Former California pastor sentenced to 14 years for defrauding investors of $33M
A former pastor in California was recently sentenced to 14 years in prison after being found guilty of overseeing a church-based investment scam that defrauded investors of $33 million.
Kent R.E. Whitney, formerly the pastor of Westminster-based Church of the Healthy Self, was sentenced by U.S. District Judge Josephine L. Staton to 14 years in federal prison and ordered to pay $22,662,668 in restitution, the U.S. Department of Justice announced.
From September 2014 to April 2019, according to the DOJ, Whitney used CHS and its related entities to solicit people to invest in CHS Trust, the investment arm of the church.
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“[A]t Whitney’s direction, CHS representatives made false or misleading claims, including: CHS Trust guaranteed an annual rate of return of 12 percent; CHS Trust guaranteed a return of principal with no risk because it was federally insured; the worst return received during the previous five years was a 1.5 percent profit for the month of January 2015; traders used by CHS had not lost money in 15 years,” stated the DOJ.
“In fact, little investor money went into any trading accounts. Relying on these false statements, victim-investors sent more than $33 million to CHS from 2014 to 2019. As part of the scheme, Whitney directed that monthly statements be sent to victims that contained false reports of investment returns.”
It is estimated that Whitney sent approximately $11 million in payments to investors that was taken from money given by later victims, effectively fitting the definition of a Ponzi scheme.
Whitney also filed a false federal income tax return reporting his total income for the tax year 2018 as $17,539, when it was actually at least $452,872, about $435,333 of which was obtained through his CHS fraud.
Kenneth White, an attorney representing Whitney, told The Associated Press via email last Friday that Whitney “immediately settled with” the Securities and Exchange Commission “upon being notified of the investigation.”
“[Whitney] accepted responsibility and entered a guilty plea,” added White, as reported by the AP. “His focus is now on his family.”
Last November, Whitney agreed to plead guilty to the counts of mail fraud and filing a false federal income tax return, according to a story by the Orange County Register at the time.
