March 30 (UPI) -- Federal authorities have charged a prominent Houston pastor -- who served as a spiritual adviser to former President George W. Bush -- with selling more than $1 million in worthless bonds to vulnerable investors.
Pastor Kirbyjon Caldwell and Louisiana financial planner Gregory Alan Smith were charged in the indictment, officials said. Both face 13 counts of conspiracy, wire fraud and money laundering.
The U.S. Department of Justice said Caldwell used his influence as pastor and Smith used his status as a prominent investor to lure people into investing more than $1 million in worthless historical Chinese bonds issued decades ago.
Prosecutors say the bonds, issued by the former Republic of China prior to losing power to the communist government in 1949, are not recognized by China's current government and have no investment value.
"Smith and Caldwell promised high rates of return, sometimes three to 15 times the value of the investments," the department said. "Instead of investing the funds, the defendants used them to pay personal loans, credit card balances, mortgages, vehicle purchases and other personal expenses."
During a news conference Friday, Caldwell attorney Dan Cogdell said the accusations are "simply false."
"Reverend Caldwell has been a spiritual force in this city, in this state, in this country for 30 years ... these charges are false," Cogdell said. "If any person deserves the presumption in innocence it's that man right there."
Caldwell said at the news conference the bonds are legitimate, and that dissatisfied investors who asked for their money back were repaid.
Caldwell and Smith each face 20 years in prison for the wire fraud counts, 10 years in prison for the money laundering counts, a $1 million fine, restitution, forfeiture and five years of supervised release.
Both are also being sued by the U.S. Securities and Exchange Commission on allegations they violated financial laws.
Smith told one investor who put up $800,000 the bonds were backed by gold or silver, the SEC said.