Investment Fraud Affinity Church
Scams using Religion Focused Faith-Based Ponzi Schemes
11/06 - (Ohio) - A former youth leader at the Church of the Open
Door in Elyria was charged this week with selling $17 million in
bogus securities to church members and others across the country.
Gary McNaughton used the money to buy 21 vehicles, including four
Corvettes, two motor homes and a Harley-Davidson motorcycle, as
well as boats and real estate and to pay credit card expenses,
federal officials said.
Attorney Robert Gary, who represents four of McNaughton's investors,
said his clients were not wealthy but were willing to trust McNaughton
with their life savings.
"It was the belief that this was a faith-based investment
and the church was behind him," the Lorain attorney said.
Church officials could not be reached for comment.
McNaughton, a 51-year-old Elyria man, is being held without bond
pending a hearing Tuesday in federal court.
McNaughton's attorney, Carlos Warner, said it was too early to
comment on the case. He said McNaughton should be released on bond.
Federal prosecutors said McNaughton should remain in jail because
he is a risk to flee to Canada, where he has citizenship and financial
McNaughton sold the unregistered securities for four years, ending
in June 2003. He told the 200 investors, most of whom were affiliated
with the church, that the money would be invested with an individual
in Canada using an unusual trading strategy.
A Tennessee couple whose family was involved with the Elyria church
cashed in their pension as well as their disabled daughter's savings
- about $25,000 in all. They gave the money to McNaughton to invest.
"He was a very convincing kind of guy," said Gary, their
attorney. "And no matter what, the money was always around
The family was forced to sell the house where they had lived nearly
In 2004, a federal judge found that McNaughton was liable for
$6.2 million in payments and interest owed to his clients after
the U.S. Securities and Exchange Commission sued him. The judge
did not order him to pay the money back because he did not have
it. McNaughton had just $11,815.
McNaughton's financial problems continued last year, when he filed
for bankruptcy. He said he had $7,300 in assets and $1.2 million
in debts. He owed the Internal Revenue Service $350,000 in back
Three Hebrew Boys Investment Fraud
Feds seize computers, records at 3 Hebrew Boys
By BEN WERNER - The State
(South Carolina) 9/07 - Alluding to the Bible story inspiring
their investment firm’s name, leaders of 3 Hebrew Boys LLC
have repeatedly said they will emerge from the legal firestorm
currently embroiling them.
The heat on the firm’s leadership — accused of defrauding
investors from 23 states out of $82 million — just turned
up a notch.
Three months after facing state securities charges, federal agents
seized computers and records from Columbia offices of the 3 Hebrew
Boys — which authorities say is run by Joseph Brunson, Tim
McQueen and Tony Pough.
“It is further my belief that the subjects have purposefully
failed to comply with two grand jury subpoenas issued to them for
records,” wrote FBI special agent Ronald Grosse in an affidavit
requesting the court order to seize the equipment.
Since most of the funds collected by 3 Hebrew Boys came from out
of state, Grosse wrote that this could be considered mail fraud.
The 3 Hebrew Boys lawyer, Hemphill Pride II, revealed his clients
were the target of federal investigators in June. But the search
of the firm’s office last week was the first public act by
federal authorities in this case.
Pride confirmed the federal search Thursday and that records were
taken, but said he was not told what investigators sought.
Officials from U.S. Attorney Reginald Lloyd’s office also
confirmed computers and records were seized, but declined to provide
The 3 Hebrew Boys are accused by state and federal authorities
of collecting money from investors mostly on military bases and
in churches with promises of investing in foreign currency. State
and federal investigators allege the firm kept most of the money.
Brunson, McQueen and Pough each face state charges of selling
securities without a license, brought by S.C. Attorney General
Henry McMaster. A judge froze $17 million in company bank accounts.
The trio have pleaded not guilty and are free on bail.
According to the search warrant filed at U.S. District Court in
South Carolina, FBI agents took four computer servers and a computer
terminal from offices of Daniel Development on Horseshoe Drive,
also run by Brunson, McQueen and Pough.
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