Judge sentences deceptive financial dealer to 54 years behind bars


Vaughn Reeves sentenced to lengthy prison term after being found guilty of multi-million dollar, faith-based affinity fraud scheme

INDIANAPOLIS (Dec. 7, 2010) – A Sullivan County Judge sentenced today former pastor Vaughn Reeves to 54 years behind bars after being found guilty of 9 felony counts involving violations of the Indiana Securities Act at an October jury trial.

The sentencing comes after a jury convicted Reeves of engaging in a multi-million dollar, faith-based affinity fraud scam through the use of a modified Ponzi scheme. Reeves committed the crime in partnership with his sons, Chip, Chris and Josh. The investigation, which followed a federal receivership action initiated in mid 2005, was a collaborative effort by the Sullivan County Prosecutor’s office, the Indiana State Police and the Secretary of State’s Prosecution Assistance Unit.

“This was truly a collaborative effort by all three parties to protect Hoosiers investors,” Indiana Secretary of State Todd Rokita said. “Hoosier investors should have the peace of mind knowing that their local and state officials are working on their behalf to ensure that fraudulent dealers like Reeves are prosecuted to the fullest extent of the law and held accountable for their actions. Prosecutor Hunley did tremendous work in achieving justice in this case.”

On Oct. 21, Reeves was found guilty of committing securities fraud by duping investors into buying bonds that raised at least $120 million and then using the money for personal use. Reeves, a previously ordained minister, stated the purpose for the vast majority of the bonds was to supposedly finance church construction and expansion. However, according to testimony, Reeves took part in shuffling this money among various accounts deceiving investors into believing money was being used for the churches. In actuality, the money was being diverted toward speculative investments and to make interest payments on other bonds to conceal their defaults and other performance problems. 

Alanar, the holding company owned by the Reeves, created training materials to distribute to church members, who were encouraged to sell bonds to their fellow church members. The materials relied heavily on the religious convictions of the victims. For example, the church members were trained to open the sales call with a prayer, quote Bible scripture and to "never sell the facts, sell warm stewardship and the Lord." Many investors actually chose these bonds over other investments because of their faith.

The trials for the other Reeves defendants are scheduled to take place in early 2011.

About the Prosecution Assistance Unit
In 2004, Indiana Secretary of State Todd Rokita created the Prosecution Assistance Unit within the Securities Division of the Secretary of State's Office. Its sole purpose is to assist police and prosecutors in investigating and prosecuting criminal violations of the Indiana Securities Act and the Indiana Loan Brokers Act. The investigators and attorneys in the unit collectively have over 72 years of experience in investigating and prosecuting criminals. Since its inception, the Unit has helped to convict 42 criminals in state and federal courts across Indiana. In addition, courts have handed down over 350 years in sentences, and have ordered over $438 million in money ordered to be returned to investors. The Unit operates under the direction and supervision of the Securities Commissioner and the Senior Investigator.


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Todd W. Darroca
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