'Pastor' to plead guilty to $33M church-based investment scam
A man claiming to be a pastor in California will plead guilty to organizing an investment scam using the guise of a church to swindle over $33 million away from investors, primarily from Orange County’s Vietnamese community. He could face over two decades in prison.
The Department of Justice announced last week that 38-year-old Kent Whitney of Newport Beach has agreed to plead guilty to one count of mail fraud and one count of filing a false federal income tax return.
According to the plea agreement, Whitney will admit that he engaged in a scheme to defraud investors through an entity he founded called the Church for the Healthy Self and its investment program, CHS Trust. The scam lasted from September 2014 until April 2019.
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The Church for the Healthy Self was launched by Whitney only three months after he was released from federal prison for organizing a previous commodities-driven investment scheme, according to court documents.
Even though the “church” is physically operated out of a strip mall in Westminster, California, CHS Trust is headquartered out of Dallas, Texas.
The church no longer has an active Facebook page or website. But Whitney’s LinkedIn profile claimed that Church for the Healthy Self supported over 20 charities and offered “programs in everything from Young Earth Creationism to Health and Wellness and managing your Personal Investments.”
The Securities and Exchange Commission charged Whitney last March when it announced a bust of a $25 million Ponzi scheme that falsely promised high annual returns with minimal to no risk to investors.
The church’s co-pastor and alleged director of CHS Trust, David Lee Parrish, was also charged by the SEC in its complaint filed March 13, 2019.
The SEC alleges that the Church for the Healthy Self targeted the Vietnamese community of Orange County with radio and television advertisements that included various misrepresentations and false claims about CHS Trust.
According to the SEC, CHS Trust promised investors tax-deductible, guaranteed, and insured returns of at least 12 percent through reinsurance investments and options trading. CHS Trust also assured investors that there was no risk because their investments were federally insured and that the trust was audited.
“CHS told investors it was not a Ponzi scheme, but is managed by Wall Street investors, audited by KPMG, and is a ‘well-run company that brings big returns’ to its investors,” the SEC complaint reads. “These assurances are false.”
According to the U.S. Attorney’s office, CHS representatives “appeared on television and at live seminars at CHS offices to solicit investments in CHS Trust.”
The Federal Bureau of Investigation seized the funds remaining in the CHS Trust accounts last March.
“The Defendants misused almost all of the roughly $25 million raised from investors,” the SEC wrote in its legal complaint last March.
Last Wednesday, authorities alleged that investors sunk over $33 million into the Ponzi scheme in over 4.5 years. However, a very small percentage of that money actually went into trading accounts.
“Relying on these false statements, victim-investors sent more than $33 million to CHS from 2014 to 2019,” the press release explains.
Court documents indicate that CHS Trust sent falsified monthly statements showing investors that the trust was earning returns.
The U.S. Attorney’s Office for the Central District of California accuses Whitney of trying “to lull victims into believing their money had been invested.”
Whitney also admitted in his plea agreement to filing a false federal income tax return in 2018 in which he claimed to have earned only $17,539. However, authorities believe his true income was at least $452,872, most of which was obtained through the fraud scheme. According to the plea agreement, the resulting tax loss was at least $130,808.
Whitney could face a maximum sentence of up to 23 years in federal prison, according to prosecutors.
Follow Samuel Smith on Twitter: @IamSamSmith
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