The Atlanta Business Chronicle reports…
“Two leaders of a ‘Building Wealth’ tour that targeted church congregations across the country – including New Birth Missionary Baptist Church in Lithonia, Ga. – will serve time in federal prison in connection with a fraud scheme.
Federal prosecutors say Ephren Taylor II, 32, of Overland Park, Kan., and Wendy Connor, 46, of Raleigh, N.C., carried out a Ponzi scheme while officers at City Capital Corporation. The scheme targeted more than 400 people who invested over $16 million.
More than 80 people from Georgia lost more than $2 million because of Taylor’s scheme, according to the U.S. Department of Justice.
Taylor was sentenced Tuesday to 19 years, seven months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $15,590,752.81.
Connor was sentenced to five years in prison, to be followed by three years of supervised release, the first eighteen months of which are home confinement, and ordered to pay restitution in the amount of $5,818,299.13.
Taylor was convicted Oct. 8, 2014, after he pleaded guilty to conspiracy to commit wire fraud. Connor was convicted Oct. 8, 2014, after she pleaded guilty to the interstate transportation of money taken by fraud.
“Taylor’s ‘Building Wealth’ tour accomplished exactly the opposite, victimizing hundreds of investors and leaving many of them financially ruined,” Acting U.S. Attorney John Horn said in a statement. “At churches across the country he touted himself as a socially conscious investor, but his investment opportunities were nothing but a Ponzi scheme designed to build his own personal wealth. This sentencing brings a measure of justice to those who remain devastated by his actions.”
According to Horn, the charges and other information presented in court:
The investments pushed by Taylor and Connor included purchasing promissory notes, where the funds invested would be used to support small businesses such as laundries, juice bars, and gas stations. Taylor and Connor falsely represented the revenues and returns for these businesses knowing that they were not profitable.
Taylor and Connor also pushed an investment in sweepstakes machines. Sweepstakes machines are computers loaded with various games that allow players to win cash prizes. City Capital published offering materials that falsely claimed the average sweepstakes machine would generate 300 percent investor returns. As part of the fraud scheme, Taylor and Connor also promised that the sweepstakes machine investments were 100 percent risk free.
Taylor and Connor knew that the investments he was touting were not profitable and that investors were not receiving actual returns from their investments.
As part of the scheme, Taylor and Connor encouraged investors to use self-directed IRAs to make their investments. Many victims transferred their retirement savings to trust companies that act as custodians for self-directed IRAs, expecting these funds to be used to fund the investments pushed by Taylor.
After victims funded their self-directed IRAs, Taylor and Connor directed the use of those funds. The money was not invested as promised, but rather was used to pay ongoing business expenses of City Capital, pay personal expenses for Taylor and Connor, and in some limited instances, to pay supposed returns to earlier investors.
In late 2010, the scheme collapsed and Taylor’s victims lost virtually all of their investments.”