Pastor is arraigned in bond scam case
Caldwell insists he’s innocent, plans to testify
Kirbyjon H. Caldwell, a prominent Houston pastor and spiritual adviser to former President George W. Bush, pleaded not guilty to federal fraud charges and plans to testify in his own defense, his attorney said Thursday outside a courtroom in Shreveport, La.
The 64-year-old pastor was indicted in late March, accused with a Shreveport financial planner of selling millions of dollars in worthless Chinese bonds to elderly and vulnerable investors, according to court records.
“We believe in our hearts and in our souls that the jury is going to do the right thing at the end of this trial and acquit Kirbyjon Caldwell,” defense attorney Dan Cogdell said after the appearance before federal Magistrate Judge Mark L Hornsby.
Cogdell has maintained that Caldwell was dealing in good faith and will testify when the case goes to trial. He said a grand jury indicted Caldwell without hearing his side of the story.
“The grand jury did not hear from Kirbyjon Caldwell like the trial jury will hear, so we’re looking forward to our day in court when we can actually go forward and present our defense,” Cogdell said.
Federal prosecutors with the Securities and Exchange Commission have accused Caldwell and financial planner Gregory Alan Smith, 55, of selling 29 investors “collectible” Chinese bonds that are not recognized by the Chinese government as financial instruments or legitimate bonds.
Both men pleaded not guilty Thursday and were released on personal recognizance bonds. Caldwell and his supporters followed Cogdell out the federal courthouse but did not speak.
Caldwell is accused of using his position as the senior pastor of the Windsor Village United Methodist Church to help lure nearly $3.5 million in investments between April 2013 and August 2014.
He and Smith allegedly told investors they could see returns as high as 15 times their initial investment. None of the investors got the money they’d been promised, and most did not recover even the value of their investments, according to the indictment.
A Houston native, Caldwell developed a friendship with then-Texas Gov. George W. Bush that continued into Bush’s presidency.
Under Caldwell’s leadership starting in 1982, the Windsor Village church expanded its membership from 25 to more than 16,000, making it one of the largest Protestant churches in the country, according to the church website.
Caldwell and his Wyoming-based company, LDT are accused of pocketing nearly $2 million in the Chinese bond scheme. Smith received $1 million and “offshore third parties, at least one in Mexico” received most of the rest, court records show.
Caldwell sometimes used the alias “Turner Hines” when communicating with investors, and he told one person who invested about $800,000 that the bonds were backed by gold or silver, according to the indictment.
Smith is the operator and manager of Smith Financial Group in Shreveport, prosecutors say. In 2010, he was permanently barred from having any association with Financial Industry Regulatory Authority members after he was caught misappropriating investor funds, according to the indictment.
The Lay Leadership of the Windsor Village Church issued a statement Thursday backing Caldwell.
“Pastor Caldwell’s thirty-five plus years of leadership with integrity, unselfish service and history-making achievements both in the Church and in the community, have earned him our trust, respect and love,” according to the statement.
“We believe Pastor Caldwell is innocent of the charges and we stand by him with unswerving confidence.”
If convicted, both men could face up to 20 years in prison for conspiracy to commit wire fraud count and for the wire fraud counts, and up to 10 years in prison for conspiracy to commit money laundering and the money laundering.
They also could each face $1 million in fines.