SEC says “social capitalist” Ponzi scheme bilked U.S. Christians
A self-described “social capitalist” who has appeared on national TV talk shows was charged on Thursday with fraud by the U.S. Securities and Exchange Commission for an alleged $11 million Ponzi scheme that targeted socially conscious churchgoers.
The SEC said Ephren Taylor II fraudulently sold $7 million of notes, said to bear 12 percent to 20 percent annual interest rates, to fund small businesses such as laundries, juice bars and gas stations.
It said Taylor, 29, also raised $4 million by selling “sweepstakes” machines loaded with casino-style games, with promised returns of 72 percent to 2,400 percent per year. The SEC said Taylor’s company, City Capital Corp, would promise to donate some revenue to charity.
In reality, according to the complaint filed in Atlanta federal court, Taylor diverted money to promote his books, hire image consultants, fund his wife’s singing career a nd pay bi lls.
The SEC said Taylor had touted himself as the youngest black chief executive of a public company, and the son of a Christian minister who emphasized the importance of “giving back.”
It said he had conducted a multicity “Building Wealth Tour” in which he spoke to congregations such as the New Birth Missionary Baptist Church in Lithonia, Georgia, and appeared on TV programs such as “The Montel Williams Show” and “The Big Idea with Donny Deutsch.”
“Ephren Taylor professed to be in the business of socially conscious investing,” David Woodcock, director of the SEC office in Fort Worth, Texas, said in a statement. “Instead, he was in the business of promoting Ephren Taylor.”
According to the SEC, more than 100 investors including from the New Birth church bought the notes, while more than 250 investors bought the machines. It said the scheme ran from 2008 until late 2010, when new funds dried up.