Georgia Church Faces Suit, by Kelly Greene, Wall Street Journal, October 19, 2011

Georgia Church Faces Suit

By Kelly Greene
Wall Street Journal
October 19, 2011

http://online.wsj.com/article/SB10001424052970203752604576641491456671676.html

Bishop Eddie Long, senior pastor of New Birth Missionary Baptist Church, shown here preaching in 2010.

The leader of one of the nation's best-known megachurches was accused in a civil lawsuit in Georgia of encouraging church members to invest in a scheme that promised 20% annual returns on safe investments but diverted their money to a failing company.

Bishop Eddie Long, senior pastor of New Birth Missionary Baptist Church in the Atlanta suburb of Lithonia, and his church marketed, sponsored and hosted "Wealth Tour Live" seminars in October 2009 through which an entrepreneur and another firm recruited investors for a "Ponzi scheme," according to a lawsuit filed Wednesday in DeKalb County (Ga.) State Court.

The suit, filed on behalf of 10 church members who claim to have lost more than $1 million, contends that Mr. Long and New Birth church used their "confidential/fiduciary relationship" to "coerce" the church members into investing with Ephren Taylor Jr., the former chief executive of City Capital Corp. in Chicago.

According to the complaint, Mr. Long told the congregation, during his introduction of Mr. Taylor: "I am responsible for everyone I bring before you and what they say."

Mr. Long and his church received compensation from Mr. Taylor, according to the complaint.

Art Franklin, a spokesman for Mr. Long and New Birth Missionary Baptist Church, said the church's legal team wasn't ready to comment on the suit, and referred to an earlier news release that said Mr. Long has asked Mr. Taylor "to do the right thing by quickly resolving this matter with a positive outcome."

The suit alleges that Mr. Taylor told the investors that his companies focused on "socially conscious, safe investments" that would "guarantee results."

Neither Mr. Taylor nor his firm was licensed to sell investments or render investment advice in Georgia or elsewhere, according to the complaint.

Mr. Taylor, who along with City Capital was named as a defendant in the suit, couldn't be reached for comment.

One of the plaintiffs, Lillian Wells, said in an interview that she transferred her retirement savings into a self-directed individual-retirement account with a firm handling money for Mr. Taylor. On Dec. 16, 2009, she said, she was issued a nine-month promissory note for $122,000 that guaranteed 20% interest at maturity.

Ms. Wells said that when she tried to get her money back, City Capital representatives repeatedly tried to persuade her to maintain the investment. She said Mr. Long pledged to help her and other investors at a November meeting, and met with them again in December, but nothing came of those meetings or a conference call with Mr. Taylor in February.

According to the complaint, investors later learned that at least some of their funds went to a unit of City Capital that was purchasing video-sweepstakes machines—and later some machines were shut down amid allegations of illegal gambling.

City Capital's chief executive didn't return calls to the company's Chicago office seeking comment.

The case is one of the highest-profile accusations to date of so-called religious affinity fraud, in which potential investors are targeted through a faith-based organization.

"I've seen more money stolen in the name of God than any other way," said Joseph Borg, Alabama securities commissioner and a past president of the North American Securities Administrators Association. "Seven out of 10 of our cases involve affinity fraud, and in the South, probably 40% to 50% have a religious angle."

Write to Kelly Greene at kelly.greene@wsj.com