Bursted! U.S. Man Accused of Swindling Churchgoers Arrested

A businessman accused of swindling churchgoers in an investment scheme was arrested Tuesday on fraud charges, federal prosecutors in Atlanta.

The arrest of Ephren Taylor II, 31, came a week after he was indicted by a federal grand jury, prosecutors said.

Taylor, former chief executive of North Carolina-based City Capital Corporation, is accused of convincing members of mostly African-American church congregations across the country to invest in small businesses — such as juice bars and gas stations — when prosecutors claim he really used their money to pay personal expenses.

Taylor and another former City Capital executive, Wendy Jean Conner, conspired between April 2009 and October 2010 to defraud hundreds of investors out of millions of dollars, prosecutors said, adding that Taylor traveled the country presenting "Building Wealth Tour" seminars to churchgoers. Authorities say Taylor, originally of Overland Park, Kansas, told investors a portion of the company's profits would be donated to charity.

Aside from pushing fraudulent small business investments, prosecutors say Taylor also convinced victims to invest in sweepstakes machines — computers loaded with games that allow players to win cash prizes. Taylor told victims the machines would generate 300 percent returns on their investments and that the machines were 100 percent risk free.

Taylor also convinced investors to use self-directed IRA's to make their investments and used victims' retirement money to pay City Capital's business expenses, personal expenses and pay returns to some investors, prosecutors said.

The Securities and Exchange Commission filed a complaint in April 2012 accusing Taylor and Connor of defrauding investors out of more than $11 million. A federal judge ordered City Capital to forfeit nearly $15 million in profits, interest and civil penalties.

Authorities could not immediately say if Taylor has an attorney.

Cathy Lerman, a Florida attorney representing some of Taylor's victims in a class action lawsuit, said she's now pursuing third-parties suspected of helping further the scheme. Lerman said she began pursuing Taylor in 2007 and was unaware the case would balloon to include victims across the country.

"As a lawyer with 30 years of experience, this is the first time I've ever had to talk clients out of committing suicide," Lerman said. Dozens of clients, she said, have faced foreclosure and unexpected medical bills after losing their life savings and unwittingly destroying their families' financial stability.

"The shame of that never leaves you. I don't care what happens in life, that never leaves you," Lerman said.

One of Lerman's clients, Joann White, 67, of Belleville, Michigan, said that after seeing Taylor appear on television to talk about his book she invested in what she thought was a laundry service run by college students and a gas station looking to capitalize on alternative fuel sources.

"I kind of just got caught up in what I heard about him and the good he was trying to do," White said. "It just sounded like a win-win situation for everybody."

White said her retirement savings disappeared and her family was pushed to the brink of homelessness when there was no money to pay the mortgage. White said she was also unaware of how far-reaching the conspiracy was.

"It is amazing how deep this really is," White said. "What he did was wrong, yes. In the end he will pay for it."