Businessman Linked to Eddie Long's Church Hit With Federal Lawsuit for $11M Ponzi Scheme
A charismatic businessman accused last year of defrauding members of Eddie Long's New Birth Missionary Baptist Church, has been charged by the federal government with orchestrating a $11 million Ponzi scheme "that targeted socially-conscious investors in church congregations."
The Securities and Exchange Commission (SEC) alleges that Ephren W. Taylor, a "self-described 'Social Capitalist,'" made numerous false statements to lure investors into two investment programs being offered through City Capital Corporation, an investment company of which he was the CEO.
"Instead of investor money going to charitable causes and economically disadvantaged businesses as promised, Taylor secretly diverted hundreds of thousands of dollars to publishing and promoting his books, hiring consultants to refine his public image, and funding his wife's singing career," SEC said.
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More than $11 million Taylor and his company raised from hundreds of investors nationwide from 2008 to 2010 was used to operate a Ponzi scheme, the lawsuit alleges. Investor money was misused to pay other investors, finance Taylor's personal expenses, and fund City Capital's payroll, rent, and other costs. City Capital's business ventures were consistently unprofitable, and no meaningful amounts of investor money were ever sent to charities, according to the SEC.
"Ephren Taylor professed to be in the business of socially-conscious investing. Instead, he was in the business of promoting Ephren Taylor," David Woodcock, Director of the SEC's Fort Worth Regional Office, said in a statement. "He preyed upon investors' faith and their desire to help others, convincing them that they could earn healthy returns while also helping their communities."
The investment company was also charged in the suit, so was its former chief operating officer Wendy Connor, who lives in North Carolina and "along with Taylor received hundreds of thousands of dollars from investors in salary and commissions," the federal agency said in a statement. The SEC's complaint, filed in federal court in Atlanta, seeks "disgorgement, financial penalties and permanent injunctive relief against City Capital, Taylor and Connor, as well as officer and director bars against Taylor and Connor."
Taylor and his company offered two primary investments: promissory notes supposedly funding various small businesses, and interests in "sweepstakes" machines, the agency said.
The SEC accuses Taylor of preying on people's vulnerability, as in addition to promising high rates of return, the businessman "assured investors that he had a long track record of success and that investor funds would be used to support businesses in economically disadvantaged areas. A portion of profits were to go to charity."
"Taylor devoted considerable time to denigrating traditional investment vehicles such as CDs, mutual funds, and the stock market, labeling them as 'foolish' and 'money losers,'" the statement reads. "He told audiences they could make far greater returns using their self-directed IRAs for investments in small businesses and sweepstakes machines offered by City Capital."
Taylor is reportedly known for convincing audiences with his financial seminars that promise secure investments. He is facing two civil lawsuits filed last year, in which he is accused of targeting worshippers and being a con artist in at least five states on the East Coast since 2004, allegedly swindling tens of millions of dollars through investment fraud.
Bishop Long faced heat for introducing Taylor to his New Birth congregation and endorsing him and his investments during a financial seminar. Long and New Birth Missionary Baptist Church are reportedly listed as defendants in the $1 million civil lawsuit filed last year by several members of Long's congregation.
