FBI, state investigating church group’s dealings

Churchgoers in as many as 10 states are investing in a company that some were told is worth $170 billion with assets around the world. Yet its business address is a Scottsdale post office box and state and federal officials are investigating its owners.

No one has been charged in the case, and no investors have sued.

At least one pastor, church elders and congregation members in Avondale and Chandler are among those who have put money into Nakami Chi Group Ministries International. The non-profit company promises to fund Christian charities while paying investors 24 percent annual returns.

Nakami’s owners have told potential investors they control gold mines, Australian developments, telecommunication firms, banks and a Phoenix technology company.

Financial records raise questions about the size of Nakami’s assets. One of its owners, Ed Purvis, is a licensed practical nurse who lives in a Chandler home valued at $270,000.

Records also show Purvis and Nakami principal Gregg Wolfe do not have brokers’, lenders’ or banking licenses and have not filed paperwork in Arizona related to mines in the state.

The FBI confirmed last week that church members and others in 10 states have put several million dollars into Nakami.

“They encouraged us to take out equity loans on our homes,” says Gary Bruyns, an airline pilot who attended an investment meeting with Purvis at Vineyard Church in Avondale. “(Purvis) personally guarantees 24 percent per year as a freshman investor.”

Investigators with the Arizona Corporation Commission are looking into possible state securities violations. The FBI is examining whether Nakami functions as a pyramid scheme, in which funds from new investors are used to pay returns to existing ones without a real revenue source.

“The investigation is moving forward with criminal action against various people,” says FBI supervisor Pete Norell in California. He added that investments in Nakami are “pretty widespread” and he expects Nakami to be shut down. “Hopefully, an end is coming soon.”

Purvis and Wolfe declined to talk about Nakami. In a letter sent to The Arizona Republic, Purvis says he has no investors and “is philanthropic and pays out money to deserving charities.” He says Nakami’s financial dealings have harmed no one and the investigations constitute a “witch hunt.”

Church members and pastors are vehement in their defense of Purvis and Wolfe, saying they are convinced everything is legal.

“Has anyone complained? No. Has any victim come forward? No,” says Leon Goshow, director of an investment club made up of Vineyard Church members.

Many church investment efforts are certainly legitimate. But fraud cases involving churches also have increased across the country in recent years, costing investors billions of dollars, financial experts say.

In most religious investments, the faithful put their trust in the company based on its promise to do God’s work and generate returns.

Pastors defend company

Pastor John Farmer can barely contain his enthusiasm as he wraps up a service in the elementary school auditorium that doubles on Sundays as Vineyard Church.

Sitting in folding metal chairs, the congregation is anticipating the good news. Farmer, smiling, doesn’t disappoint.

After nine years of worshiping in school buildings, he says they will be getting their first real church. And Farmer says he believes Purvis and Wolfe will help make it happen.

For months the congregation has been digging deep into its pockets to raise $1.4 million to buy land and fund construction. Purvis has agreed to match the building fund.

If the match money doesn’t come in, Farmer says the church would likely have to sell a prime portion of its newly acquired site to pay for construction. But he believes the money will be there in time.

“Just because it hasn’t happened yet, doesn’t mean it isn’t going to happen,” he says.

Farmer, who was subpoenaed in August by the Arizona Corporation Commission to testify about Nakami, says his faith in Purvis goes back four years. That’s when Farmer first put his personal money into Nakami.”We don’t consider them investments,” Farmer says. “We consider them donations.”

Still, Farmer acknowledges he and others who gave money to Nakami have received regular returns of 2 percent per month.

“I don’t want to deceive you. I have been getting money back,” he says. “But that’s not what this is about.”

Farmer says he originally put money into Nakami as a way to fund Christian ministries and charities. He says a good portion of his returns also go to charities.

“I know for a fact that some (charities) have been helped,” Farmer says, adding he is distrustful of the state’s investigation. “A lot of people get accused of a lot of things. The way I feel is that I don’t know of any evidence of guilt.”

It’s common for individuals to make donations to a non-profit charity and deduct the amounts on tax returns. But the law does not permit a charity to pay donors returns in exchange for donations.

Pastors at the 2,000-member Chandler Christian Church also defend Purvis.

Associate Pastor Don Anderson said church officials “confronted” Purvis about some of the questions being raised and determined he is “handling himself in a proper manner.”

“We can play ‘what if’ games forever,” Anderson said in brief phone interview. “As far as the church goes, it’s people’s own business what they do.”

Investors warn church

Financial adviser Mitch Behm says he repeatedly warned pastors at Chandler Christian that some members were investing thousands with Purvis and Wolfe. Among them were Behm’s father-in-law and brother-in law, who is a missionary for the church in Peru.

“They gave $150,000 to Purvis,” says Behm, who works for Edward Jones Investments in Denver. “I called the church to tell them what was going on. . . . They told me I wasn’t giving Purvis a fair shake.”

Behm says his research left him with concerns about Nakami’s purported assets and lack of licenses. When he threatened to file complaints with regulators, Purvis and Wolfe both agreed to give back all of the money that his relatives invested, Behm says.

“They told me that if I agreed not to go to authorities, then they would give back the $150,000,” Behm says. “I’ll tell you, the minute the checks cleared, I called every regulatory agency I could think of.”

Those included the Securities and Exchange Commission and the Arizona Corporation Commission.

Behm’s father-in law, Tony Senarighi of Prescott, says he testified this month before the Arizona Corporation Commission.

“I gave (Purvis) $50,000,” the 63-year-old retired management consultant says. “It was our retirement money. It is a lot of money to us.”

He first met Purvis at a Chandler Christian Church picnic in 2004. He says Purvis’ approach was low-key and attractive. Senarighi says he didn’t jump in right away. But over the next 12 months, Purvis and Wolfe made him feel comfortable about investing.

Senarighi says he took $50,000 from an IRA and his son-in-law invested more than $100,000 from the sale of his home.

Senarighi says he regretted the decision to invest almost immediately.

He says he was thankful when Behm was able to get the money returned.

Probe begins

More than a year after Behm’s calls, the state has not taken any enforcement action against Nakami.

And federal investigators didn’t start questioning Nakami’s activities until four months ago, when Barry Minkow contacted them. Minkow is a former con man turned pastor who runs a private investigative agency in San Diego called the Fraud Discovery Institute. Federal authorities credit him with stopping more than $1 billion in fraud in the past two years.

Minkow says he received calls about Nakami from church members in Arizona. He says he contacted pastors in Avondale and Chandler who rebuffed his concerns.

“This is a company that appears to be offering returns with no paperwork, no prospectus, no licenses,” Minkow says.

Minkow says his investigation of Nakami found ties to investments at churches in Texas in addition to Arizona and Missouri. He says he also found a California investor who says he gave Purvis almost $100,000 for an overseas gold mine operation.

Purvis’ lawyer, John O’Neal of Phoenix, says he cannot discuss the case.

Officials with the Arizona Corporation Commission confirmed they are investigating Nakami but would not talk specifically about the case.

Spokeswoman Heather Murphy said the commission is seeing more securities-related cases involving churches. “In Arizona, we have had several large cases dealing with investments that have spread like wildfire through churches,” she said.

Nationally, authorities say they also are investigating more cases of “affinity frauds,” which target members of a particular religious or ethnic group.

Church scams cost individuals about $450 million between 1994 and 1998, says the North American Securities Administrators Association, which seeks to educate and protect investors. Between 1998 and 2001, the amount skyrocketed to more than $2 billion and since has risen.

Holdings not evident
In May, Purvis and Wolfe met with about 15 Vineyard church members at an investment-club meeting and described their holdings and strategy.

“You don’t want to miss out,” says airline pilot Bruyns, a 35-year-old father of three.”If this guy is a benevolent billionaire, you don’t want to miss out on an opportunity.”

Bruyns, who did not invest, says Purvis and Wolfe equated investing in Nakami with faith in God.

“They said let your yes be your yes and your no be your no,” he says.

Purvis and Wolfe asked people to donate to the company as a way to fund Christian charities. In return for their donations, Purvis and Wolfe guaranteed financial returns paid through their personal fortunes, Bruyns says.

A review of public records did not reveal Nakami’s overseas companies, mines and other assets described in the investment club meeting. Financial records, property searches, corporation searches and tax filings show only that Nakami was incorporated in Nevada in 2003 and its director’s address is a UPS postal box near Fashion Square Mall in Scottsdale. It also has a $500,000 investment in a Phoenix technology company, ACI Holdings.

The public record also shows few holdings for Purvis and Wolfe.

Property records show Purvis, 37, has lived on and off in the Valley since 1989, renting apartments in Scottsdale, Mesa and Chandler. He and his wife, Maureen, own the $270,000 house in Chandler, which they borrowed $60,000 against last year.

Records for Wolfe show he also has lived in apartments and townhouses around Scottsdale.

According to church members, investors who wanted proof of Purvis’ holdings were given tours of ACI’s facility near Interstate 17. There, investors were shown a device that they were told could reduce home energy bills and save homeowners thousands of dollars.

ACI President James Keaton says he had no idea his company was being held up as evidence of Purvis’ claims to church investors. He acknowledged that Nakami is a shareholder and that Purvis was a former company director.

But he says his company can’t offer any returns and investors should know that.

“This is an equity investment that doesn’t have any immediate returns,” Keaton says, adding that he isn’t involved in Nakami or any other Purvis or Wolfe business.

Financial adviser Behm tells a different story. He says Keaton arranged the return of the money to his in-laws. Behm says after demanding that Purvis and Wolfe return the money, he received a call from Keaton who offered to make it happen if Behm agreed not to go to authorities.

Keaton says he never told Behm not to go to authorities. He says he returned Senarighi’s $50,000, which was made as a direct investment to ACI.

Keaton says he had nothing to do with returning the $100,000 to Behm’s brother-in-law, who was not a listed as investor in ACI. He may have offered to speak with Purvis and Wolfe about it, but that’s as far as it went, he says.

Keaton says after his talk with Behm, he began asking Purvis and Wolfe questions that they refused to answer. Keaton says when Purvis refused to fill out a financial disclosure form related to his position as company director, he asked Purvis to step down and evicted both Purvis and Wolfe from ACI offices.

Even after the eviction, however, Purvis continued to bring investors to the company and Nakami is still a shareholder in ACI, Keaton says.

Keaton says he is worried that his company might have been used to mislead investors and he wants to cooperate with authorities.

Purvis threatens lawsuit

Arizona Corporation Commission lawyers have been trying to examine Purvis’ bank records since last year as part of their investigation of Nakami. A Maricopa County Superior Court judge threatened in August to hold Purvis in contempt if he fails to produce the documents by October.

Purvis last month made an unusual demand against Judge Paul McMurdie, several Arizona Corporation Commission officials, Minkow, Behm, Bruyns and The Republic.

In a mailed letter, Purvis threatened to charge each party upwards of $20 million if they did not agree to remain silent about the questions surrounding Nakami. Purvis calls the questions libelous. He also attached a bill.

In his letter, Purvis says he “only engages in private contracts with other private parties.” He says the state does not have any jurisdiction to question his dealings.

Standing at the entry of his house, Purvis says he wants nothing more than to clear his name. But he declined to answer questions.

“I can’t talk. I’m sorry,” he says. “I also wouldn’t answer any of the state’s questions.”

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Religion News Blog posted this on Sunday September 10, 2006.
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