- Post 19 February 2013
- By Atlanta Daily World
- Hits: 572
Bishop Eddie Long, pastor of the New Birth Missionary Church in Lithonia has been hit with a lawsuit by former parishioners who say he encouraged them to invest in a company that was operating a Ponzi scheme.
A dozen former members of New Birth Missionary filed suit in DeKalb County court in late January. The suit says that Long's assistant had been warned that businessman Ephren W. Taylor was running a $3 million capital deficit, the AJC reported.
After Long introduced the businessman as his friend, the plantiffs say they lost more than $1 million investing with the self-described "social capitalist."
"If Bishop Eddie Long hadn't endorsed this they wouldn't have invested," Jason Doss, attorney for the former members, told the AJC.
Long's church has urged Taylor to repay investors with interest.
"We remain hopeful that Ephren Taylor and companies related to him restore the funds that were taken from congregants at New Birth and churches around the county," New Birth said in a statement. "We continue to cooperate as the case proceeds."
The Securities and Exchange Commission charged Taylor in 2012 with running a Ponzi scheme, and a civil case against him is pending. SEC officials said he promised to use investments for charity and to help economically challenged areas but instead diverted the funds he received after speaking to churches, including New Birth, to pay other investors and finance business and personal expenses.
According to investment dictionary website Investopedia, a Ponzi scheme is defined as fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.
The Ponzi scam is named after Charles Ponzi, a clerk in Boston who first orchestrated such a scheme in 1919.
"He preyed upon investors' faith and their desire to help others, convincing them that they could earn healthy returns while also helping their communities," David Woodcock, director of the SEC's Fort Worth Regional Office in Texas, told the Huffington Post.
Long previously faced another suit from young men who accused him of using gifts and money to coerce them into sexual relationships. He settled those cases in May 2012.