Phoney Pastors Caught Running $28m Church-Based Ponzi Scheme

• Churchgoers targeted by scammers posing as pastors
• A total of $28m fraudulently taken from largely immigrant community
• Promises of ‘financial freedom through God’ undone by the fact the project was a massive Ponzi scheme

Deception, distraction, and abuse of trust are standard tools of fraudsters. However, the plan concocted by Dennis Jali to defraud members of his church’s congregation took scamming to an unprecedented low level. Mingling with churchgoers in Maryland and Washington D.C. led Jali and his team to swindle $28m from the congregation.

Unholy Ponzi Scheme

Most of the victims of the scam have lost all of the money they invested in Jali’s 1^st Million Dollars fund, which ended up being little more than a classic Ponzi scheme. Returns of up to 30% a month were ‘guaranteed’ to those who tied funds up in pool investment plans, but unfortunately for most, such returns never materialised.

Early-day investors and associates of the fraudsters were paid out during the initial phases of the scam program. Those returns were used to lure more investors into the scheme, and the influx of new cash was used to create the illusion that the project was viable.

Working with his associate, John Frimpong, Jali claimed to have previously made 1,700% returns by trading forex and crypto markets. He promised the congregations of East Coast churches that his new scheme, ironically entitled “secure contracts”, would do something similar.

Targeting immigrants to the U.S., Jali offered a version of the American dream that appeared all too believable for many. His boasts about his financial success fine-tuned his delivery even down to the brand of car that successful Americans favour. In an interview given just before his scheme collapsed, Jali said:

“I own 28 cars that I bought, all cash. And I’m not talking cheap cars. I’ve never owned a Toyota in my life.”

Source: MarketWatch

The unbelievable lifestyle that Jali and Frimpong promised didn’t materialise for the victims of the scam, but the two men did manage to ‘live the dream’. At least for a while. In addition to the fancy cars, the men spent investor cash on luxury homes and private jet travel.

Victims of the fraud have lost their shirts, but U.S. authorities have now charged both ringleaders. Frimpong has pleaded guilty to wire and securities fraud, and Jali’s efforts to escape to South Africa have been undone. The authorities in that country detained him and are preparing for his extradition to the U.S.

Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you would like to know more about this particular topic or have been scammed by a fraudulent broker, you can also contact us at [email protected]

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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