Fool's Gold Mine: Calif. Pastor Convicted of $32 Million Fraud

A California federal jury has convicted a pastor and his business partner of defrauding investors of more than $32 million on schemes involving a coal mine and a "divine" gold deal.

Pastor Robert Jennings, 58, of Perris, Calif., and Henry Uliomereyon Jones, 53, of Los Angeles, were found guilty on multiple counts of securities, mail and wire fraud after a three-week trial in the U.S. District Court for the Central District of California.

A third defendant, Arthur Simburg, 63, of Portland, Ore., previously pleaded guilty to related securities-fraud charges, according to the Los Angeles U.S. attorney's office.

Prosecutors said the men operated the scams from February 2002 until January 2006, holding teleconferences with some 500 investors in deals involving a coal mine and international gold.

"Many of the conferences also included group prayer, and investors were told that the gold transaction was 'divinely inspired' and that it was God's will for it to come to fruition," the U.S. attorney's office said in a statement.

The defendants allegedly ran a Ponzi scheme, using funds from new investors to pay "returns" to existing investors to give the false appearance that their ventures were profitable.

They solicited investors to pay storage fees on 20,000 pounds of gold purportedly being shipped from Luxembourg to Israel and the United Arab Emirates. Investors were told they would receive up to a 300 percent profit by helping to pay the $150,000 monthly storage fee, prosecutors said.

Investors ultimately paid the defendants millions of dollars in storage fees for gold that never existed, according to the federal charges.

The coal deal allegedly involved sales on investments in four Kentucky mines owned by Jennings' business, Tri Energy Inc. The defendants told investors the mines were profitable and could produce "tens of thousands of tons" of coal, prosecutors said.

The defendants collected millions of dollars for coal mines that essentially were non-performing assets that never turned a profit, according to the charges.

Investors in both schemes reportedly lost a total of more than $32 million.

Jones allegedly diverted at least $21 million of the money to bankroll his music recording business, Marina Investors Group, in Marina Del Rey and Venice, Calif.

He also used some of the money to buy a Ferrari Spider and a Porsche Cayenne, the charges said.

Jennings and Simburg also used investor money for personal expenses, prosecutors said.

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