ATLANTA – The US Attorney's office in Atlanta said Ephren Taylor II and a second defendant have been arrested on federal indictment, which says they were involved with defrauding investors from across the nation of more than $5 million.
"Mr. Taylor came into our community, promising hard-working citizens a way to make their retirement money go farther," said United States Attorney Sally Quillian Yates in a statement released Tuesday. "The investments he pitched proved to be worthless, along with his promises."
According to the indictment, from at least April 2009 through October 2010, Yates, then CEO of City Capital Corporation, along with his co-defendant Wendy Connor, former COO of City Capital Corporation, participated in a conspiracy to defraud hundreds of investors of more than $5 million nationwide.
The indictment said Taylor, 31, of Overland Park, KS, traveled around the nation on a "Building Wealth" tour, where he gave so-called wealth management seminars to congregations at churches. Taylor claimed to be a socially conscious investor and claimed that 20 percent of the profits of his venture were being donated to charity.
One of the churches on Taylor's tour was New Birth Missionary Baptist Church in Lithonia, where Taylor and Connor met with potential investors. Over 80 people from the state of Georgia alone lost more than $2 million due to Taylor's scheme.
The investment vehicles used by Taylor as a part of the scheme included investments in promissory notes, where the funds would be used to support small businesses including laundries, juice bars and gas stations. Taylor is alleged to have falsely represented the revenues and returns for these businesses while knowing they were not profitable. The indictment also says Taylor pushed an investment in "sweepstakes machines," which are computers loaded with various games allowing players to win cash prizes.
Materials Taylor published in conjunction with the offerings falsely claimed the sweepstakes machines would generate a return on investment of 300 percent. He also said the investments in the sweepstakes machines was 100 percent risk free.
According to the indictment, Taylor encouraged investors to use self-directed IRAs to make their investments. Many victims transferred money, including their retirement savings in some cases, to trust companies that acted as custodians for self-directed IRAs, expecting the funds to be used for the investments promoted by Taylor.
The money was directed by Taylor, according to the indictment, and instead of using the money for the promoted investments, the funds were directed to pay ongoing business expenses of City Capital, personal expenses for Taylor and, in some instances, to pay early investors in the scheme as so-called "returns to investors."
Taylor was indicted by a federal grand jury on June 10, 2014.