pastor pleads guilty to wire fraud as part of a $5 million ponzi scheme
DENVER – Pastor Charles Lawrence Kennedy, Jr., age 71, of Tampa, Florida pled guilty before U.S. District Court Judge Christine M. Arguello yesterday to one count of wire fraud federal law enforcement authorities announced. Kennedy, who is free on a bond, is scheduled to be sentenced by Judge Arguello on January 22, 2014. Kennedy was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Stanley Wayne Anderson of Arvada, Colorado and Edwin Alexander Smith of Denver, Colorado. Smith pled guilty to one count of wire fraud on August 27, 2013. Anderson’s trial is scheduled for January 13, 2014.
According to the facts contained in the indictment as well as the stipulated facts contained in the plea agreement, beginning in October of 2005 and continuing through December 2008, Anderson, Smith and Kennedy together with each other, and aiding and abetting other persons known and unknown to the Grand Jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through “CFO-5, LLC” and “Trinity International Enterprises, Inc”, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida where he worked as a pastor and conducted business through a company identified as “Keys to Life Corporation". Kennedy through a formal partnership with Trinity assisted Anderson and Smith in soliciting investment funds.
They solicited investors' funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes ("MTN program"). When in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million dollars from approximately 100 investors nationwide over the course of the scheme. The investors' funds were not used to trade in financial instruments, but were instead misappropriated by Anderson, Smith and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments, that is, money taken from one investor to compensate another, lost their total investments. Anderson and Smith generally commingled and deposited investors' funds into bank accounts controlled by Anderson and Smith.
Kennedy began soliciting investments in December of 2005 from fellow pastors and members of their congregations through his company Keys to Life Corporation and falsely promised that for every $1,000 invested, the minimum return would be $1,000,000 which would be paid within 90 days. From December 2005 through April 2006, Kennedy collected $460,000 from nine investors and forwarded only $145,000 to Trinity for use in the investment pool, and as a result has agreed to pay $315,000 in restitution. Kennedy in fact took a portion of investor funds for his own personal benefit.
“The defendant used his position as a Pastor to solicit funds from investors with promises of substantial returns,” said U.S. Attorney John Walsh. “Instead of investing the funds, he and others used the money for unauthorized purposes. The defendant’s abuse of his position of trust led to 100 people losing their hard earned money, for which the defendant will now face the consequences.”
“Investors should always be wary and cautioned of investment proposals that promise high returns on their investment. ‘If it seems too good to be true’, it is probably an investment scheme,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“The FBI has made protecting innocent investors a priority,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Therefore, we will vigorously investigate those who engage in schemes to defraud members of our communities.”
“Fraud schemes victimize honest hard working individuals,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “Our inspectors will take every action possible to ensure that people who use the mails for criminal gain are caught and brought to justice.”
Wire fraud carries a penalty of not more than 20 years imprisonment, and up to a $250,000 fine, per count.
This case was investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
The charges in the indictment are only allegations, and the defendants are presumed innocent unless and until proven guilty.