Pastor Gets Probation For Hedge Fund Fraud

Mar 10 2008 | 10:27am ET

A former Colorado pastor convicted of hedge fund fraud has avoided hard time.

Douglas Scott, who led the evangelical, and now defunct, River of Life Church in Colorado Springs, was sentenced Friday to 15 years probation on Friday, and ordered to pay $1.4 million in restitution for his role in defrauding investors of some $12 million.

“As a pastor, you were supposed to be a fisher for men’s souls,” Judge J. Patrick Kelly said. “Instead, you were fishing for their wallets.”

The judge rejects Scott’s claim that he was blameless in the scam, which according to the pastor was masterminded without his knowledge by his partner-in-crime, Hamilton Bird.

“It is obvious to me you knew a lot more than you believed you knew,” Kelly said. “You took quite a bit of money and were flush with cash.”

Scott allegedly made $780,000 in referral fees from hedge fund XL Capital Partners for recruiting investors for its Vision Fund, without informing investors or potential investors of his financial interest. What’s more, Scott was not a licensed securities broker, according to the Colorado attorney general’s office.

Some 400 investors placed about $24 million with XL and Vision.

In addition to probation and restitution, Kelly barred Scott from entering into contracts and credit agreements, and ordered him to get a full-time job and perform 200 hours of community service.

Bird, who ran XL before authorities shut it down in 2004, is set to go to trial at the end of this month. David Newton, who also worked at XL, was also given probation for his role in the scam.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.