= Subscriber content; or subscribe now to access all American Banker content.

Former Bishop Pleads Guilty to Tarp Fraud

A former leader of a Mormon congregation in Connecticut has pleaded guilty to charges he laundered hundreds of thousands of dollars through a bank that received funds from the Troubled Asset Relief Program.

Julius Blackwelder, an ex-bishop of the Bridgeport Ward of the Church of Jesus Christ of Latter-day Saints in Trumbull, has accepted liability for criminal charges that he tricked members of his congregation and others into entrusting their money with him in exchange for a return on their investment, U.S. Attorney David Fein said in a press release on Wednesday.

Rather than invest the funds in long-term investments as he told the investors he would do, Blackwelder allegedly deposited the money in an account at Bank of America (BAC) that he used to pay down personal loans, reimburse earlier investors in the scheme and build a home.

Blackwelder allegedly bilked roughly $400,000 from investors in the ruse, violating a U.S. law that specifically prohibits fraud involving financial institutions such as B of A that received Tarp funds.

"As bishop of his church, Blackwelder used his status within the community to dupe victims, including members of his congregation, into funding his Ponzi scheme," Christy Romero, Special Inspector General for Tarp, said in a press release. "Taxpayers did not bailout banks so others could launder proceeds of crimes through them."

A lawyer for Blackwelder did not respond to a request for comment.

According to court papers, Blackwelder persuaded members of his congregation and others to invest their money with him starting in 2005 as part of an investment pool known as the "Friend's Investment Group." Blackwelder allegedly told investors that he was an experienced and successful commodities investor who would invest their money safely.

Blackwelder, who entered his plea in the U.S. District Court in New Haven, faces jail time when he appears before Judge Ellen Bree Burns at a sentencing hearing scheduled for May 15.




Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.