Georgia preacher sued over church fraud scam

Ex-convict’s pitch pulls in $9 million until SEC steps in
AP, Nov. 27, 2002
http://www.chron.com/
By DAVID B. CARUSO

PHILADELPHIA — For hundreds of congregations barely scraping by on Sunday collections, Abraham Kennard seemed like the answer to a prayer.

For nearly a year, the Georgia preacher traveled the country, meeting with pastors at mostly small black churches and offering a once-in-a-lifetime deal.

For a one-time fee of $3,000, he said, he could award them a $500,000 grant, drawn from a little-known charity built by wealthy Christian businessmen and athletes interested in promoting religion. Congregations that kicked in more would get bigger returns — another $500,000 for every additional $3,000 they invested.

Thousands found the deal too good to pass up, and they are now paying a steep price.

The Securities and Exchange Commission said at least 1,000 and possibly as many as 2,000 churches and religious groups nationwide put money into the scheme, with some investing the maximum of $18,000 allowed. Only a few got anything in return.

The SEC filed a lawsuit on Nov. 4 accusing Kennard, an ex-convict who served time for armed robbery, of fabricating the story about the charitable fund as well as a tale about using membership fees to build a network of Christian resorts.

Investigators estimate that in just a year, Kennard’s company, Network International Investment Corp., took in $9 million from pastors in 41 states.

“Any money that was paid out to churches was simply other churches’ money,” SEC attorney Lawrence Parish said.

No criminal charges have been filed. A federal judge has frozen Kennard’s assets.

Like other ministers, the Rev. Michael Jones of Philadelphia said he was caught up in a frenzy that followed the charismatic Kennard wherever he went.

Jones said he decided to invest $3,000 only after seeing dozens of other pastors in Pennsylvania do so first — including many with large congregations and impeccable reputations.

“This was the buzz of the town. Everybody was talking about getting it. When I looked at the caliber of the people who were investing money, people you knew were high-integrity people, I sort of figured it had to be legitimate,” he said. “And when I would ask common-sense questions, the response I got was, `This is about faith. God is giving us a gift.’ ”

In the meantime, investigators said, Kennard was living luxuriously on the proceeds.

The SEC said he toured the country in rented private jets, put family members on his payroll and wined and dined ministers at expensive hotels, often arriving in a white limousine. Kennard also paid himself a $400,000 salary, according to his attorney.

His flash didn’t sit well with everyone.

“The guy, he could preach,” said the Rev. Joe Mallory of Philadelphia. “But he had a gold tooth, and where I came from, down South, the only people who had gold teeth were playboys and pimps.”

Kennard’s Atlanta attorney, Mark Scott, said his client really did intend to use the money to build the retreats, then repay his investors with his profits. Scott said some of the pastors who helped Kennard promote the program misrepresented how soon their money would produce a return.

“I don’t believe his intention was to defraud anyone,” Scott said. “I think he designed this program without the advice of counsel, without the benefit of financial consultants, and what has resulted is this financial night-mare.”

A Texas native, Kennard was an unlikely financier. He was convicted of armed robbery and writing bad checks in the 1980s and served three years in prison. He settled in Wildwood, Ga., in the 1990s and opened a storefront church. His first effort to open a religious retreat in Georgia failed, and he declared bankruptcy in 1999.

Investigators are still trying to track the cash the company raised. His lawyer said much of it was spent on the marketing campaign or on a preliminary round of payouts to churches.

“It’s not like he pocketed millions of dollars and moved the money to offshore accounts,” Scott said.

Kennard and investigators agree that only about $300,000 of the cash remains and that the company has few assets to repay investors.

That’s bad news for ministers such as Mallory, who had bought a $9,000 membership in Network International, believing it would net him $1.5 million to help him finish building a new church in South Philadelphia.

“They were so smooth. You look back at it now, and you say, `I should have known,’ ” he said.

The small chapel still has no roof. And the 80-member congregation has been turned down several times for a bank loan.

“We’ll find a way, somehow,” Mallory said.

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