Prominent Houston Pastor Kirbyjon Caldwell, who served as a spiritual adviser to former Presidents Barack Obama and George W. Bush, was sentenced to six years in prison Wednesday, just under a year after he pleaded guilty to conspiracy to commit wire fraud in a multimillion-dollar investment scheme.
The U.S. Department of Justice said in a release that in addition to serving six years in prison, Caldwell, who formerly led the Windsor Village United Methodist Church in Houston, Texas, will also serve one additional year of supervised release.
He was also ordered to pay restitution in the amount of $3,588,500, as well as a fine of $125,000.
“The defendants in this case abused the trust that the victims had placed in them,” Acting United States Attorney Van Hook said. “This defendant used his status as the pastor of a megachurch to help convince the many victim investors that they were making a legitimate investment but instead he took their hard-earned money from them and used it for his own personal gain. This office will continue to investigate and prosecute those who scheme and prey upon the elderly and others.”
The lay leadership of Windsor Village said in a statement shared on Facebook shortly after the sentencing that the man who led their church for nearly 38 years was a victim in the case as well.
Caldwell, 67, who was indicted in 2018 for defrauding investors — including elderly members of Windsor Village United Methodist Church — of more than $1 million, previously maintained his innocence as his co-defendant, Gregory Alan Smith, pleaded guilty to wire fraud.
Caldwell and Smith, who is an investment adviser based in Shreveport, Louisiana, were both charged with 13 counts, including conspiracy to commit money laundering when they raised around $3.5 million in Historical Chinese bonds from 29 investors between 2013 to 2014.
The pastor, who obtained a master’s degree from the Wharton School of Business and previously worked in the financial industry was the one who pitched the Chinese bonds to investors through Smith, according to the DOJ.
Potential investors were told that they would be obtaining a partial ownership interest in the bonds and that they would receive exponential returns on their investments in a short period of time. Caldwell and Smith neglected to tell these individuals the historical Chinese bonds, issued by the former Republic of China prior to losing power to the communist government in 1949, held no value. The bonds were considered by the Securities and Exchange Commission to be mere collectables with no value outside of the memorabilia market.
After hearing the pitch, investors signed up and were provided with a “participation agreement” indicating that if the sale of the bonds failed to occur within a certain number of days, the invested funds would be returned within a specific time. They were instructed to wire funds to various bank accounts held by or controlled by Caldwell. Approximately $3.5 million was “invested” in the scheme in 2013 and 2014.
Smith, Caldwell, and others later divided up the funds with Caldwell personally receiving approximately $900,000, the DOJ said. Caldwell used a portion of the funds to pay down debt including personal loans, mortgages, and credit cards to maintain his lifestyle while investors were told their funds were used to purchase bonds and pay for expenses incurred from selling or redeeming the bonds.
LeBlanc insisted on Wednesday that Caldwell was a victim.
“Kirbyjon Caldwell and his wife were the first investors in the Chinese bonds, and thus the first victims. As a person seeking to operate in integrity, Mr. Caldwell executed contracts with the other investors, victims in the legal case and he committed to give them their money back if they asked to exit the deal. He had in fact refunded more than $1 million to investors or victims who requested a refund before the indictment in the legal case in 2018. And before the sentencing hearing earlier today Mr. Caldwell had repaid every dollar invested to every victim investor,” LeBlanc said.