Pastor Sentenced To Federal Prison For Wire Fraud As Part Of A $5 Million Ponzi Scheme
DENVER – Pastor Charles Lawrence Kennedy, Jr., age 71, of Tampa, Florida was sentenced last week by U.S. District Court Judge Christine M. Arguello to serve one year and a day in federal prison for one count of wire fraud, federal law enforcement announced. Following his prison sentence, Kennedy was ordered to serve three years on supervised release. He was also ordered to pay restitution of approximately $315,000 to the victims of his crime. Kennedy appeared at the sentencing hearing free on bond, and was ordered to report to a facility designated by the U.S. Bureau of Prisons on a certain date.
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. Smith is scheduled to be sentenced by Judge Arguello on February 4, 2014. Anderson has a change of plea hearing scheduled for February 6, 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.
3Kennedy 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.
“When a person abuses his position of trust to take fraudulent financial advantage of the people who trust him, he will face criminal consequences,” said U.S. Attorney John Walsh. “Pastor Kennedy will spend a year of his life in prison to reflect on his criminal conduct.”
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
“The investigation of investment fraud is an FBI priority,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the outcome of this case will deter others who seek to defraud innocent investors.”
“The defendants’ position of trust as a Religious Leader gave him the opportunity to prey on vulnerable victims causing them emotional and financial harm,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is important we stop this victimization and bring these perpetrators to justice.”
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.