SULLIVAN — A former Sullivan pastor and his sons now face 10 separate felony counts in violation of the Indiana Securities Act for an elaborate fraud that allegedly bilked millions from investors.
Charges against Vaughn Reeves and his sons, Chip, Chris and Josh, were filed Tuesday in Sullivan Circuit Court by Prosecutor Robert Hunley II. The case is the result of a collaborative investigation of Alanar Inc. that was supported by the Secretary of State’s Prosecution Assistance Unit and the Indiana State Police.
Each of the Reeveses could face up to eight years in prison on each class-C felony charge if convicted.
As Secretary of State Todd Rokita joined Hunley on Tuesday at the Sullivan County Courthouse to announce the filing of the charges, word came that one of the men, Chip Reeves, had been taken into custody by U.S. Marshals.
Applause erupted among some of the people in the courtroom who said they were victims of the alleged Ponzi scheme and had lost the money they invested in Alanar Inc.
Later Tuesday, Chip Reeves was taken to the Sullivan County Jail, where, according to a jail spokesperson, his bail was set at $1.5 million, no 10 percent allowed.
All four men moved out of Indiana when the company was put into receivership as, investigators say, the financial scheme fell apart.
“This case goes far beyond simple theft,” Rokita said. “The Reeveses allegedly targeted their victims through their faith, and then exploited their religious convictions in order to hide their elaborate Ponzi scheme from potential investors.”
Chip Reeves, 44, was last known to live in Milford, Ohio. His father, Vaughn Reeves, 65, was last known to live in Louisville, Ky. The most recent known address for Chris Reeves, 40, was Bardstown, Ky. Josh Reeves, 33, had lived in Bettendorf, Iowa.
Hunley said that U.S. Marshals have been looking for the men in anticipation of the charges.
According to court documents, the Reeveses allegedly committed affinity fraud by duping investors into buying bonds that raised at least $120 million. The stated purpose for the vast majority of the bonds was supposedly to finance church construction and expansion. However, the Reeveses allegedly shuffled this money among various accounts and stole approximately $6 million for themselves in the process, investigators say.
The Reeveses operated Alanar Inc. as the umbrella company for their scheme. The charges allege that the Reeveses violated securities laws by misapplying and misappropriating money from bond repayments made by churches issuing the bonds. The Reeveses also allegedly were misappropriating money from people purchasing bonds, often members of the same church that had issued a bond.
According to a news release from Rokita’s office, Alanar management created training materials to distribute to church members, who were encouraged to sell bonds to their fellow church members. The materials relied heavily on the religious convictions of the victims.
For example, the church members were trained to open the sales call with a prayer, quote Bible scripture during sales calls and to “never sell the facts, sell warm stewardship and the Lord,” the release stated.
“This is a day a long time in the making,” Hunley stated in the news release. “I’m glad to hold Vaughn Reeves and his sons accountable. People trusted their life savings to these men. Investors felt they were helping to build churches, not buy the Reeves[es] expensive homes, fancy cars, airplanes and swimming pools. The Sullivan County Prosecutor’s Office is committed to bringing these men to justice.”
The prosecutor noted that he received many inquiries from Sullivan area residents who had invested in Alanar, asking about criminal charges against the men. Due to the ongoing investigation, however, he said he was unable to give any information to the investors. It was a frustrating case, Rokita agreed, because, at one time, three federal agencies — the Securities and Exchange Commission, the Internal Revenue Service, and the Federal Bureau of Investigation — were investigating Alanar. It is the policy of his office not to duplicate an investigation of another agency, Rokita said, which would be a waste of public dollars.
“But it became clear they weren’t going to file charges,” he said, at Tuesday’s news conference, “so a year-and-a-half ago we teamed up to file local charges.”
The allegations suggest the Reeveses engaged in their scheme over the course of at least five years. By illegally moving money among bond accounts, investigators say, the Reeveses concealed the true rate of default on Alanar bonds from investors. According to the secretary of state’s news release, “Thousands of investors, mostly Hoosiers, have been financially devastated by the Reeves[es]’ alleged conduct.”
Referring to the Sullivan community, Rokita said, Tuesday, “I couldn’t believe the amount of folks that were hurt in such a small place.”
One of those investors, Bill Springer, attended Tuesday’s news conference. He said he had a “sneaking suspicion something was wrong with Alanar” when he called a church in Warren, Mich. That church had received money for a building project from Alanar but, as Springer discovered, the Michigan church already had paid off its bond issue.
Springer said he had entrusted the money of the local Oddfellows Lodge to Alanar. Determined to get it back, he sat in the company’s headquarters on Sullivan’s courthouse square until someone brought him a check for the lodge’s $45,000 investment.
Springer said he took the check directly to the bank, where it bounced. After threatening to take the bad check to the county prosecutor and the secretary of state, the bank finally cashed the check.
“I was one of the lucky ones,” he said. “I got the money back.”
Springer said when he talked to Vaughn Reeves about the investment, Reeves tried to sell him more bonds rather than issue the check.
“It was like pulling eye teeth to get the money,” Springer said.
The money has since been used to build a new youth center at the Sullivan lodge.
Rokita said the Reeveses were the kingpins behind the Ponzi scheme. Some of their former employees and associates have been cooperating in the investigation, but no charges are planned at this time against any of those people or the sales staff who made the presentations to investors, he said.
In an effort to keep the alleged victims informed of the status of the case, Rokita and Hunley each have set up Alanar information pages on the Internet.
For Rokita’s office, go to www.in.gov/sos/alanar.
For Hunley’s, go to www.sullivancountyprosecutor.com and click on the “Alanar Information” section.
Both Rokita and Hunley emphasized that the charges described are only accusations. The defendants are presumed innocent until and unless proven guilty. Rokita’s news release also offered more information “on how to avoid becoming a victim of investment fraud” at www.IndianaInvestmentWatch.com.
Lisa Trigg can be reached at (812) 231-4254 or lisa.trigg@tribstar.com.
Local & Bistate
Ex-pastor, sons face 10 felony counts in Sullivan
- Local & Bistate
-
-
Illinois Senate approves medical marijuana bill
SPRINGFIELD, Ill. — Illinois Gov. Pat Quinn must decide if he will sign a measure allowing the use of marijuana for medical purposes after the state Senate approved legislation today.
-
Vigo County Jail Log: May 17, 2013
The following individuals were booked into the Vigo County Jail by area law enforcement on Thursday, based on jail records.
-
I-70 resurfacing project will close westbound exit ramp
PUTNAM COUNTY, Ind. – The Indiana Department of Transportation announces the resurfacing project on Interstate 70 will close the westbound exit ramp at Indiana 243 beginning Wednesday May, 22 at about 6 a.m. until 9 p.m. that same day to mill and resurface the ramp.
-
UPDATE: Fire damages buildings in downtown Greencastle
GREENCASTLE, Ind. — Fire badly damaged several buildings today near the courthouse square in Greencastle, with flames shooting through the roofs as firefighters from several communities were called in to the central Indiana city to help.
-
Get outside this Memorial Day weekend
Although DNR campgrounds and cabins at state parks, state reservoirs and recreation areas are booked to capacity for Memorial Day weekend, some shelters remain available for picnics and other day-use gatherings.
-
Skateboarders, BMX bike riders working to improve area of city park they use
The sound of small wheels rolling across smooth concrete fills the air, accented by the clacking noise of a wooden skateboard coming to an instant stop on a metal edge before rolling on again.
-
Indiana State to host 2014 MVC baseball tourney
Build it… and they will come. The Missouri Valley Conference and Indiana State University made that famous line from the movie “Fields Of Dreams” reality Thursday.
-
Overlay recommended for 812 area code
The state agency that represents Hoosier utility customers is calling for a ten-digit solution to southern Indiana’s vanishing supply of 812 area code telephone numbers.
-
Elementary school saddened by student’s death
A 9-year-old Dixie Bee Elementary student died unexpectedly Wednesday evening as the result of pneumonia, said Vigo County Coroner Susan Amos on Thursday.
-
Vermillion CSX crossings undergoing maintenance
CSX maintenance crews are working on railroad crossings between Dana and Chrisman, Ill. this week and next, a CSX official said Thursday.
-
Beware of scams everywhere
Ever get a phone call in the middle of the night from a person claiming to be your grandchild, who unfortunately has been jailed in Canada and needs bail money?
-
INDOT to start work on Indiana 163 in Vermillion County
Maintenance crews will begin a pavement preservation project Monday on Indiana 163, between Indiana 63 and the Illinois state line west of Clinton.
-
Union Hospital community garden spots now available
Community gardening spots are now available at the Union Hospital Community Garden for Wabash Valley residents interested in planting and maintaining a garden but may not have the space. The garden is located west of the intersection of North Sixth Street and Seventh Avenue in Terre Haute at 1430 N. Sixth St.
-
Correctional officer remembered at memorial
Greene County native and Wabash Valley Correctional Facility Officer Timothy Betts was honored during a memorial ceremony at the National Law Enforcement Officers Memorial in Washington, D.C.
-
Money donated for Dresser sculpture
100+ Women Who Care of Vigo County on Thursday awarded a $20,200 grant to Art Spaces that will help make the Paul Dresser sculpture, “A Song for Indiana,” a reality.
-
Powerball jackpot quickly jumps to $550 million
The Powerball jackpot jumped to $550 million on Thursday — the third largest lottery in history — as dreamers in all but the seven states where the game isn’t played snatched up tickets for the minuscule chance at a life on easy street.
-
School bus carrying special-needs kids rolls over
INDIANAPOLIS — A school bus carrying special-needs students rolled over today on a highway near Indianapolis, injuring a dozen people including five children, state police said.
-
Vigo County Jail Log: May 16, 2013
The following individuals were booked into the Vigo County Jail by area law enforcement on Wednesday and Thursday, based on jail records.
-
Terre Haute to host MVC baseball championship in 2014
After 32 years, Terre Haute will once again host the Missouri Valley Conference baseball championship tournament next season.
-
About 200 channel catfish find new home in Dobbs Park pond
About 200 channel catfish transferred into a new home at the Dobbs Park pond on Wednesday, but it’s unclear how long they’ll remain there. That depends upon the people fishing.
-
GED grads turn the tassels
Michelle McClendon’s first child was born when she was 15.
She tried to stay in school, but it was just too much, so she dropped out to take care of her daughter. -
MARK BENNETT: Local summer music series idea remains a good one
One-of-a-kind ideas happen rarely.
As the biblical adage goes, there is nothing new under the sun. We humans succeed occasionally, inventing electricity, automobiles, telephones and the Internet. Invariably, though, someone else insists, “Hey, my grandpa thought of that years before Edison.” -
State to spend $2M to clean up voter rolls
Indiana’s bloated voter registration rolls, which officials say make elections more susceptible to fraud, will soon come under more scrutiny by the state.
-
Community tips lead to arrest on methamphetamine charges
Acting on community tips and other information, Indiana State Police troopers from the Putnamville District Meth Lab Enforcement Team were led to a rural Vigo County residence where they arrested the homeowner on meth-related charges and a female companion on a Clay County warrant for driving while suspended.
-
Historic National Road Yard Sale begins May 29
Bargains galore are expected along a 824-mile stretch of U.S. 40 as the annual The Historic National Road Yard Sale begins May 29 and continues through June 2
-
Woman arrested after selling relatives truck without permission
A Terre Haute woman faces a charge of auto theft after being arrested for selling a relative’s vehicle without permission.
-
Redevelopment Commission hears TIF districts in good shape
Terre Haute’s special economic development taxing districts, known as TIF districts, are in good financial shape, according to a report given Wednesday to the city’s five-member Redevelopment Commission.
-
Tribune-Star staff wins awards from IAPME
The Tribune-Star was well represented once again at the annual Indiana Associated Press Media Editors awards in Indianapolis Saturday.
-
Indiana’s 2013 Click It or Ticket effort begins Friday
As motorists take to the roads this Memorial Day holiday, the Vigo County Traffic Safety Partnership is urging everyone to buckle up as Indiana’s 2013 Click It or Ticket seat belt enforcement effort begins Friday.
-
Health changes may hurt some Indiana Native Americans
INDIANAPOLIS — For Allen Dunnagan and other members of the Miami Nation of Indians of the State of Indiana, changes under the federal health care overhaul amount to another slight.
- More Local & Bistate Headlines
-
Illinois Senate approves medical marijuana bill
NM Mom Chases Down Child Abductor
Dying Man's Blinks Lead to Murder Conviction
Raw: Obama Sits Down With Elementary Kids
Raw: Driver Ejected From Truck, Over Bridge
Terror Suspect Due in Court in Idaho Friday
Raw: Crash Sends Car Into Fla. Pool
Ousted IRS Chief: Errors Not Caused by Politics
Raw: Germany Protestors Picket Barbie House
Wash. State Releases Draft Rules for Legal Pot
Officials Arrest Man in Idaho in Terrorism Case
China, Others Want What's Under the Arctic Ice
Raw: Suicide Bomber Kills 2 Americans, 13 Others
One Million Evacuated As Cyclone Hits Bangladesh
Raw: Bear Falls From Tampa Tree
Officials: Texas Tornado Likely Had 200 Mph Wind
Music Therapy Bonds Parents and Preemies
Brothers Arrested in NOLA Parade Shooting
Raw: 6 Die in Russian Ship Fire
Raw: Pope Frees Doves From Cage
Raw: Marines Come to Obama's Aid in the Rain
Coffee Stop Leads To Arrest Of YouTube Sensation Wanted For Murder
Bearded Dragon Reunited With Owner
Marine Reunited with Warzone Companion
Beyonce Is Pregnant!
SF baseball player overpaid $500,000 RETURNS money -- and team says KEEP IT
$1 Million in Jewels Stolen at Cannes Film Fest
Dad returns from Afghanistan, surprises family during Rays' first pitch
See Jennifer Lopez's New $10m Hamptons Mansion
Woman tricked into taking abortion pill
Emma Watson Goes Pantless
IRS scandal: Republicans seek to tie Obama to agency's woes
Play of the Day: Flipping to Safety
Pregnant Kim Kardashian Squeezes Her Swollen Feet Into Stilettos
Top Videos of the Week: Angry Taco Bell Guy, Glacier Moves on House, Dog Hates Baths
Cindy Crawford Stuns At Cannes
CUTE: Monkey shares lollipop with dog, then HITS pooch on head with it
Miranda Kerr Looks Sexy in a Bikini Photo Shoot
Hatchet-wielding viral video star, once a hero, now a murder suspect
