Pastor must repay flock
Sep. 20, 2003
ReligionNewsBlog.com • Monday September 22, 2003
14 trusting investors lost nearly $900,000 in scheme
Douglas Sanchez of Mesa always seemed to know how to reach out to members in his congregations, whether he was praying for them or adjusting a pillow for a disabled member.
But unfortunately for a handful of them, including two pastors and one paraplegic, they trusted Sanchez too much. And now they are nearly $900,000 the poorer for it.
The state has accused the 56-year-old Sanchez of running a six-year financial scheme, and the Arizona Corporation Commission has ordered him and his wife, Karen, to repay investors their money plus interest and a $50,000 penalty. No criminal charges have been filed.
The couple did not return calls Friday. They have signed a consent order and waived their rights to a hearing before the commission.
“He acted like the most amazing man of God,” said Tina Otis, who lost more than $70,000 and met Sanchez at Celebration Christian Church in Mesa. “But this is a man who masqueraded in sheep’s clothing. He’s not a man of God. He can’t do what he did and be a Christian.”
The state, in a cease-and-desist order, said Sanchez raised $895,025 from 14 investors since 1998 by selling them promissory notes and investment contracts. At least five investors, including two who were handicapped, were members of churches that Sanchez attended. One investor’s husband had multiple sclerosis.
“He church-hopped and he preyed upon the vulnerable and women,” said Rachel Johnson, whose mother was an investor.
Most of the investors entrusted Sanchez with their retirement funds, while one investor sold her house and gave him the equity, the state said.
The state said Sanchez was an associate pastor at undisclosed churches in Mesa where he would befriend investors. Sanchez also was manager of DMS Power Cash Flow and Persanco, companies that served as conduits for the promissory notes and investment contracts, according to the state.
Sanchez and the two companies have not filed tax returns since 1998.
Sanchez promised investors returns of up to 20 percent through stock trading, purchasing deeds of trust, investing in bonds or certificates of deposit and looking for business opportunities.
However, the state said Sanchez used the money for stock trading, to pay other investors interest, akin to a Ponzi scheme, and for personal use. He lost money every year but 1998, when he made $1,918.
Sanchez also had limited knowledge of stock trading, according to the state. Before 1998, his only knowledge reportedly was from a Wade Cook seminar he attended. He also used less than $50 to explore business opportunities, and he did not purchase any deeds of trust with the investor funds.
The state said he also failed to disclose to investors the risks of using margin (borrowed money) and trading short (betting a stock price will fall) in stock trading. He also did not disclose that he was not registered to sell securities.
When several investors told Sanchez they were experiencing “extreme financial problems” because of the loss of their investment, he avoided contact with them, the state said.
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