Pastor Who Advised Two Presidents Is Sentenced to 6 Years for Cheating Investors

The former pastor of a Houston megachurch who advised former Presidents George W. Bush and Barack Obama was sentenced on Wednesday to six years in prison after he pleaded guilty to cheating investors in a multimillion-dollar scheme, prosecutors said.

The former pastor, Kirbyjon H. Caldwell, 67, was the leader of the Windsor Village United Methodist Church in Houston and rose to prominence as a friend and adviser to Mr. Bush from his days as Texas governor.

As the leader of a predominantly African-American congregation, Mr. Caldwell helped Mr. Bush as he sought to appeal to Black voters.

Mr. Caldwell spoke at the Republican National Convention in 2000, delivered the benediction at Mr. Bush’s second inauguration in 2005 and was an early supporter of Mr. Bush’s initiative to give religious groups a greater role in the delivery of social services.

In 2008, Mr. Caldwell officiated at the wedding of Mr. Bush’s daughter Jenna on the Bush family ranch in Crawford, Texas.

He supported Mr. Obama when he ran for president in 2008 and was part of a small circle of Christian pastors who would pray with him, sometimes in person and sometimes over the phone. He also served on a task force that advised Mr. Obama on fatherhood and healthy families.

Prosecutors said that Mr. Caldwell’s scheme had begun in 2013, when he and another man, Gregory Alan Smith, a Louisiana investment adviser, started conspiring to use their influence and standing to persuade victims to invest with them.

Mr. Smith began approaching clients and acquaintances that year about what he described as an opportunity to invest in historical Chinese bonds, prosecutors said.

Mr. Smith told potential clients that by investing money with him and Mr. Caldwell, who had a master’s degree from the Wharton business school at the University of Pennsylvania and had worked in the financial industry, they would obtain partial ownership of the bonds and would quickly receive exponential returns on their investments, prosecutors said.

In fact, the bonds, which had been issued by the former Republic of China before Mao Zedong’s Chinese Communist Party came to power in 1949, were virtually worthless, prosecutors said. The current Chinese government does not recognize the bonds, and the U.S. Securities and Exchange Commission considers them collectibles with no value outside the memorabilia market, prosecutors said.

But investors were not told of the true nature of the bonds, nor were they told that no previous investor had ever obtained the promised returns, prosecutors said.

Many of the clients were elderly and retired, prosecutors said, and those who did not have money readily available were encouraged to cash out other investments so that they could participate in the scheme, prosecutors said.

The victims 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, prosecutors said.

Investors were instructed to wire money to various bank accounts held or controlled by Mr. Caldwell. In total, in 2013 and 2014, about $3.5 million was “invested” in the bond deals, prosecutors said.

Mr. Caldwell received about $900,000, prosecutors said, and used some of the money to pay down debts, including personal loans, mortgages and credit cards, prosecutors said.

When investors began questioning why they hadn’t received the promised returns, Mr. Caldwell and Mr. Smith offered excuses, defended the legitimacy of the deals and promised the investors that they would receive their returns, prosecutors said.

Mr. Caldwell was indicted by a federal grand jury in 2018 and pleaded guilty in March to conspiracy to commit wire fraud, the Justice Department said.

On Wednesday, Judge S. Maurice Hicks Jr. of United States District Court in Shreveport, La., sentenced Mr. Caldwell to six years in prison and one year of supervised release, prosecutors said. Mr. Caldwell was ordered to pay about $3.5 million in restitution and a $125,000 fine, prosecutors said.

Mr. Caldwell declined to comment on Thursday, as did Karima Maloney, one of his lawyers.

Mr. Smith pleaded guilty in 2019 to conspiracy to commit wire fraud and was sentenced in November to six years in prison followed by three years of supervised release. Mr. Smith was also ordered to pay about $3.5 million in restitution and a fine of $100,000, prosecutors said.

“The defendants in this case abused the trust that the victims had placed in them,” Alexander C. Van Hook, the acting United States attorney for the Western District of Louisiana, said in a statement.

Mr. Caldwell, Mr. Van Hook added, “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.”

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