U.S. Attorney Alexander C. Van Hook said in a news release Thursday that a 13-count indictment was handed up against 64-year-old Kirbyjon Caldwell, of Houston, and 55-year-old Gregory Alan Smith, of Shreveport. They’re accused of wire fraud and money laundering, as well as one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Louisiana, U.S. Attorney Alexander C. Van Hook of the Western District of Louisiana claims Caldwell used his status as pastor of the Houston church to help gain investors’ trust. The Securities and Exchange Commission is also suing Caldwell and Smith in federal court for allegedly violating financial laws. According to the indictment, Caldwell and Smith of Smith Financial Group LLC, in Shreveport, lured investors to pay more than $1 million for Historical Chinese bonds that aren’t recognized by China’s current government and have no investment value. The bonds were issued by the former Republic of China prior to losing power to the Communist government in 1949. The SEC says the bonds have been in default since 1939, and the “current Chinese government refuses to recognize the debt.”Caldwell and Smith promised high rates of return and, instead of investing the funds, used the money for personal loans, credit card balances, mortgages, vehicles and other expenses. The rates of return that were promised were as high as three-to-15 times the value of the investments. Most of the victims were elderly and liquidated their annuities to invest in this scheme. The DOJ says they allegedly defrauded the investors out of more than $1 million. The SEC places that figure higher, at $3.4 million. The SEC said that in 2010 Smith was permanently barred from associating with broker-dealers for “misappropriating investor funds.” According to the DOJ, the maximum sentence, if they’re convicted, is 20 years with a $1 million fine, as well as restitution and forfeiture.
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