California pastor, advisors found guilty in $32m coal, gold Ponzi scheme

‘Divinely inspired’ investment advice bilked 500 investors out of $32 million in a Ponzi scheme involving so-called ‘100% emission-free coal’ and a mysterious Saudi Arabian prince who needed cash to ship 20,000 tonnes of gold.

Author: Dorothy Kosich
Posted: Monday , 14 Jul 2008

RENO, NV -

A church pastor and a record company executive have been found guilty by a Los Angeles federal court jury of bilking investors out of more than $32 million in a fraudulent investment scheme involving coal mines, and the alleged sale of 20,000 tonnes of gold between Israel and the United Arab Emirates.

The men were convicted Friday and await sentencing. The hearing has yet to be scheduled.

The U.S. attorney's office for the Central District of California originally indicted Robert Jennings, 57, who was the president of the Tri Energy coal mining company, and record company executive Henry Jones, 53, concerning what was apparently a bogus coal mining venture and a non-existent gold transaction, which the defendants told investors was inspired by God.

Jennings is the pastor of Perris, California's New Life Fellowship Church. Assistant U.S. Attorney Douglas Axel told jurors that Jones and Jennings took advantage of their estimated 500 victims through nightly conference calls and by promising to double their money in 60 days. Many of the conference calls included group prayer and assertions by the defendants that the gold transaction was "divinely inspired," according to the U.S. Attorney's Office.

Many of the calls also threw in information about so-called humanitarian projects funded by the profits, according to the indictment.

The owner of Marina Investors Group, Jones, who reportedly came up with the idea for the gold transaction, allegedly spent a large portion of the investors' money on a house in Marina Del Rey, a condominium in Culver City, and Ferrari Spider and Porsche Cayenne automobiles. The SEC said investors were convinced that extraordinary profits were to be generated by helping an unnamed Saudi Arabian prince move gold from Israel through Luxemburg to the United Arab Emirates.

Pastor Jennings faxed or e-mailed investment materials, promissory notes and loan agreements from his home. He was charged with three counts of mail fraud, 10 counts of wire fraud, six counts of securities fraud and one count of a contempt of court order issued in a related case filed by the SEC. Jones was also charged with three counts of mail fraud, six counts of securities fraud, four counts of contempt of court (for ignoring a court order to cease-and-desist), one count of witness tampering and seven counts of money laundering.

The Securities Division of the State of Washington had issued a summary order for each of the defendants to cease and desist trading money for a "Middle East gold investment." A third defendant, Robert Simburg, 63 of Portkand, Oregon. reportedly told investor that the Washington state order and securities investigation was a "slap on the wrist."

Jennings faces a maximum prison sentence of 180 years while Jones faces up to 250 years. Simburg, 63 previously pleaded guilty and is awaiting sentencing on wire fraud. The Senior Vice President of Tri Energy, Simburg co-operated with the U.S. Attorney's Office in the investigation.

In August 2007, Federal District Judge Andrew Guilford entered final judgments against Jennings, Simburg, Tri Energy, H&J Energy and other defendants ordering them to pay civil penalties stemming from the SEC case.

Tri Energy and H&J Energy both have kept offices in Nevada, which does not have coal mining. The SEC said the defendants told early investors that their money was going toward the development of Tri Energy coal mines, while later investors were told the money would be used for the gold transactions. The SEC said many of Tri Energy's investors learned about the gold program through the networking portion of the Millionaire Mind seminars designed to help people "develop a millionaire mind" and "reach their financial potential."

The defendants or their agents urged investors to dial into a nightly conference call, where they were directed to the company's website www.trienergy.net for further information. Tri Energy reportedly claimed that it would be able to develop processes that would create 100% emissions-free coal and pay back its investors, according to the SEC.

At one point Tri Energy investors were asked to contribute money to purchase "very highly discounted equipment," the SEC said. Jennings also reportedly told investors that Tri Energy has several mines with 9 million tons of coal ready to be mined within 12 months. However, the U.S. attorney said only 2,000 tons of coal actually existed at two coal mines.

Deputy Federal Public Defender Nadine Hettle said Jennings believed that the coal deal was real and knew the coal mine was real. Hettle claims that Simburg, who was Tri Energy's senior vice president, was the brains behind the coal mining operation and that Jennings didn't realize he was being lied to.

Meanwhile, Jones also kept charging his clients fees, including storage fees, administrative fees and unnamed attorneys fees in the gold scheme, according to the prosecutor.

In an October 2007 press release, J. Stephen Tidwell, Assistant Director in Charge of the FBI in Los Angeles said the "case should serve as a reminder to future investors that it is prudent to investigate potential ventures before taking costly risks."

Thomas Jankowksi, acting Special Agent in charge of the IRS said, "The perpetrators of Ponzi schemes need to be put on notice that stealing from their victims will be investigated and prosecuted whenever possible." The indictment resulted from an invested conducted by the U.S. Postal Inspection Service, the FBI, and the IRS-Criminal Investigative Division with the assistance of the SEC.