Why ‘sea-scooter’ Ponzi suspect allegedly targeted California ‘prosperity gospel’ church

People who visit the website of Bethel Church, an evangelical megachurch in Redding, will find inspirational quotes from its leaders, photos of worship services and a link to its YouTube channel.

Oh, and this: a financial disclaimer telling congregants that Bethel doesn’t endorse any offers they may receive to invest their money.

“Although we pray for miracles in economies and investments, Bethel Church board members, leaders, and management are neither financial advisors nor investment consultants and in no way represent ourselves as such,” the disclaimer says in part. “Bethel Church strongly recommends that you seek expert investment advice from qualified professionals before considering any form of investment.”

The disclaimer, posted to Bethel’s website in 2014, represents an extraordinarily unusual message for a house of worship. But then, Bethel and its members have learned the hard way about the perils of investing.

On Monday federal prosecutors charged two men with running a $35 million Ponzi scheme that — according to a law enforcement source — targeted the Bethel faithful.

One of the accused men, Matthew Piercey, attended services at Bethel. His arrest made national headlines because he briefly eluded FBI agents by diving into the frigid waters of Lake Shasta riding an underwater “sea scooter,” officials said.

The sensational arrest brought back painful memories for Bethel congregants. In 2009 another congregant was arrested on charges of bilking about two-dozen Bethel worshippers in a Ponzi scheme that took in hundreds of thousands of dollars. That congregant, David Souza, was sentenced in 2014 to an 18-year prison term, according to the Redding Record Searchlight.

“Our friends said they had made money off of it, and it was cool,” Shaun Shirley, who lost $8,000 investing with Souza, told The Sacramento Bee on Wednesday.

Experts say Bethel appears to have been the victim once again of “affinity fraud,” in which a scammer pitches his investment plan to members of a tight-knit community.

“It makes it easy to identify and spread the word,” said private investigator Kevin Baker, who once led the Sacramento FBI office’s white collar crimes unit. “It gets communicated faster and spreads ... like a virus.”

The victims include members of the same ethnic group, or people who share an occupation. Mostly, though, Baker said the victims attend the same house of worship — the perfect environment for getting investors to let their guard down.

“It’s a sense of shared affinity — ‘I’m a Christian, you’re a Christian. We attend this church together. We’re people of God. I can trust you,’ ” said U.S. Attorney McGregor Scott, whose office is overseeing the prosecution of Piercey and his co-defendant Kenneth Winton. “Unfortunately, I’ve seen over the years there are too many people who are willing to take advantage of others.”

Scott emphasized that he was speaking about affinity fraud in general, not the case against Piercey and Winton.

Preaching the ‘prosperity gospel’

Bethel’s belief system also may have made its members an easier mark for potential con men. Bethel is among the Pentecostal churches that believe God rewards faith with wealth, a concept sometimes referred to as “the prosperity gospel.”

“Prosperity is often the result of doing things right,” Bethel’s founder, Bill Johnson, told the Redding Record Searchlight in 2010.

The Ponzi arrests come at a difficult time for Bethel, whose members believe they can raise the dead and heal the sick.

Last month more than 300 students and staff at Bethel’s School of Supernatural Ministry tested positive for COVID-19. Local elected officials roundly criticized leaders at the church, a powerful force in the community with roughly 11,000 members — 10 percent of Redding’s population — for staging large gatherings and flouting rules on masks and social distancing.

The church said it wasn’t familiar with Piercey’s financial work.

“To our knowledge, Matt Piercey and his family have attended Bethel Church in Redding for the past few years, however we are unaware of his personal financial decisions,” said Bethel communications director Aaron Tesauro in an email. He said Piercey and his family hadn’t yet officially become members of the congregation.

“The leadership of Bethel Church strongly recommends that all people seek expert financial advice from qualified professionals before considering any form of investment,” Tesauro added. “Bethel Church does not promote or endorse investment opportunities.”

Using religious values to gain trust

Affinity fraud is nothing new.

The most notorious financial scammer of all time, Bernie Madoff, siphoned billions of dollars from his fellow Jews before his arrest in 2008.

In one of the biggest financial frauds in Sacramento-area history, Roseville businessman Lee Loomis was accused of touting his Christian values to convince investors they would get a return of 12 percent on their money each month. Prosecutors said Loomis conned his victims out of as much as $50 million before he was sentenced to prison in 2018.

“He referred to himself as a Christian, God-fearing man,” Chico investor Deborah Teja once told The Bee. She and her husband lost $150,000 investing with Loomis’ company, Loomis Wealth Solutions.

Similarly, a Folsom Ponzi mastermind named Anthony Vassallo went after members of Sacramento’s Mormon community before his operation was shut down a decade ago. Vassallo is serving a 16-year prison term for a Ponzi scheme estimated at $80 million.

What they had in common was the ability to get their customers to trust them.

“It’s a normal human thing to just trust people,” said Erin Dervin, a former Shasta County deputy district attorney who worked on the first Ponzi case at Bethel a decade ago. “If you’re in a fringe or a smaller type of identifiable group, you’re going to trust them implicitly, especially if they’re invoking the name of God. And if you are particularly religious, you know, that’s going to resonate with you.”

Souza, the man convicted in that first Bethel case, went to considerable lengths to gain victims’ confidence. The former handyman and truck driver paid church members’ bills and bought cars for students, single moms and single elderly women. He also bragged to congregants that he had a closer relationship with Bethel’s leadership than he really did.

Largely, though, his pitch was about Christianity. According to federal officials, his marketing slogan was, “Where business is moral and the miraculous is routine.”

Another of his victims, who insisted on anonymity, told The Bee that Souza told Bethel members that he was using their money to build homes for poor people in Southern California.

“It was, ‘Let’s do something kind for humanity,’ ” said this woman, who lost $80,000. “ ’Let’s change people’s lives as Christians, as believers.’ ”

‘You’re around a bunch of people who love God’

Shirley, another one of the victims, said: “It was faith-based. You’re around a bunch of people who love God and want to advance things for the Kingdom.” She said she hadn’t heard of Piercey, the Bethel worshipper arrested at Shasta Lake, until reading media accounts of the case.

Federal prosecutors say Piercey and Winton promised hefty returns to anyone who invested with their two companies, Zolla and Family Wealth Legacy. They allegedly took some of the customers’ funds for themselves, with Piercey buying $1 million worth of real estate and paying off $1.5 million in personal loans. Winton bought himself a houseboat.

Although nearly $9 million was returned to early investors, most of the remaining $35 million is gone, prosecutors said. “Few if any remaining liquid assets remain to repay investors,” the indictment says.

In dealing with clients, Piercey claimed to have a line to President Donald Trump. That may have helped bolster his standing with members of a church where one of its leaders, Kris Vallotton, made a “prophecy” that Trump would win re-election. He later apologized after Joe Biden was declared the winner, according to the Record Searchlight.

According to prosecutors, Piercey invoked Trump’s name after learning in March that several of his investors had received subpoenas from federal investigators.

He fired off an email to investors claiming that the subpoenas were a response to a letter he sent Trump, suggesting that the only way to save the nation’s banking system from the financial effects of the coronavirus pandemic was to have them invest money with him.

“In light of our emboldened focus to rescue the banking system, be advised I anticipate potential new levels of regulatory scrutiny,” he wrote one investor. “If you have any connections or contact with government workers please let me know.”

This story was originally published November 19, 2020 at 8:23 AM with the headline "Why ‘sea-scooter’ Ponzi suspect allegedly targeted California ‘prosperity gospel’ church."