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Saturday, June 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

‘Financial Guru’ Accused of Being Ponzi Man

RALEIGH, N.C. (CN) - Ephren Taylor, a self-proclaimed "minister, financial guru ... and philanthropic rock star," led Ponzi scams that sucked millions of dollars from working-class, "socially conscious" people, primarily minorities, who did not know they were throwing their money away on nonexistent or failing businesses and illegal gambling operations, the alleged victims say in a federal class action.

The class claims Taylor and his co-conspirators are still running Ponzi schemes under new corporate identities.

A Google search of "Ephren Taylor" this morning (Wednesday) turned up more than 64,000 hits, many of the top ones linking to his work as an "entrepreneur."

Lead plaintiff William Lee, of Raleigh, sued Ephren Taylor, Wendy Connor, Dwayne Connor, Information Enterprises Unlimited, City Capital Corporation, four other alleged corporate shells and three other people.

Lee and two other named co-plaintiffs say they represent thousands of people swindled by Taylor.

Lee claims Taylor and his co-conspirators "intentionally targeted and induced hundreds of thousands of innocent, working class, church-going, 'socially conscious,' mostly minority and African-Americans to transfer and invest their hard-earned money in defendants' companies with a false sense of security that their money was insured, protected and invested by persons in legitimate, no risk, multi-million dollar, profitable, 'leading' public and private companies with 'the highest ethics,' and an overriding sense of social responsibility."

Lee says many investors lost their life savings and their 401(k) and IRA retirement accounts. He says the defendants were not licensed or registered to sell securities or provide investment advice.

The class claims Taylor and his associates used various shell corporations, including City Capital, to run several investment scams. The defendants persuaded their victims to invest in apparently legitimate ventures such as real estate, financial services, oil and gas, and sweepstakes machines, according to the 109-page complaint.

Lee says he invested $160,000 in City Laundry, one of Taylor's shell companies, after being told he could recoup the money he had lost in the stock market crashes of 2006-2008 by betting on the defendants' high-return investments.

Lee says the defendants failed to disclose that City Laundry leased most of its equipment - until they asked him to sign a personal guaranty on the lease.

Lee claims the defendants denied him access to the company's books, refused to return his money when City Laundry was sold at a loss, and made him sign a confidentiality agreement to discuss settlement of the City Laundry debt.

He says that after City Laundry's creditor obtained a $133,000 judgment against him, as personal guarantor, the defendants still refused to settle the debt or return his investment.

According to the complaint, Taylor lured investors by touting himself as a "self-made millionaire at 16" and as a "'minister,' financial guru, investment wizard, multi-million dollar business manager and philanthropic rock star."

Taylor, the son of a Missouri minister, claimed that a company he launched with a high school partner in 1998 made him a teenage millionaire, according to the complaint.

Lee says Taylor repeatedly hawked his "success story" to the media and used his perceived affiliation with his father's church to attract church-going investors.


"Taylor targeted minority and African-American persons of faith because he knew that there was an unwritten (and sometimes written) tenet imposed upon church members, particularly in African-American and Christian churches, which can best be described as 'what happens in church stays in church,'" the complaint states. "The tenets of many Christian religions require disputes among church members to be handled by the church through its elders, deacons and minister (assuming the minister is not involved)." (Parentheses in complaint.)

Lee claims that "Taylor persuaded many church goers to invest in his schemes using his rags-to-riches story, the promise of 'no risk' investment returns that were unheard of with any other investment vehicle, and especially his promise to benefit the investors/victims' church and community with the proceeds of the investments."

Taylor gained credibility by founding companies under the guise of nonprofit ministries and claiming they were affiliated with his father's church, according to the complaint. Though Taylor was not an ordained minister, nor the leader of any church, he told investors that "God had helped him find the perfect investment opportunity for the church and its members," the complaint states.

Lee says Taylor devised media campaigns and speaking tours to promote his shell companies and investment scams.

He says that in a February 2006 press release, Taylor falsely claimed that one of his companies was "chosen by Snoop Dogg to create and raise a one million dollar endowment fund for Snoop's Youth Football League."

According to a March 2009 forbes.com article, Taylor delivered as many as 70 speeches a year at a cost of $8,000 each, the complaint states.

Lee says Taylor's investment scams included a creditor-investor program that offered investments in affordable real estate with no money down and guaranteed the investors' mortgage payments up to 2 years; a "socially conscious" investment scam that encouraged people to invest in real estate and businesses in working-class communities, to create new jobs and affordable homes in those communities while doubling their return on investment within 12 months "risk free"; and a "sweeps machine" scheme that advertised sweepstakes machines to be put in retail establishments around the country, and promised high returns from legal gambling.

In most cases, Taylor's clients invested in nonexistent assets, according to the complaint.

"It is estimated that less than 30 percent of the investment proceeds were ever invested in real estate, sweeps machines or anything else," the complaint states. "The remaining proceeds were misappropriated and diverted by the City Capital conspirators to pay themselves, pay earlier investors or solicit new investors to perpetuate the defendants' fraudulent schemes."

Lee says Virginia and North Carolina shut down Capital City's sweeps machine operations last fall, under charges of illegal gambling. After numerous complaints from investors, the North Carolina Attorney General in March this year announced an investigation of the defendants' sweepstakes operations.

Though Taylor promised to return the investors' money, he never did, Lee claims.

He says that while City Capital lost more than $2 million in 2008 and more than $6 million in 2009 and operated on a huge deficit, Taylor received more than $1 million in compensation in each of those years.

In February this year, Taylor was named one of the 5 richest African-American CEOs, according to the complaint.

"The Ponzi schemes orchestrated by the City Capital conspirators were particularly well planned because the 'investments' of the plaintiffs and other class members were set up to automatically renew or 'rollover' each year such that the investors could not liquidate their investments automatically at the end of the investment period and, in fact, were not even notified at the end of any investment period that they could withdraw their investment funds or 'choose' to reinvest," the complaint states.

Lee says the defendants fed the illusion of successful investments by sending investment account statements showing high returns, which in reality were nonexistent.

Taylor and his cohorts urged investors to act quickly, claiming the opportunity to buy real estate or invest in other businesses was limited, the complaint states.

"There is no evidence that Taylor ever generated any kind of 'profit' for any of his 'clients,'" according to the complaint. "In fact, Taylor never had a license as a securities broker or dealer or any investment training and therefore was illegally providing investment advice."

Lee says the defendants' schemes eventually crumbled, but Taylor continues to solicit investments through public speaking tours, visits to communities and churches and sales of sweepstakes machines over the Internet.

The plaintiffs seeks class certification and damages for fraud, money laundering, RICO violations, conversion, conspiracy, negligent misrepresentation, breach of fiduciary duty, unfair trade practices, negligence and violations of the North Carolina Securities Act.

They are represented by David Schiller.

Here are the defendants: Ephren W. Taylor Jr., Wendy Connor, Dwayne Connor, Information Enterprises Unlimited Inc., Sweepsvend LLC, Waldo Emerson Brantley, Don Ricardo McCarthy, Web3Direct Inc., City Capital Corp., Jeffrey Smuda, ERX Energy LLC, and Equity Trust Co.

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