INDIANAPOLIS -- The Church of God's fund-raising arm defrauded investors out of $85 million, according to the Securities and Exchange Commission (SEC). The SEC's complaint, filed in federal court, alleges Church Extension artificially inflated income in correspondence with investors and misled them about the risk and type of investments, according to The Associated Press.
The SEC said it has negotiated a preliminary settlement with Church Extension, which neither admitted nor denied the allegations. A judge must approve the settlement, which calls for Church Extension to establish an oversight committee and return investor money.
"It might take months, it might take years to repay noteholders, but we're doing the best we can to meet their needs," SEC spokesman Joshua Robbins told the AP.
Church Extension was created in 1921 to raise funds for new church construction and renovations to existing Church of God facilities. The Church of God has more than 2,200 affiliated congregations and more than 230,000 members nationwide.
In addition to Church Extension, the complaint also named former president James Perry Grubbs, affiliate United Management Inc., and its former president Shearon Louis Jackson.
The complaint accuses Grubbs and Jackson, through Church Extension and United Management, of fraudulently hiding financial difficulties from investors while selling investment notes to thousands of investors nationwide between 1996 and April 2002.
The complaint seeks repayment of $81 million plus interest from Church Extension and seizure of assets from Grubbs and Jackson.
