Investors in church-related fraud get some money
INDIANAPOLIS — Investors will get 70 cents for every dollar they invested in an $85 million Ponzi scheme operated by a fundraising branch of the Church of God.
A federal judge in Indianapolis on Monday gave final approval to the terms ending the case. As part of those conditions, U.S. District Judge David Hamilton also granted permission for properties causing a financial drain on Church of God assets to be abandoned. The case is expected to be finalized in September or October.
Court documents said the Securities and Exchange Commission filed suit against the church’s prior fundraising organization in 2003, alleging it had defrauded investors who believed their money would go to church-related construction.
Instead, the judge said the leaders of the former fundraising organization used the money raised to make interest and principal payments to prior investors to cover up bad business decisions, The Herald Bulletin reported.
“It’s more of the same old cliche, if you find yourself in a hole, stop digging,” Hamilton said.
The 70 percent payback will go to unsecured investors. Under those terms someone who invested $100,000 could receive about $70,000 back.
Much of the money has already been repaid. Hamilton has approved a final installment of about $750,000 before the case is closed. Any unclaimed funds would then go to the unclaimed property division of the Indiana attorney general’s office.
Records show more than $73 million was recovered from the liquidation of church assets and other funding such as private contributions. However, part of that went for professional fees associated with the case.
Hamilton called the recovery of funds “extraordinary.”
Frank Johnson, president of the Reconstituted Board of Church Extension, said the new fundraisers were determined to recover as much money as possible for church members who had invested their money.
“People still lost money and many will be disappointed, but we did our best,” Johnson said.
Monday’s final hearing allows the former organization to be dissolved and fundraising activities to continue under a new group.
The Church of God, headquartered in Anderson, has more than 2,000 affiliated congregations and more than 230,000 members nationwide. In 1921, the Church of God established the Church Extension to operate fundraising activities along with its subsidiary, United Management Services Inc., which is a nonprofit Indiana corporation.