A Tennessee-based adviser who touts a “faith-based investment” strategy is facing SEC charges that he defrauded several clients out of millions.
Commission submitted her complaint against Cookeville, Tenn., resident Donald Anthony Wright and his SEC-registered firm Retirement Specialty Group in Tennessee federal court on Monday.
Wright was the president and CEO of RSG, which he co-owned with his wife and has been registered with the SEC since 2002. The firm's assets under management totaled approximately $26.8 million. RSG advertised its approach as faith-based, and most of its clients were Christians. According to the complaint, Wright was previously a Senior Faith Pastor at World Church and often promoted his consulting business through a SiriusXM talk show and podcast.
According to the SEC, in 2021, Wright wanted to buy a Texas-based, Christian-focused media marketing company that represented several “prominent Christian pastors and evangelists.” The price was $20 million, and Wright was unwilling (or unable) to find “traditional” financing sources, according to the complaint.
Wright soon contacted at least three note issuers who offered to help him secure financing to buy the media company; an issuer said it would lend Wright about $500,000, but only if Wright sold $1 million of the issuer's promissory notes to investors, which would serve as collateral for the loan. Other issuers said they would provide financing to Wright only if he provided some capital, according to the SEC.
At points, Wright sold counterfeit promissory notes not authorized by the issuer; of the $2.42 million in promissory notes Wright sold, about $950,000 consisted of three counterfeit notes he sold to two advisory clients and another investor, according to the SEC. But Wright continued to make false statements to his clients, including that the notes were “safer and more stable” than the stock market.
“In many instances, Wright knew these statements were false,” the complaint said. “For example, Wright knew that he would send a substantial amount of investment income to overseas bank accounts in exchange for promises that Wright would quickly receive hundreds of millions of dollars in financing to buy the trust-based media marketing company. “
Wright never disclosed the risk of the notes, and so far, the notes that have become outstanding are in default, according to the SEC, which claimed that none of the investors have received back any of their principal or interest.
Wright offered various defenses as to why this was so, including that the money was “bound in England” and that governments had to ensure “the money was clean and no terrorists were involved”. He also argued that the failure to pay was due to the SEC's investigation, according to the complaint.
Additionally, last September, Wright told at least one client that RSG would receive an $8.1 million wire transfer, which Wright would use to repay the client. He attached a bank transfer confirmation to the message.
“In reality, the bank transfer confirmation was false, having been altered by Wright,” the complaint said. “RSG never received $8.1 million.”
An attorney for Wright did not respond to a request for comment before publication.
According to an SEC press release, Wright agreed to a permanent officer and director bar and to be prohibited from participating in the purchase or sale of securities in certain cases. However, there was no additional settlement order immediately indicating this, and the SEC did not respond to requests for clarification. In addition to the bars, Wright agreed to pay disgorgement, prejudgment interest and civil penalties, which will be determined at a later date. according to the announcement of the SEC.
In June, The SEC issued an investor alert urging customers to be wary of “affinity scams”, in which scammers are (or claim to be) members of the group they are targeting. In particular, the commission warned that scammers may target a religious group, including “a particular faith or church”.