Indiana Ex-Pastor, Sons Allegedly Stole Millions from Church Members to Buy Planes, Sports Cars

A former pastor and his sons were charged with securities fraud in Indiana on Tuesday in what officials said was a multimillion-dollar scheme aimed at church members who thought they were helping build churches but were actually buying the men planes and sports cars.

The secretary of state's office said arrest warrants issued for Vaughn Reeves, 65, and three of his sons charged each with 10 felony counts. Each man could face two to eight years in prison on each count if convicted. Bond for each was set at $1.5 million cash.

None of the men was in custody as of Tuesday afternoon. The charges were filed in western Indiana's Sullivan County, where Reeves formerly lived, but the men also have last known addresses in Ohio, Iowa and Kentucky. U.S. marshals were tracing their whereabouts, said Jim Gavin, a spokesman for Secretary of State Todd Rokita.

The men are accused of duping about 11,000 church members into buying bonds worth $120 million by urging them to fulfill their "Christian responsibility" to support church construction projects, according to a probable cause affidavit. The men said the bonds would be handled by their brokerage firm, Alanar Inc.

Prosecutors said the men pocketed about $6 million, bought two airplanes, sports cars and vacations. Reeves also bought Porsches for family members, Gavin said. Most of the men's victims lived in Indiana.

Gavin said he didn't know whether Reeves and his sons — Chip, 44; Chris, 40; and Josh, 32 — had defense attorneys, and telephone numbers for the men's previous addresses in all four states were unlisted or disconnected. The men represented themselves in a related federal civil case filed in Indianapolis, according to court documents.

"This case goes far beyond simple theft," Rokita said in a statement. "The Reeveses allegedly targeted their victims through their faith, and then exploited their religious convictions in order to hide their elaborate Ponzi scheme from potential investors."

Investigators believe that the men assembled teams of church members to sell bonds to other church members. They were given training materials that instructed them to open sales calls with a prayer and to quote scripture. As the scheme progressed over about five years, the Reeveses shuffled incoming money between various accounts to hide defaults by churches and their own thefts so they could make scheduled interest payments to investors.

"People trusted their life savings to these men," Sullivan County Prosecutor Robert Hunley II said in a statement. "Investors felt they were helping to build churches, not buy the Reeveses expensive homes, fancy cars, airplanes and swimming pools."

In a separate civil case brought by the Securities and Exchange Commission, a federal judge in 2005 froze Alanar Inc.'s assets and appointed Indianapolis attorney Bradley Skolnik receiver.

Skolnik said Tuesday he recently began the process of making initial returns to investors in accordance with a plan approved in U.S. District Court in Indianapolis.

Skolnik has said that more than 11,000 people invested in bond offerings prepared by Alanar. It wasn't clear how many investors' money may have been diverted.

He said a "significant number" of the churches were in default on their bond issues.