HOUSTON – The attorney for a Houston pastor accused of defrauding investors of millions of dollars in exchange for Chinese bonds that had no value said Friday that his client is “100 percent innocent.”
Kirbyjon Caldwell, the senior pastor at Windsor Village United Methodist Church in southwest Houston, and Gregory Alan Smith, a former broker and financial planner, are facing nine violations from the Securities and Exchange Commission out of Louisiana.
"The accusations are simply false," said Dan Cogdell, Caldwell's attorney, during a news conference Friday. "At no time did the pastor conspire with anyone."
Cogdell said that his client still believes the bonds are legitimate and that he invested more of his own money than anyone else’s money.
“Every single person who has asked for their money back, has gotten their money back,” Cogdell said while pointing out that his client has paid back nearly a million dollars to investors who have exercised a clause in the contract that provided for a refund.
Caldwell said that he has proof of the legitimacy of the bonds, and that he believes they will pay off soon.
“Just because it hasn’t happened yet doesn’t mean it won’t happen,” Caldwell said.
According to court documents, Caldwell and Smith duped at least 29 people into buying bonds for a total of $3.4 million between April 2013 and August 2014.
The pair told investors that the historical Chinese bonds, which reportedly have been in default since 1939 and aren't recognized by the current Chinese government, could provide exorbitant, risk-free returns on their investments and that the bonds would be sold by Caldwell to a third party or redeemed by the Chinese government, court documents state.
The indictment states Smith secured the victims due to his connections to prospective investors, whom he told he was an investment advisor and had personally invested hundreds of thousands in the deal.
Caldwell then told investors to wire the money to a bank account controlled by his attorney or an account of a limited liability company of which he is a member, the indictment reads. Caldwell is accused of then transferring the money to his personal account, the personal account of Smith or a Mexican business associate.
Caldwell and Smith promised investors they would be paid and offered a wide range of "excuses," according to court documents.
Caldwell, 64, received $760,000, which he used for personal expenses, including mortgage payments, the indictment claims.
Caldwell's limited liability company also received $1 million, of which $175,000 was transferred to Caldwell, according to the indictment.
Smith, 55, received $1 million of investor funds, which he used for luxury vehicles.
None of the investors received any money back, according to the court documents.
Caldwell celebrated 30 years of service at Windsor Village United Methodist Church in 2012.
He gained national notoriety when former President George W. Bush made him his spiritual advisor.
Through Caldwell's help, Windsor Village grew tremendously from a small southwest Houston church to one of the biggest in the city.
Bishop Scott Jones, of the Texas Annual Conference of the United Methodist Church, said in a statement released Friday that the church recognizes the seriousness of the allegations.
Jones' entire statement is below:
"Kirbyjon Caldwell has been an outstanding pastor and leader in our community for over 30 years. The United Methodist Church has high standards for the moral conduct of its clergy, and we recognize the seriousness of the charges against him. We will walk though this difficult situation with Rev. Caldwell and the Windsor Village congregation and keep them in our prayers. We have faith that the judicial process will find the truth."