Former Associate Pastor Pleads Guilty in Scheme to Defraud Investors
FORT SMITH, AR—Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that Thomas Edward James, age 34, of Phoenix, Arizona, formerly of Fort Smith, pleaded guilty today to one count of Mail Fraud and one count of Making a False Tax Return . The Honorable Chief Judge P.K. Holmes, III, accepted the plea in the United States District Court in Fort Smith.
According to court records, the defendant, Thomas Edward James, was a part-time associate pastor at St. James Missionary Baptist Church in Fort Smith, Arkansas. He was previously employed as a broker for Merrill Lynch, but was terminated for lack of production. His broker license went inactive on September 3, 2010. James was not registered with the Arkansas Securities Department as a broker, dealer, agent, or in any other capacity since he was terminated from Merrill Lynch. After his termination from Merrill Lynch, James continued to sell securities to investors and misappropriated the investors’ funds. As part of his scheme, James approached potential investors, a majority of whom were retired and members of St. James Missionary Baptist Church, with proposals to make investments through him. James then fraudulently induced investors to invest funds through false representations that their funds would be invested in a U.S. Treasury Bond, which were insured and guaranteed by the full faith and credit of the United States Government. James however did not invest the funds in a U.S. Treasury Bond, but instead converted the funds to his personal use. It was further part of the scheme that James sent statements to investors via U.S. Mail providing investors with false assurances that their funds had been invested in U.S. Treasury Bonds. As a result of the scheme to defraud, James defrauded investors of approximately $200,000. During a deposition, James admitted that the funds were never invested in a U.S. Treasury Bond, but were placed in his personal account. Additionally, James admitted that he filed false tax returns from 2008-2012, and that he owed the United States additional taxes in the amount of $205,566.46.
This case was investigated by The Internal Revenue Service (IRS), the Federal Bureau of Investigation (FBI) and Financial Crimes Task Force officers from the Fort Smith and Fayetteville Police Departments. Assistant United States Attorney Mark Webb prosecuted the case for the United States.