The Securities and Exchange Commission has moved to successfully freeze the assets of an ongoing Ponzi scheme being run out of a virtual church founded by a felon and his long-time accomplice, who became ordained ministers online.
“Defendants Pastor Kent R.E. Whitney and Pastor David Lee Parrish are running at least a $25 million Ponzi scheme in Orange County, California, through their purported church, The Church for the Healthy Self (CHS), and a related entity, CHS Asset Management Inc. (“CAM”), which are both Texas corporations operating out of a strip mall in Westminster, California,” the SEC argued in court.
Whitney, 37, founded The Church for the Healthy Self in 2014, three months after being released from federal prison for defrauding investors in a $600,000 commodity options investment scheme he ran with Parrish, 47, a fact they kept from investors. The duo reprised their fraud operation in 2018, the SEC said.
Instead of generating the promised guaranteed investment profits, which could range as high as 43 percent, Whitney and Parrish stole millions of dollars of investor funds and paid returns through Ponzi payments, the SEC said.
Earlier this month, the FBI obtained a criminal seizure of the funds in CHS Trust's main account, citing potential violations of federal wire fraud and money laundering statutes. Despite the FBI seizure, Whitney and Parrish brazenly continued to solicit investors—many of them Vietnamese.
As recently as March 6, the defendants were still making large withdrawals from the church’s bank account, the SEC said.
Using presentations, radio and television advertisements and YouTube videos, the defendants falsely promised investors, at least 12 percent annual returns that are tax-deductible, guaranteed and insured by the FDIC and SIPC, the SEC lawsuit stated.
The scam artists explained to investors that they were able to generate high returns—as high as 43 percent annually —with “minimal to no risk” by investing their funds in the reinsurance industry.
The duo convinced investors to write checks or rollover their retirement, investment, or college savings assets to the Church’s bank accounts where the funds were commingled and misused.
Defendants lured investors by promising to open investor accounts on their behalf “under the CHS Trust non-profit umbrella” that would provide “safe and secure growth,” offering market upside without exposing investors to market declines or any loss of principal.