In a double-your-money scam, remarkably similar to the New Era Philanthropy scandal (CT, Oct. 27, 1997, p. 86), a Los Angeles-area woman has been convicted in a $4.4 million fraud case.
After the March 6 verdict in Wichita, Kansas, federal Judge Monti Belot denounced Priscilla Deters, 63, as a "danger to any honest person." Deters could be sentenced to four years in prison for each of the 12 counts. She could also be fined up to $250,000. Sentencing is set for May 22.
Deters's company, Productions Plus, promised church groups it would make "matching gifts" for their projects if they first put up "deposits," which Deters held for a year.
"The premise is savings and convenience and the result is good," her materials stated. In response, church groups in 21 states, mainly evangelical Nazarenes and Friends (Quakers), poured nearly $6.5 million into Productions Plus between 1990 and 1995. Deters pledged that funds would be kept safe in certificates of deposit, while matching gifts were to come from highly profitable businesses she ran. "I am a service agency without a fee," Deters stated in 1991. "I have one purpose, and that is to bring service to the community."
EARLY PAYOFFS: While slightly more than $2 million made its way back to investors, checks and bank statements detailed how she paid off early depositors with money from later ones in a classic Ponzi scheme. Prosecutors showed that Deters, instead of safeguarding her clients' funds, spent $4.4 million on herself and her family.
"If there were business profits," says Kansas State investigator Gary Fulton, who searched six years of bank records, "I never found them." Deters gave more than $1 million to her four sons for work performed for Productions Plus. She gave a $200,000 gift to help a son buy a home and paid $120,000 in wages to her mother, who died in 1994 at age 97. Some $18,000 was spent on dental work. "She was a shrewd, calculating thief," argued prosecutor Annette Gurney.
'GREAT FINANCIAL OPPORTUNITY': Deters recruited churches with the help of endorsements from prominent church figures, especially in Friends circles.
The most important came from T. Eugene Coffin, who recommended Deters in 1988 while chair of a national Friends Ministers Conference. At his behest, conference planners placed $7,500 with Deters; a year later she returned $50,000 to the group. When news of the generous matching gift spread, pastors and superintendents lined up to sign up. (Coffin now has Alzheimer's disease and did not testify.)
Maurice Roberts, superintendent of the Friends' Mid-America Yearly Meeting in Wichita, collected $439,000 from his churches to send to Deters. Roberts was forced to resign in October 1994 when it became clear that the yearly meeting faced losses of as much as $200,000. R. J. Wegner, who oversaw Nazarene congregations in North Dakota and South Dakota, collected $600,000, more than $500,000 of which disappeared in the scheme. In a letter to pastors, Wegner wrote, "I, as your district superintendent, am very excited, happy, and thrilled with this great financial opportunity knocking at our door. We cannot afford to pass this up."
Other groups drawn into the scam included the Houston Graduate School of Theology, a decade-old Friends-related seminary in Texas, that saw in Deters an opportunity to obtain funds to help build a new campus. It mounted a fundraising campaign around the plan and bought a large tract of land with her early payments.
But the school later lost more than $250,000. The new campus remains unbuilt, the land has been put up for sale, and the school has fallen behind in its repayment of funds borrowed to sink into the scheme.
The Friends Church in Cherokee, Oklahoma, recruited community members to send $475,000, planning to use its gifts to build a worship and community center. Cherokee's loss is in excess of $400,000. Other victims included John Wesley College in High Point, North Carolina, Barclay College in Haviland, Kansas, and Indiana Wesleyan University in Marion, Deters's alma mater.
Individuals also lost large sums. For example, Mary Washburn, a widow in Cherokee, invested her entire $68,000 life savings in the failed community center venture; Allen Dace, a retired Nazarene pastor from Chatham, Illinois, put $154,000 into a nonexistent electronic sign business that Deters claimed was producing copious profits.
LEGAL TROUBLES: Many victims described Deters as charismatic and highly persuasive when presenting her program. But prosecutors charged that she failed to tell her victims that in 1991 cease-and-desist orders had been issued against her in California, North Dakota, and South Dakota by securities commissioners in those states. California followed up its order with an injunction in 1995, and a civil-contempt citation in 1997. The federal indictment in Wichita came in December 1996.
In 1991, when Wegner, the Nazarene superintendent, learned about North Dakota's cease-and-desist order, he defiantly declared he would rather "believe people in the church," and sent the money to Deters anyway. At the trial, Wegner said, "You could say I was rather innocent, and maybe a little on the dumb side."
Deters's defense counsel, Steve Gradert—appointed by the court because Deters said she could not afford one—attempted to portray her as "an honest, hardworking Christian woman" victimized by a shadowy conspiracy involving church officials who were "working for Satan." However, Gradert presented no concrete evidence of any conspiracy. Deters did not testify at the trial.
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