March 25, 1999 | Read Time: 4 minutes
Federal officials have arrested the leaders of a Florida church, charging that the group’s money-doubling investment plan is a fraud, and that the church did not fulfill its promise to spend millions of dollars on charity.
The seven leaders of Greater Ministries International, in Tampa, face a 20-count indictment for money laundering, fraud, and criminal conspiracy for running what allegedly amounts to a Ponzi scheme — a bogus investment plan where cash from later investors is used to make payments to earlier investors.
Among other allegations, prosecutors say that Greater Ministries attempted to evade the jurisdiction of state authorities by fraudulently characterizing payments to the investment plan as charitable contributions or gifts to the church.
All seven of the people who were arrested, including the group’s president, Gerald Payne, were freed on bond. Lawyers for the church officials could not be reached for comment on the charges, which came after a lengthy investigation conducted by state and federal agencies.
The indictment says that for the last six years, Greater Ministries has offered an investment plan under names such as Double Your Money Gift Exchange Program and Faith Promises Program.
The programs promised that people could double their money within 17 months, with investors receiving monthly cash payments. Greater Ministries, which solicited members of churches around the country for a minimum of $250, said that profits from investments in silver and gold mines abroad were used to pay back investors and to pay for the ministries’ charitable and religious programs.
But most of the solicited money was not put into profit-making ventures, the indictment says, and money paid back to some investors was simply money that had been given to the church by other investors. In addition, the indictment says, Greater Ministries failed to tell investors that 5 per cent of their money was paid in commissions to church officials.
Greater Ministries also fraudulently exaggerated the size of the program, federal officials say — claiming to have collected $500-million from 100,000 people. Prosecutors, however, did not offer their own estimate of the program’s size. According to the Tampa Tribune, the program has handled tens of millions of dollars.
Greater Ministries earned tax-exempt status as a religious organization in 1994, about five years after it started offering what its leaders call “gift-in, gift-out” programs. According to the group’s literature, the basis for the programs is a passage in the New Testament that begins: “Give, and it shall be given unto you.”
Church leaders told potential investors that their money would be used in part to pay for missionary work around the world. But they also told investors that if they reported their gifts as tax-deductible, charitable contributions, they would have to report any money they received back from the church as taxable income. The vast majority of the investments, government officials say, were not reported.
In addition to the federal case, at least four states have taken action against Greater Ministries over the years. In 1995, regulators in Pennsylvania and Florida ordered the church to stop operating its investment programs, which officials said were illegal if for no other reason than that they revolved around the sale of unregistered securities. Last year, California and Ohio regulators followed suit.
This month, a Pennsylvania judge fined Greater Ministries $6.4-million for ignoring a November court order barring the church from doing business in the state. Despite the order, Greater Ministries had continued to solicit in Pennsylvania.
The fine will grow by $2,000 a day until Greater Ministries clears itself of the contempt charges by giving back to Pennsylvania residents any money they had collected since November and by providing authorities with a list of the people the church solicited in the state.
In a video available on Greater Ministries’ World-Wide Web site, (http://www.greater-ministries.com) Haywood Eudon Hall, one of the church’s leaders arrested this month, says of the investment program: “You call it a Ponzi or whatever you want to call it, it’s going to get some souls saved.”
In that and other videos made before the arrests, Mr. Payne, the group’s president, argues that government regulators had been unfairly, and unconstitutionally, interfering with church business by conducting investigations and attempting to shut down the investment programs.
In other forums, Mr. Payne has reportedly repudiated Greater Ministries’ tax-exempt status, blaming the church’s trouble on what he has called the unholy alliance it forged with the government when it incorporated and became a charity.
