A minister’s son who marketed his investment products to socially-conscious African-American congregations is accused of running a $11 million Ponzi scheme that destroyed the life savings of many of its investors.
Ephren W. Taylor II, 29, who ran City Capital Corp., called himself “The Social Capitalist” and said he was the youngest African-American CEO at a publicly-held company.
The SEC’s complaint alleges that Taylor made a variety of false statements regarding two investment programs he operated through City Capital in order to attract investors. He promised his investors, many of them African-American churchgoers, that money invested would go to help struggling businesses, like laundries and juice bars, as well as charities. The investors believed that they would be helping causes at the same time they potentially helped their own portfolios. Instead, the money reportedly went to – wait for it – Taylor and his family.
David Woodcock of the SEC’s Fort Worth Regional Office said in a statement that Taylor “professed to be in the business of socially-conscious investing,” while he was really “in the business of promoting Ephren Taylor.” Shocking.
The agency also said that “City Capital’s business ventures were consistently unprofitable,” and that “no meaningful amounts of investor money were ever sent to charities.” Even more shocking.
Taylor’s scheme offered two investment opportunities – promissory notes which were supposed to fund economically disadvantaged businesses, and so-called “sweepstakes machines.” According to the SEC complaint, Taylor’s company was able to raise $7 million in promissory notes. He promised that the funds would go to struggling businesses, but instead directed the funds toward personal projects like promoting books he’d written, hiring personal image consultants, and furthering his wife’s singing career
The “payments on the notes were sporadic at best,” and few of the notes were ever fully paid, according to the SEC. When investors did insist on being paid, their money reportedly came from new customers, the way a classic Ponzi scheme works.
As for the sweepstakes machines, which were similar to what you could find at a casino, Taylor claimed that there could be an investment return of 300% each year on them. Yeah, right.
In addition, the so-called Social Capitalist got investors to roll over their retirement plans to his investments, calling traditional investment vehicles “foolish” and “money losers.”
Speaking of money losers, Taylor’s so-called “Building Wealth” tour built wealth, all right – for him! In the tour, Taylor visited African-American congregations and wealth seminars pushing his schemes. The SEC said he “heavily emphasized his Christian background” and was “at times referred to as ‘Minister Taylor.’”
After Taylor’s scheme went awry, Bishop Eddie Long, pastor of New Birth Missionary Baptist Church, one of the churches whose members invested with Taylor, made a YouTube video calling for the Social Capitalist to “do what’s right” and return the money, to no avail. Long himself has been sued by investors who claimed that he encouraged the investments by inviting Taylor to his church for a three-day “Wealth Tour Live” seminar.
In addition to going after Taylor with this lawsuit, the SEC has also filed complaints against City Capital itself, as well as Wendy Connor, the firm’s former chief operating officer.
Check out footage from the Wealth Tour below:
Lisa Swan is a Feature Writer for the Compliance Exchange and Wall Street Job Report. She is also a columnist for The Faster Times and a blogger for Subway Squawkers. Her work has also appeared in the New York Daily News, Yahoo Sports, Huffington Post and the books Graphical Player 2011 and Graphical Player 2010.