Two Men Convicted in Ponzi Scheme Involving Local Pastors

NEWPORT NEWS, VA—Samuel B. Jacobs, 59, of Hampton, Virginia; and Christopher C. Rice, 29, of Suffolk, Virginia, were convicted today by a federal jury following an eight-day trial. Jacobs was convicted of numerous counts of mail fraud, money laundering, engaging in transactions using proceeds from the mail fraud, and forgery. Rice was convicted of seven counts of engaging in transactions using proceeds from the mail fraud, as well as one count of forgery.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; John Boles, Special Agent in Charge of the FBI’s Norfolk Division; and Eric Hilton, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigations, made the announcement after the verdict was accepted by United States District Judge Mark S. Davis. Jacobs faces a maximum penalty of 20 years on each mail fraud count, 10 years on engaging transactions using proceeds from the mail fraud, 20 years for each money laundering count, and 10 years on each forgery count. Rice faces a maximum penalty of 10 years on each count of engaging in transactions using proceeds from the mail fraud and 10 years on the forgery count. Both will be sentenced on September 6, 2012.

“Mr. Jacobs and Mr. Rice ripped off hundreds of thousands from local church members who trusted them. They lied and manipulated investors so they could pay off debts and live large on others’ hard-earned savings.” said U.S. Attorney MacBride.

Jacobs and Rice were originally indicted in December 2010 with additional charges added in January 2012. Both were indicted for their roles in a mail fraud scheme, unlawfully using proceeds derived from the mail fraud scheme, as well as uttering forged securities. Jacobs was also indicted for money laundering.

According to court records and evidence at trial, beginning in 2005, Jacobs, who was the owner, and Rice, who was an employee, began Alliance Financial Services Corporation, a television station broadcasting primarily religious programming. They solicited investors to deposit or invest money with Alliance that would be used for various loan and/or investment purposes. The investors were mostly local pastors and their congregations, with whom Jacobs had relationships through the broadcasting stations. Over three years, Alliance took in over $750,000. These funds were never invested, but, unbeknownst to the investors, were used for the benefit of the broadcasting station, to repay prior investors, and for personal use, including the payment of old debts, other business expenses, and to purchase a 36-foot long boat. Defendants repaid initial investors with new investor money to keep the scheme afloat for nearly three years. Jacobs was taken into custody following the verdict; Rice remains free on bond.

This case was initiated by victim complaints to the State Corporation Commission (SCC) and investigated by the FBI and Internal Revenue Service-Criminal Investigations. Assistant United States Attorney Brian J. Samuels and Department of Justice Attorney Justin Goodyear are prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.