A Shreveport investment adviser has pleaded guilty to conspiracy in federal court, admitting to his part in bilking victims in a Chinese bond scheme.
Gregory Alan Smith, 55, pleaded guilty to conspiracy to commit wire fraud. He admitted to working with a Houston pastor to sell worthless bonds.
According to information presented in court, Smith used his influence and status as an investment adviser to persuade multiple victims to “invest” approximately $3.5 million with Smith and co-defendant Kirbyjon H. Caldwell. Caldwell also faces charges; his trial is set for this fall.
The victims’ investments were purportedly in historical Chinese bonds, which are bonds issued by the former Republic of China prior to losing power to the communist government in 1949. These bonds are not recognized by China’s current government and, accordingly, have no investment value.
Smith began approaching existing clients and acquaintances in the spring of 2013 about what he described as an opportunity to invest in Chinese historical bonds.
His usual sales pitch to investors was that Caldwell, the senior pastor at Windsor Village United Methodist Church in Houston, Texas, was that he would put the bond deal together, hold the bonds
(1) putting the bond deal together on behalf of investors,
(2) had the bonds in his possession or was obtaining them and
(3) was brokering a deal to sell the bonds.
Smith also promised that by investing money with him and Caldwell, the victims would obtain a partial ownership of the bonds and would quickly receive exponential returns on their investments. The victims were not told of the true nature of the bonds nor were they informed that no previous investor had ever obtained the promised return on investment. The victims were encouraged to cash out any other investments they might have if they could not otherwise afford to participate.
After Smith made the fraudulent pitch, the victims were instructed to wire funds to various bank accounts under Caldwell’s control. The funds were then divided between Smith, Caldwell and others.
Smith received $1.08 million of the total $3.5 million. He used it to pay down loans, purchase two luxury sport utility vehicles, place a down payment on a vacation property and maintain his lifestyle.
After time passed and investors began to question why they had not received the promised returns, Smith and Caldwell offered excuses, defended the legitimacy of the deals and assured victim investors that they would receive the promised returns.
Under the terms of his plea agreement, Smith faces five to seven years in prison. He also faces a $1 million fine, restitution, forfeiture and five years of supervised release. Smith’s sentencing is scheduled for December 11, 2019.
Caldwell’s trial is scheduled for December 2, 2019.
The FBI conducted the investigation. Assistant U.S. Attorneys Seth D. Reeg and C. Mignonne Griffing are prosecuting the case.