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In Brief

"In Brief" Continued...

Issue: "John Smoltz: The closer," Aug. 3, 2002

Diligence due: SEC settles fraud complaint

The federal Securities and Exchange Commission and a fund-raising arm of the 2,200-congregation Church of God (Anderson, Ind.) are in court. The SEC accused Church Extension (CE) of defrauding investors of more than $80 million between 1996 and 2002 by misstating income and the risk and type of investments. In court filings, the SEC said it had negotiated a preliminary settlement that requires CE to establish an oversight committee and return investor money. CE agreed to the settlement, subject to court approval, without admitting or denying the allegations. The complaint seeks repayment of $81 million plus interest from CE, along with seizure of assets from two principals in the fundraising operation. A CE spokesman said it might take years to repay noteholders, but "we're doing the best we can to meet their needs." A CE settlement with state authorities last year netted $350,000 in reimbursements to noteholders. - Edward E. Plowman


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