July 31, 2005
A new variation on the collection plate:
A minister-turned-financier who helped finance construction of hundreds of churches across the country allegedly bilked investors by diverting money to an account where he made loans to himself and others.
A federal judge this past week froze the assets of Vaughn Reeves of Sullivan, Ind., his brokerage, Alanar Inc., and three sons who followed him into the family business. The Securities & Exchange Commission alleged in a complaint they had committed “affinity fraud” with solicitations aimed at their investors’ shared beliefs.
“They were dependent on the trust and faith of a large network of Christian investors,” said John Sikora, assistant regional director of the SEC’s Chicago office.
… The family raised more than $120 million from buyers of bonds used to finance church construction projects and more than $50 million from investors in church bond funds that they had created, the SEC said.
Over 20 months ending in May, the SEC said the Reeveses and their various companies diverted $8 million held in trust for bondholders into an online brokerage account they used to trade stock, loan money to at least one church and to make unsecured loans to themselves and their companies. They also allegedly transferred nearly $5 million in investor proceeds to their companies.
The punishment here should clearly fit the crime. Ezekiel 18:13 offers one suggestion.
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