 percent were in default. About eight churches face foreclosure proceedings and likely will lose their buildings, he said. Skolnik said that in some cases, Alanar had never determined whether the churches could afford to issue bonds on their projects.

The Lambs, who invested about $53,000 from inheritance money and their two sons’ trust funds, have gotten back just $6,000.

“We wanted to invest in something honest, and doing the Lord’s work – and that just sucked us right in,” said Karen Lamb, whose 57-year-old husband works as a millwright.

Indiana Secretary of State Todd Rokita, whose office led an effort to toughen criminal penalties for affinity fraud last year, said people need to verify that they are investing in legitimate enterprises before handing over cash.

“The point isn’t to make everyone distrust their friends and loved ones or be afraid of their own shadow, but to reinforce the fundamentals of sound investing,” he said.

The SEC’s Schock said such due diligence can “protect these people from a lifetime of hardship.”

“Some of these people are too old to regain this money they’ve lost,” she said.

—

Online:

SEC alert on affinity fraud: http://www.sec.gov/investor/pubs/affinity.htm

Comments (29)

  • George Washington
    Posted on October 18, 2010 at 4:51pm

    This was from that pastor’s last sermon. Go ahead and steal from your neighbors. Go ahead and cheat your friends. Do it in the name of Heaven. You’ll be justified in the end.

    Report Post »  
  • EyeofFaith
    Posted on October 13, 2010 at 2:31pm

    Having know these men in our community for several years…my husband and I felt something was not right about this fraud they called Alanar. Vaughn Reeves quit being a pastor to start this scheme. We wondered “who does this if they were called to be a preacher”? Wish people would have listened to us…
    Our own son lost money.

    Report Post »  
  • EyeofFaith
    Posted on October 13, 2010 at 2:26pm

    Know this:It will be a bitter thing when they meet their GOD.

    Report Post »  
  • Paradigmm
    Posted on October 13, 2010 at 12:20pm

    You mean that there are people out there that will use the bible and religion to take advantage of the good nature of those naive enough to believe them? So when a man who reports that “god” is speaking through him, standing on the national mall spouting scripture in one breath and hate in the other he should be believed?
    By the way, don’t forget to call Goldline today!

    Report Post » Paradigmm  
  • Zaphod
    Posted on October 13, 2010 at 7:48am

    It just makes me wonder how much of this uber-wealth out there is actually REAL wealth? How many of these jet-setting millionaires living the high life actually make their money by producing something of actual value?

    Report Post » Zaphod  
  • historypaper
    Posted on October 12, 2010 at 2:47pm

    This is an example of the new social-justice church. Alanar Inc. on the Securities and Exchange Commission’s might be in need of one of those nudges.

    Report Post » historypaper  
  • Jezreel
    Posted on October 12, 2010 at 1:21pm

    I also think that these churches who were were at the meeting in Washington to support Obama should be taxed 10%. It would be actually good if all huge denominations were taxed 10% to help to feed the poor etc, after all, feeding and care of the poor is the responsibility of the church and not the government. Also, since they twist and distort the doctrine of tithing, they should pay for it. The Levitical priesthood ended with Christ upon the cross and now we have hirelings in pulpits putting condemnation upon their congregations to tithe. These men need to work for a living like Christ and the apostles did and not pervert the word of God and use it to make a living and for a paycheck.

    Report Post »  
    • Mithra
      Posted on October 12, 2010 at 9:46pm

      Here’s an idea. You get the first n to tithe 10% to the church. If that person gets 2 people to join the church he gets 10% of each of the 2 other people’s 10% tithes. The church is happy because hey receive more funds, and the new people can attain salvation plus a little value added for their efforts. So everyone wins!

      Report Post »  
  • Endstatism
    Posted on October 12, 2010 at 12:55pm

    I am sickened by all the fraud, theft and scams that are used to prey on Americans. We can break the back of all the financial scamming by passing new laws that hang harsh prison sentences on con artists like Reeves plus as a condition of release they have to pay back every penny, otherwise they will remain in prison. If they end up spending the rest of their life in prison, so be it. Many of these guys hide their stolen money offshore in unnumbered accounts and shell corporations. The money wont do them any good in prison. And I would put these guys in maximum security prisons. Lets see how well they do sharing a prison cell with Bubba. Personally, if these guys scammed me for 53K and all I got back was 6K, I think Mr Reeves would be getting a visit from me with a baseball bat. Sorry, but I`m kind of Old Testament when it comes to criminals.

    Report Post » Endstatism  
  • R_U_4_Real
    Posted on October 12, 2010 at 11:15am

    It is only legal for the Government to create a Ponzi Scheme.

    Report Post » R_U_4_Real  
  • Midwest Belle
    Posted on October 12, 2010 at 10:32am

    My question – why would ANYONE give money to build a church they’re not going to see (or attend)?? If a paster asked me for a donation, I’d want specifics – OUR building?? If not, I’d not give a dime. And certainly not money put away for my kids. Family FIRST!

    Report Post » Midwest Blonde  
  • wscitgo
    Posted on October 12, 2010 at 10:14am

    There is no doubt that these people are ciminals and should be in jail.

    HOWEVER, these small time Ponzi schemes are nothing compared to the ones run by the U.S. government, and I believe that we should impose a MORATORIUM on all prosecutions against illegal ponzi schemes like the one described in this article until the government puts itself on trial for the biggest ponzi scheme ever committed against people.

    If you look at some of the state sponsored ponzi schemes we have in the U.S…..

    1) Stock Market
    2) Social Security
    3) Most Pension Funds

    …one can clearly see that the small Ponzi schemes like the one described in this article are NOTHING compared to the Ponzi schemes run by the Federal Reserve (stock market, treasury debt), the U.S. government (Social Security), state governments (pension funds), and corporations (pension funds, worthless paper stock).

    At the end of the day, those in big government and larger corporations must laugh every day and say “god what a great country” (that is, unless they find that politically incorrect) for being able to commit the financial ponzi schemes against the American public with no repurcussions.

    And for ANYBODY who doesn’t believe the aforementioned social security, pension funds, and the stock market are ponzi schemes, I suggest you research what a ponzi scheme is and then take a hard look. Social Security meets the definition of a ponzi scheme exactly, as do most pension funds, yet, because they are crimes committed by the government and most have a vested interest, nobody says anything. Same goes for the stock market, albeit the stock market is a “multi-crime” syndicate in that most corporations are allowed to cook their books (e.g. “mark to market”, “pro forma earnings”) in order to show “growth” so that they can push their worthless paper higher.

    Come on people, wake up. We should not be prosecuting small time Ponzi scheme perps until we tackle the biggest ponzi scheme(s) in the history of mankind—the U.S. financial system. Effectively, as citizens we have given license to the government to steal our labor—-using these ponzi schemes, the U.S. government is effectively enslaving the entire population, and this is a problem that no political party seems to want to address.

    In the end, it doesn’t matter who gets voted into office, republican or democrat. As long as the aforementioned institutions are allowed to continue the criminal ponzi schemes like Social Security, the Stock Market, and unfunded pensions (to buy votes and/or juice stock prices), the end result will be dicatorship.

    Report Post »  
    • starman70
      Posted on October 12, 2010 at 10:19am

      Madoff has nothing on the government’s ponzi scheme!

      Report Post »  
  • shofar
    Posted on October 12, 2010 at 10:08am

    In G-D we trust. All others checked through NCIC/IDACS!

    Report Post » shofar  
  • Jezreel
    Posted on October 12, 2010 at 10:00am

    A believer that truly knows their responsibilities knows that supporting men to build huge buildings is a waste of their money and that giving to family and the members of the body of Christ is the first priority, not supporting egotistical whims of hirelings. It is good that they loose the buildings. The first church met in other’s homes and it looks like some day it may come back to the original blueprint of the church because those follow man and not God will fall away because of the persecution being too rough. These word of faith churches are going to fail also who twist the word of God.

    Report Post »  
  • andrey1279
    Posted on October 12, 2010 at 8:59am

    Seek the LORD, All you humble of the earth Who have carried out hisordinaces; Seek rightteousness, seek humility. Perhaps you will be hidden in the day of the LORD’S anger. ZEP. 2:3

    Report Post »  
  • Breaker 19
    Posted on October 12, 2010 at 8:34am

    Government education – we are to be wise as serpents and gentle as a lamb.

    Report Post » DIOS BENDIGA AMERICA ... JESUCRISTO ES EL SEÑOR!  
  • LadyIzShy
    Posted on October 12, 2010 at 8:04am

    what a shame. to Use God to scam people..They will pay for this..

    Report Post » LadyIzShy  
    • UPSETVET
      Posted on October 12, 2010 at 9:02am

      This is a sad exemple of those who use religion as a ploy to get what they otherwise could or should not get through honest means. Obviously this “ pastor ” and his sons are not God’s servants because they chose to serve another master, “ mammon ” or the flesh. Jesus said in the Gospel of Matthew 7:24, ” No man can serve two masters: for either he will hate the one, and love the other, or else he will hold to the one, and despise the other. Ye cannot serve God and mammon “.
      Unscrupulous men and women prey on those who wrongly believe that all who come in Christ’s name are true and honest Christians. Unfortunately they are wolves in sheep‘s clothing and once their true idenity is revealed it’s too late for many of their victims. My heart goes out to those who were victimized by these frauds. If it’s any consulation, God will judge and punish them for their evil act.

      Report Post »  
  • traderdan
    Posted on October 12, 2010 at 8:00am

    Anyone investigating our govt for running the biggest ponzi scheme in the world?

    Report Post »  
    • BoilitDown
      Posted on October 12, 2010 at 10:08am

      You nailed it TraderDan. Quote: “Lawlessness in a society increases with the corruption of it’s leaders” They’re thinking; Since we have a lawless DOJ, what’s a little ponzi scheme gonna matter? or… The president doesn‘t abide by the Constitution so our little scam won’t mean a thing. or…Blagojevich says it isn’t extortion, it’s only routine politics. or…Rangel cheated on his taxes. etc. etc.
      Throw incumbents out and pass term limits as a partial fix first.

      Report Post »  
    • starman70
      Posted on October 12, 2010 at 10:17am

      They must have been former union officials or government bigwigs.

      Report Post »  
    • Mithra
      Posted on October 12, 2010 at 9:38pm

      And if you look at it, our whole economic system is a Ponzi scheme as it requires continued population and economic growth to keep the system going. Think what happens to company share priceswhen they miss their earnings estimates.

      Report Post »  
  • unionrockstar
    Posted on October 12, 2010 at 7:42am

    Moral of the story;
    No one is perfect,
    Never ever put your trust in mankind without checking them out first.
    People will fail you.
    Christ will not

    Report Post »  
  • RONALDREAGAN1980
    Posted on October 12, 2010 at 7:32am

    Are we surprised?

    Report Post » RONALDREAGAN1980  
    • *************************
      Posted on October 12, 2010 at 4:26pm

      Hmmm. Sounds just like another ponzi scheme … “Social Security”! Have those Washington, DC, officials been arrested yet for that scheme? Or are they still suckering Americans?

      “So, tell me, schatze. Is it twue what they say about the way you people are, gifted? [zipper sound] Oh, it’s twue. It’s twue. It’s twue, it’s twue!” -Lili Von Shtupp, Blazing Saddles

      Report Post » WeDontNeedNoStinkinBadges  

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love