An Atlanta man who ran a $16 million Ponzi scheme that targeted churchgoers through promises of annual returns of up to 300% was sentenced to serve nearly 20 years in federal prison. Ephren Taylor, who once described himself as the "youngest African-American CEO of any publicly traded company ever," received the sentence after previously pleading guilty to conspiracy to commit mail and wire fraud. In addition to the sentence, Taylor was also ordered to pay $15.5 million in restitution and serve three years of supervised release following completion of his sentence.
According to authorities, Taylor was the chief operating office of City Capital Corporation ("City Capital"). Touting himself as "the Social Capitalist" and that he was the youngest black CEO of a public company, Taylor sought to portray himself as a wildly successful entrepreneur in internet and radio advertisements. At "wealth management seminars" he conducted at various churches, including mega churches run by well-known pastors Eddie Long and Joel Osteen, Taylor pitched church congregants on two investments through City Capital that promised enormous returns. The first investment was the purchase of promissory notes that purportedly funded small businesses and offered annual returns ranging from 12% to 20%, while the second investment involved the purchase of interests in "sweepstakes machines" that could generate annual returns of up to 300%. As many of the potential investors were elderly and saving for retirement, Taylor offered the ability to roll over retirement portfolio into self-directed IRA custodial accounts that could then be used to invest with City Capital. In total, Taylor and City Capital raised approximately $16 million from investors.
However, the majority of funds raised from investors were not used as promised. Rather, Taylor used investor funds to support his extravagant lifestyle and self-promotion, including expenses for Taylor's book promotion, consultants for Taylor's speaking engagements and public relations, his wife's music recording career, and rent for Taylor's New York apartment. Additionally, the funds that were used as promised did not generate the returns promised by Taylor. Rather, the ability to pay returns to existing investors was possible only through the continuous flow of new investor funds - the hallmark of a Ponzi scheme.
Taylor was previously charged by the Securities and Exchange Commission with violating federal securities laws in April 2012. Taylor did not contest the charges, and a judgment of nearly $15 million was later entered against him. The scheme also spawned at least one lawsuit against a church pastor that had endorsed Taylor, leading to a recent undisclosed settlement.
Taylor previously made an appearance on CNBC back in 2007: