Wednesday, January 31, 2007

Pastor of Gateway Church in Southlake pays price for taking part in giant Ponzi scheme

By Pegasus News wire

Reed Grafke

Reed Grafke, a pastor at the Gateway Church in Southlake, and a Canadian church leader agreed to pay $500,000 to the British Columbia Securities Commission. Grafke and others were involved in a giant Ponzi scheme with a group called International Product Investment Corporation (IPIC).

Gregory Earl Setser, 50, who was convicted in June 2006 of 22 counts of conspiracy, securities fraud and money laundering, was sentenced to 40 years in federal court Wednesday. Sester was the president, CEO and chairman of International Product Investment Corporation, an import/export company which operated out of Canton, Texas, and later from Ontario, California, Florida, and other places.

U.S. District Judge Barbara M.G. Lynn also ordered Sester to pay approximately $62 million in restitution, jointly and severally with his co-defendant family members. Setser has been in custody since his conviction last year.

Setser, a recent resident of Canton, Texas, most recently lived in Alta Loma, California. At trial, the jury found that Setser, a self-proclaimed former minister, exploited his connections to highly visible members of the evangelical Christian community to meet potential investors, legitimize IPIC’s operations and sell IPIC securities, ultimately defrauding investors of approximately $62 million in his elaborate Ponzi scheme.

“I applaud Judge Lynn’s tough sentences today," said U.S. Attorney Richard B. Roper. "It should send a clear message that those who use religion as a tool to defraud, will be severely punished. There is simply no form of fraud more pernicious.”

Gregory Setser’s sister, Deborah Setser, of Rancho Cucamonga, California, who was convicted along with Setser at trial in June, was sentenced today to 15 years in prison. Deborah Setser was an officer of IPIC and was involved in the offer and sale of investments in programs with IPIC and Home Recovery Network (HRN), a companion fraudulent scheme run by the defendants. Deborah Setser has been in custody since her conviction.

Cynthia Faye Setser, Gregory Setser’s wife, did not appear for her original sentencing date and remains a fugitive. She pled guilty prior to trial to one count of securities fraud. Anyone with information regarding her whereabouts is requested to contact the Federal Bureau of Investigation at 972-559-5000.

Setser’s son, Joshua Nathan Setser, also pled guilty to securities fraud and was sentenced earlier this month to two years in prison and six months of home confinement.

At trial, Gregory Setser was convicted on a total of 22 counts - one count of conspiracy to commit mail fraud and wire fraud; ten counts of wire fraud; three counts of mail fraud; one count of securities fraud; one count of conspiracy to commit money laundering; and six counts of money laundering. Deborah Setser was convicted on a total of six counts --- one count of conspiracy to commit mail fraud and wire fraud; two counts of mail fraud; one count of securities fraud; one count of conspiracy to commit money laundering; and one count of money laundering.

The government contended that IPIC and HRN had no legitimate operations and that its fraudulent operation funded the family’s lavish lifestyle and helped maintain the companies’ facade. The government presented evidence that the Setsers used their ill-gotten gains to purchase a $2.3 million yacht, a helicopter, family residences, two small airplanes and several luxury vehicles.

Gregory Setser and Deborah Setser represented to investors that IPIC and its affiliated companies operated a highly successful import/export business in which investors could participate by entering into contracts to invest in programs IPIC and its affiliated companies offered. They falsely represented that the investment programs involved importing merchandise for resale in the United States from which IPIC would pay 50% of the profits from sales to investors. As part of their scheme, they established a website to solicit investors. They falsely promised investors that their money was at minimal risk and that they would earn a 25% to 50% return on their investment in a three to six-month period. They falsely represented that some of their investment programs were selling merchandise to major retailers, including Mikasa, Inc., Michaels Stores, Inc., Garden Ridge Corporation, Costco Wholesale, Inc., Hobby Lobby Stores, Inc., JC Penney Stores, Inc., and Pier One Imports, Inc., among others. Joshua Setser testified that his father admitted to him that IPIC’s ventures were a sham and that the representations both he and his father made to investors were false. Joshua Setser also testified that no one ever bought products from IPIC as they represented to investors.

Source: U.S. attorney's office

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