California "pastor" pleads guilty in $33-million investment scam

Yet another one; as reported by Sean Emery of the Orange County Register, April 17, 2020 (link in original):

The pastor of a Westminster-based church accused of swindling more than $33 million from investors has agreed to plead guilty to criminal charges, according to the U.S. Attorney’s Office.

Kent R.E. Whitney, 38, of Newport Beach is expected to admit to federal counts of mail fraud and filing a false federal income tax return, court filings show.

Prosecutors allege that Whitney ran the Church of the Healthy Self – along with a related investment arm known as CHS Trust – out of a strip mall in Westminster.

Whitney directed church representatives to appear on television and at live seminars –appearances that were recorded and frequently uploaded on YouTube – in order to solicit investments. Among the false and misleading claims prosecutors allege were presented to investors were promises of a 12% rate of return, a guaranteed return of principal with no risk due to federal insurance and a claim the organization was audited by an accounting firm.

In reality, prosecutors say, little investor money went into trading accounts, and fake monthly statements purporting to outline nonexistent investment returns were prepared for investors.

Prosecutors also allege that Whitney reported an income of $17,539 in the 2018 tax year, far less than the $452,872 he is believed to have earned that year. Of that, prosecutors believe $435,333 came from the alleged fraud scheme.

Previous court filings tied to a U.S. Securities and Exchange Commission investigation alleged that investor funds were used to purchase Rolex watches, a Bentley automobile, Gucci apparel and guns, as well as on rent for various Newport Beach properties. That filing also alleged that Whitney founded the church in 2014, three months after completing a 44-month prison sentence for a commodities scam.

As reported by Hillary Davis of the Los Angeles Times, April 17, 2020:

...According to his plea agreement, Whitney ran the Ponzi scheme from September 2014 until April 2019 out of Church for the Healthy Self, which he founded and operated out of a Westminster strip mall. The church appeared to have no sanctuary, according to court documents.

At Whitney’s direction, church representatives appeared on television and at live seminars at church offices to solicit investments in CHS Trust, the church’s investment arm, and made several false or misleading claims, authorities allege. They included guaranteeing an annual rate of return of 12%, guaranteeing a return of principal with no risk because CHS Trust was federally insured and boasting that the church’s traders had not lost money in 15 years.

According to authorities, Whitney and his associates targeted the Vietnamese community by advertising on Little Saigon radio and television stations as well as on YouTube. The scheme identified at least 355 investors.

Investors sunk more than $33 million into the scheme over the 4½ years, but in reality, little of that money went into any trading accounts, court documents state. But Whitney directed that monthly statements be sent to investors showing falsified reports of returns, authorities say.

Whitney also admitted that he filed a false federal income tax return in 2018 claiming $17,539 in total income even though his true income was at least $452,872, largely obtained through the fraud scheme. The resulting tax loss was at least $130,808, according to the plea agreement.

Whitney faces a sentence of up to 23 years in federal prison. He has a previous federal conviction for defrauding investors in a commodities scheme. He had been released from prison a few months before forming Church for the Healthy Self.

The FBI investigated the case with the assistance of the U.S. Securities and Exchange Commission.