HOUSTON, March 30 (Reuters) - A prominent Houston pastor who counseled presidents and top executives was charged on Friday with selling investors more than $1 million in worthless Chinese bonds and using proceeds for his own benefit, federal authorities said.
Kirbyjon Caldwell, 64, senior pastor at the about 17,000-member Windsor Village United Methodist Church in Houston, one of the nation’s largest Protestant churches, was charged with wire fraud and money laundering charges in connection with the sale of historical bonds to mostly elderly investors.
The bonds were issued by the former Republic of China prior to 1949, are not recognized by China’s current government and have no investment value, U.S. Attorney for the Western District of Louisiana Alexander C. Van Hook said.
Caldwell, an adviser to former presidents and executives, including George W. Bush and the late Enron Corp Chief Executive Kenneth Lay, was unaware the bonds were worthless and had invested his own money, his attorney said.
“He’s 100 percent, absolutely not guilty of these charges,” Caldwell’s attorney, Dan Cogdell, said in a broadcast interview. “He was the biggest investor in these bonds; he completely believed these bonds were legitimate.”
Caldwell and Gregory Alan Smith, 55, operator and manager of Smith Financial Group in Shreveport, were charged by a federal grand jury in a 13-count indictment, prosecutors said.
Smith, who worked as a financial planner, was barred from the broker-dealer business since 2010 by the Financial Industry Regulatory Authority, the SEC said.
Calls to the Windsor Village United Methodist Church were not answered on Friday, and Smith could not be reached at his office.
The two men face separate charges of defrauding investors by the U.S. Securities and Exchange Commission in connection with the bond sales. Caldwell and Smith raised at least $3.4 million from 29 mostly elderly investors, and used some of the proceeds for personal expenses, the SEC alleged.
“Caldwell took advantage of his victims, encouraging them to remain faithful even as he and Smith broke that faith, stealing from elderly investors in an outright fraud,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. (Reporting by Gary McWilliams; Editing by David Gregorio)