Two Attorneys, Including One Who Is A Church Bishop, Accused In $52 Million Ponzi Scheme With Alleged Pipeline From Missouri To England
BULLETIN: UPDATED 3:20 P.M. EDT (U.S.A.) Three men have been indicted in Missouri in an alleged Ponzi conspiracy prosecutors said created an illicit pipeline that sucked millions of dollars from investors and put it in the hands of fraudsters in the United States and Britain.
Some of the investors were lured into the scheme because one of its perpetrators was a symbol of faith and a fixture in social circles. Still other investors lacked expertise on financial matters and were vulnerable in other ways, prosecutors said.
Charged were Martin T. Sigillito, 62, of Webster Groves, Mo.; James Scott Brown, 66, of Leawood, Kan.; and Derek J. Smith, 67, of Oxfordshire.
Sigillito is an attorney, ordained priest and bishop in the church of the American Anglican Convocation, prosecutors said. Brown also is an attorney.
Smith is a real-estate speculator and hotelier in Britain. He ultimately became the sole borrowing client of an enterprise known as the “British Lending Program” (BLP) after acquiring distressed hotel properties which were not profitable due to a recession in the English real estate market.
“By the end of the 1990s, Smith was in need of capital to maintain his ownership of several small hotels which were not trading profitably and to support his retention of several options to purchase land,” prosecutors said.
“The federal indictment alleges that conspirators stole more than $52 million through a Ponzi scheme that lasted nearly a decade,” said U.S. Attorney Beth Phillips of the Western District of Missouri.
From 2000 to 2010, investors in the United States loaned a total of $52.5 million to Smith for what they believed was operating capital, prosecutors said.
In reality, prosecutors said, “most of their money was kept by Sigillito and Brown” or used to pay interest and principal to other lenders.
Sigillito gained nearly $8 million from the fraud scheme and used it to support an affluent lifestyle, prosecutors said.
The Ponzi caper, which the FBI described as “the largest in the history of the Eastern District of Missouri” because of the dollar volume of stolen money, traded in part on Sigillito’s social skills and the world-renowned name of Oxford University, prosecutors said.
Sigillito “claimed he was a lecturer at Oxford University in England, based upon his participation in an annual summer program of continuing legal education at Oxford through the University of Missouri – Kansas City,” prosecutors said.
And Sigillito interacted with well-to-do Missouri residents as part of the scam, becoming a member of “exclusive, private clubs in St. Louis,” including The Racquet Club and the Boone Valley Golf Club, prosecutors said.
Over time, the attorney/bishop acquired “rare and antique books, maps, prints, coins, jewelry, artifacts, liquor and rugs,” prosecutors said.
“He routinely traveled first class, including internationally, took his family on expensive vacations, purchased a country home in Marthasville, Mo., employed a chauffeur, sent his children to private schools, purchased and leased Volvo automobiles and invested in a condominium project at the Lake of the Ozarks in Missouri,” prosecutors said.
Luxury was a change for Sigillito, who was divorced and had declared bankruptcy prior to being introduced to the BLP scheme by Brown in 2000, prosecutors said.
Like Sigillito, Brown did not have an active law practice and turned to BLP to make a nice living, prosecutors said.
For his part, “Smith received the benefit of a total of approximately $6.1 million during the time in which approximately $52.5 million in loan funds were received in the BLP,” prosecutors said. “In contrast, during the same period, Sigillito took ‘fees’ totaling approximately $7.8 million, Brown took ‘fees’ totaling approximately $1.4 million and approximately $27 million was used to pay interest and principal to lenders. All BLP funds were dissipated and as of June 2010, the BLP had no funds.”