Sunday, 26 February 2017
Last updated 1 day ago
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.