BOISE (CNS) – A former Citizen of the Month in an Idaho city bilked people of $2.3 million in a Ponzi scheme, the state says. Gerald Silence used religious hokum to lure some victims, claiming that he “screened” clients by “the ‘guidance of the Holy Spirit'” and that “had never had a loan default,” the state says. Actually, Silence and his wife failed to repay loans of $366,500 in the 1990s and shed them through bankruptcy, before Gerald ran his scam through his companies, Wise Enterprises and Wise Lending, the state claims.
The Idaho Department of Finance, Securities Bureau, describes Gerald, a former car salesman, Realtor, and residential mortgage loan originator, as “friendly, likeable, charismatic, and a convincing talker.”
Nonetheless, he and has wife have a history of financial problems, the state says, including the $366,500 he borrowed from “friends, acquaintances, and members of a church he attended at the time. He failed to repay such loans, and in 2000 filed a second bankruptcy, this time a Chapter 7, which ultimately resulted in the discharge of such loans.”
In 2005, in violation of Idaho securities law, Gerald began selling securities, investment contracts, and promissory notes, and took in at least $2,276,637 from it, the state says in its complaint in Ada County Court.
The money came from unsophisticated investors, including friends and family, some of whom took second mortgages out on their homes or emptied out their savings accounts, according to the complaint.
Gerald claimed he would use the money to loan to people and start-up companies, and that it would pay 12 to 15 percent returns a year.
He attracted suckers through “seminars” and religious pitches, according to the 47-page complaint.
“To aid in his investment scheme, Silence established at least twenty (20) Idaho limited liability companies, at least two (2) of which he used directly to further his investment scheme, Wise Enterprises LLC and Wise Lending LLC,” the complaint states.
But Silence simply spent the money “as he saw fit,” the state says. “Silence used some of the $2,276,636.79 in investor money to extend a few loans to friends, relatives, and business colleagues, but used most of the money to pay his personal expenses, pay other investors, and transfer funds to Shauna Silence for her personal use.”
He paid off some investors with new money, and used the “investor funds to create a façade of success and prosperity [that] attracted additional investors,” the state says.
Silence, a onetime student at a biblical training institute, took money by the hundreds of thousands of dollars from 16 or more investors, the state says. He told them “that God directed Silence’s personal and professional path,” and “that he relied on the ‘guidance of the Holy Spirit’ to assess whether a borrower is a good risk for his investment program, and so far he has never been misled by that screening method,” the state says.
It wants the Silences’ assets frozen, disgorgement of ill-gotten gains, an injunction and costs.