130. The Wunderkind (Ephren Taylor II)

1h 10m
A self-proclaimed “socially conscious” entrepreneur uses church seminars and motivational speeches to lure investors into a nationwide Ponzi scheme.

Prelude: "King" Perry Santillo and Chris Parris perpetuate a financial fraud to which they had fallen victim.

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Transcript

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This episode of Swindled may contain graphic descriptions or audio recordings of disturbing events which may not be suitable for all audiences.

Listener discretion is advised.

Tonight, we're learning more about the alleged $102 million Ponzi scheme that authorities say left hundreds of people broke, including some here in western New York.

Oftentimes,

people enter into these

investments sees an opportunity to make money, And they're operated

as best they can for a period of time, but feeling the mounting pressure, they begin to take shortcuts, engage in problems and behavior.

And the things,

as this case did, spiraled

out of control, snowballed, I should say, into a massive, massive fraud.

On June 20th, 2018, federal agents gathered at an office building on West Main Street in Rochester, New York with a search warrant in hand.

Inside was the headquarters of Lucian Development, an investment firm the Securities and Exchange Commission accused of running a massive, massive fraud.

Investigators say the company stole more than $102 million from 637 investors over a seven-year period, and that's only what they had uncovered so far.

Lucian Development was co-owned by two men in their late 30s.

Christopher Paris and Perry, I'm sorry, Kink Perry Santillo, a man so enamored with his own wardrobe that he made sure it received a shout out in the custom song he commissioned for his $150,000 birthday bash at the Bellagio in Vegas.

On paper, Paris and Santillo's operation sounded legitimate.

The public-facing business was called First National Solutions, which claimed to manage diverse assets and holdings that would, quote, create positive change and self-sufficiency for individuals and communities.

But in reality, there were no assets, no holdings, and no positive change, at least for the people and communities they claimed to serve.

What started out as a quaint little investment firm exploded in size when First National began buying out the businesses of trusted, established investment advisors who were looking to retire or leave the industry.

Over time, they acquired 15 different different firms across at least 11 states.

This bought the company instant credibility and access to thousands of clients who already trusted their advisors.

The clients of the business's First National purchased were notified about their new investment options and were encouraged to move their money out of traditional investments and into issuers secretly controlled entirely by the parent company, Lucian Development.

These investments promised higher returns and lower risk, designed to achieve performance in spite of uncertain economic conditions by targeting, quote, unique opportunities in real estate.

The products mainly consisted of unsecured promissory notes and preferred stock with three-year maturities, interest rates ranging from 3 to 6%, and bonus payouts of 10 to 19%.

First National even offered what appeared to be a diversified portfolio.

businesses like Precipients Global, a house-flipping operation, and United RO Capital Services, which supposedly offered financing to doctors who wanted to build their own toxicology labs.

But none of these businesses actually operated as described.

They were all controlled from Lucian Development's office in Rochester, hidden behind fake addresses, fake employees, and shell corporations.

Investor money didn't go into any real projects.

Instead, it moved through hundreds of bank accounts in a classic Ponzi shuffle.

New deposits were used to pay earlier investors, cover operating costs, or fund the lavish lifestyles of Chris Paris, Perry Santillo, and their associates.

Account statements were fabricated, showing false returns, fictitious bonuses, and phantom interest payments.

But eventually, those payments and statements suddenly stopped.

There came a point where they stopped getting paid,

and that resulted in investors contacting various different agencies.

And after a while, when you have enough of these complaints,

you start to realize that

something is going on.

It's not just one disgruntled individual who's unhappy with an investment they've made and lost on, but there might be more to it.

So the Ponzi scheme eventually basically collapsed under its own weight.

Investors like Joe and Gail Malachewski from Pennsylvania lost their entire $314,000 nest egg.

It was very heartbreaking because not only was it the money for our future elderly care, but I wanted to leave something to our children, Joe told the Associated Press.

It's heartbreaking that somebody you trusted could do that to you.

All your life's work gone down the drain for somebody else's enjoyment.

Put their life savings in the trust of Mr.

Paris, assuming that these were safe investments.

They were looking towards retirement, and now they're in their mid-60s and they don't have the money to support themselves.

They don't have not going to have the lifestyle that they planned on in their retirement.

Their dreams have been destroyed.

The Malacheskis were one of many whose dreams had been destroyed.

Upon further investigation, federal authorities determined that the Lucian development scheme had been operating for over a decade, generating at least $115.5 million from approximately 1,000 investors nationwide, including an 80-year-old Texas man with dementia who was persuaded to invest $300,000 into the phony companies.

Approximately $45 million was repaid as part of the scam.

The other $70 million was gone.

At least $20 million had been funneled directly into the personal bank accounts of the ringleaders, with King Perry being the biggest beneficiary.

The FBI called it the largest Ponzi scheme ever prosecuted in Western New York.

Tonight, two men going to prison for what prosecutors call one of the biggest Ponzi schemes ever discovered in Western New York.

Giant fraud scheme.

Prosecutors say Perry Santillo stole more than $100 million from investors all over the country.

The scheme lasted over a decade and affected at least a thousand people.

Doesn't matter what you call it, it's a theft.

It's a theft motivated by nothing more than greed.

Perry Santillo was charged with mail fraud, conspiracy, and money laundering on October 9th, 2019.

He pleaded guilty the same day.

In January 2022, Santillo was sentenced to 17 and a half years in prison and ordered to pay $102 million in restitution.

I lay awake at night ashamed, knowing that today could be the day, the day a client can't go see their grandchildren, afford medication, or, God forbid, a funeral or vacation as they wish, he wrote.

I made terrible choices.

Frauds of this magnitude are incredibly impactful and dangerous to the community.

They have long-lasting effects.

On the one hand, we're holding Mr.

Santello accountable or bringing some semblance of relief to the hundreds of victims nationally.

But on the other hand, and just as importantly, we're putting scammers and fraudsters everywhere on notice.

If you try to enrich yourself through greed or fraud, we'll catch you or hold you accountable.

Now it was time for the other co-owner of Lucian Development, Christopher Paris, to be held accountable for his role in the fraud.

His punishment would be more severe, however, because while out on bail, federal authorities say Paris concocted another scheme.

Prosecutors say Paris fraudulently promised to provide more than $100 million in 95 masks that

he did not have to various medical supply companies.

That's in addition to the multi-million dollar Ponzi scheme.

In the early days of the COVID-19 pandemic, Chris Paris created a new company called Encore Health Group and started offering scarce PPE supplies to various medical companies and governmental entities, including the Department of Veterans Affairs.

Paris had no inventory of what he was selling, no proven source of supply, and no track record of procuring and delivering such items.

Yet, he obtained upfront payments totaling approximately $7.4 million from at least eight desperate clients who had ordered $25 million in 95 masks.

Paris's ruse was eventually discovered after a company in Baton Rouge alerted the government that he was gouging them for 15 times what the masks normally cost.

I think you are the biggest con man I have ever had to deal with in this court, U.S.

District Judge Frank Gracchi Jr.

told Chris Paris after sentencing him to 20 years in prison for both the COVID fraud and the Ponzi scheme to which he had pleaded guilty.

What's funny about the judge's statement is that neither Chris Paris nor Perry Santillo originated the Ponzi scheme.

It was the result of their paths crossing with, arguably, an even bigger con man.

Paris and Santillo had inherited the scheme and perpetuated it almost out of necessity after falling victim to it themselves in 2007.

Back then, Lucian Development, which was still trying to make an honest living at the time, legitimately invested client funds with City Capital Corporation, a so-called socially conscious business venture run by a man named Ephraim Taylor II.

The result would leave Paris, Santillo, and thousands of others unable to ever feel whole again.

U.S.

Attorney James Kennedy says Santillo was investing in City Capital Corporation without knowing it was a Ponzi scheme itself.

Santillo bought it to try to gain back some of the money he'd lost.

He wound up going from the victim of a Ponzi scheme to running one.

An inspirational entrepreneur victimizes the very people he claims to help on this episode of Swindled.

They bribed government officials to find accounting career violations of decades of state law earlier in the Catholic Corps.

Pay to play millions of taxpayer dollars that were wasted.

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Bank falsifying its courts

responsible for the collapse of the entire system.

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Things aren't looking too good.

Banks are faltering.

Fuel is at an all-time high.

Food costs are even escalating and jobs are being outsourced overseas and people are losing their jobs.

You may be sitting there wondering, saying, yes, I've lost my jobs.

How am I going to make ends meet?

And how am I going to survive day to day?

The stock market has collapsed.

Marriages, because of the financial strain, are being hit.

And, you know, our nest eggs, the retirement, have basically been cracked.

And so, for many of us, you know, we're asking ourselves, it's like, how can I become wealthy in the midst of all this?

Well, ladies and gentlemen, on this show, that's what we're going to talk about.

We're going to talk about not only what it takes to become successful, we're going to talk about what it is to become wealthy and be able to make a difference.

Meet Ephraim Taylor II.

He's about to teach us what it takes to to get rich, just like him.

You see, Ephraim's entrepreneurial mindset started early.

Like most 12-year-olds in 1994, he had a special relationship with the Super Nintendo Entertainment System.

Like most middle-class parents of 12-year-olds, Ephraim's mom and dad were not too keen on paying $50 every time he wanted a new video game.

But that didn't stop him from asking.

Ultimately, one day as I was asking my mother to buy me a new video game, she posed a very challenging question to me that helped develop my mindset as I went on later throughout my life.

And that question was, Ephraim, instead of asking me for a video game, why don't you figure out how to make your own?

Ephraim admits it was entirely possible his mother, Diane, was being sarcastic.

But thanks to a childhood steeped in can-do optimism, he took her at her word.

Apparently unaware that you could rent video games for about $3 from Blockbuster, Ephraim went to his local barns in Noble, in Overland Park, Kansas, and bought a book to teach himself game design and programming.

He still remembers the title, How to Make a Video Game in 21 Days by Andre Lamothe.

And we didn't have a computer at the house, so I had to stay after school.

In middle school, every day after basketball practicing uses school's computers, and I had to teach myself the math and the logic that kind of went behind it.

I just really went for it and created this game, you know.

Ephraim says he stayed late at school to use the computer since the Taylor family didn't have one at home.

He shuttled back and forth to the library, even on weekends, and then voila, a few months later, Ephraim Taylor's very own 3D video game was complete.

The premise was to shoot bad guys who were trying to kidnap the president.

Sounds like fun.

Naturally, Ephraim's friends wanted to play, so he says his entrepreneurial spirit took over again, and he started burning copies on the CDs and selling them $10 a pop.

And so by building that three-dimensional video game, I made it and started changing it over and selling it to my friends at school.

And one sale became another sale and lo and behold, I was an entrepreneur.

That's the story of how Ephraim Taylor II founded his first company, Flame Software.

Over the next few years, while he was in middle school, Flame would expand to designing and building websites.

Ephraim says he learned everything on the fly.

how to write business plans, how to read annual reports, how to raise capital.

Those early days running Flame Software gave him all the confidence he needed to pursue bigger and better things.

In 1999, at just 16 years old, Ephraim self-funded his next venture.

It was a job search website for high school and college students to access listings from employers such as Walmart, Sprint, and Citigroup.

He called it the 14's network.

On second thought, probably after just one web search of the business's name, Ephraim renamed the website to gofairitgo.com.

It was an instant hit.

So we created this job search engine and

started convincing employers to actually pay us to put jobs on their website.

And then number of students started hitting.

We got a lot of great press from it, which caused like 30,000 students to sign up and register on the site.

We had employees like Walmart, Target, Air National Guard, Citigroup, and it just kind of grew from there and took a life of its own, and we got funded while we're in high school.

Young Biz magazine ranked GoFairit Go Go as the number four company run by teens.

Ephraim's website also won the Teen Tech Fest Challenge, which was sponsored by Microsoft.

The company rented office space and hired employees, including Ephraim's former history teacher.

Within two years, GoFerret Go was valued at over $3 million.

I grew that company in high school to $3.4 million, making me a millionaire in high school.

What a success story, a teenage millionaire.

But you know what they say, money doesn't buy happiness, and by 2001, Ephraim said he was beyond burned out.

Running your own company is a lot of work, and combined with a tech bubble burst at the time, Ephraim felt it was the right time to retire.

He was 19 years old.

Ephraim briefly considered going to college, but you know what?

He felt he'd already given himself an MBA-level education at that point.

Plus, he didn't exactly thrive in boring, slow-paced classrooms.

So instead, Ephraim decided to use his gifts for good and began helping out at the Johnson County Church of Christ, where his father was the minister.

It didn't take long for the talented young go-getter to discover that there were better ways to manage things at the church, especially when it came to finances.

Historically, the congregation's endowments and donations were deposited into a basic money market account or a dusty old index fund, which typically returned 6% on an annual basis if they were lucky.

Ephraim was convinced he could do better.

What if, he posed, the church reinvested those funds into the community?

For instance, what if the Johnson County Church of Christ purchased and rehabilitated some run-down properties in the area?

Not only would this be a more socially conscious approach to investing, but it would also likely be much more profitable for the church.

It was a win-win.

So the church tried it, and by God, Ephraim was right.

The Johnson County Church of Christ, in less than a year, earned an ROI that, in some cases, matched a decade of returns from more traditional approaches.

It was a miracle.

No, it was Ephraim Taylor II, the young man with the golden touch.

Of course, word spread about the boy wonder.

Other churches wanted Ephraim's assistance with their stewardship, donation, and endowment programs.

He was hesitant at first, but Ephraim's new wife, Michelle, encouraged him to give it a try.

The amount of good he could accomplish with his knowledge and talent would be immeasurable.

Money can come and go, but changing somebody's life?

That's priceless.

Ephraim Taylor II formed an organization to manage the church ventures.

It was called COC Ventures.

I was getting so good at real estate investment that a lot of the people who were participating to help these churches were able to retire from their jobs because of the income I was generating, Ephraim claimed.

Obviously, that led to more clients, and more clients led to more money, which forces you into larger projects.

Soon, people noticed how well Ephraim's investment ideas worked for the churches and wondered if he could manage their personal finances with the same success.

Come on, of course he could.

Ephraim launched another organization called Christian Capital Group for these clients.

Then he founded the Amoro Management Group, a secular company based on the same model.

Naturally, that led to the formation of Amoro Financial to handle mortgages and loan brokering in-house, and so on and so on.

Unsurprisingly, all of Ephraim Taylor's wheeling and dealing caught the attention of larger organizations.

City Capital Corporation, a publicly traded Nevada-based financial services firm founded in 1984, was struggling to keep up in the modern real estate market.

Ephraim Taylor II struck the board as someone who could get them up to speed.

In 2006, Ephraim was offered the position of chief executive at City Capital.

He accepted and merged his companies.

At just 23, Ephraim Taylor II made history as the youngest African-American to serve as CEO of a publicly traded company.

Hello, this is Ephraim Taylor, CEO of City Capital Corporation, a publicly traded institution whose sole mission is to empower communities with socially conscious and corporately responsible investments.

At City Capital, we create true win-win-win developments and even share profits from the venture and other benefits with the community itself.

Instead of telling a city what we want to build and what kinds of incentives we expect, we ask them to tell us their long-range goals for realization and community building.

City Capital goes around the country and helps these communities to create economic development programs, affordable housing, job opportunities, opportunities, and many other features to help these communities lift up from where they are and go on to the next level.

According to Ephraim, among the company's projects was a 200-home subdivision near Memphis.

There were plans for 150 homes in Cleveland's 7th Ward.

And nearest and dearest to his heart, City Capital secured property near 18th and Vine in Kansas City's historic Jazz District.

where they plan to build 42 single-family homes, condos, and shopping areas as part of a major revitalization effort.

And that's what our company, City Capital, is focused on is making investments into those entrepreneurial ventures that'll foster them, recreate jobs, stimulate the economy, and take things away.

So you're a venture capitalist now.

I'm more of a social capitalist.

Okay.

As CEO of City Capital, Ephraim Taylor oversaw more than $150 million in assets and accounting.

The company's socially conscious vision was constantly evolving.

By 2007, in addition to real estate, Taylor announced that City Capital would be expanding into renewable resources and green energy.

Taylor also announced that City Capital had started acquiring distressed oil and gas properties on the Gulf Coast to revitalize them.

But their original mission was always at the forefront.

I'm 24.

I recently just acquired a natural gas well, has $48 million in natural gas there in the well.

I manage about $150 million in real estate development projects.

I have another oil well that has $30 million inside of it.

But I think more importantly, it's the things that we're generating for the community, the hundreds of thousands of dollars that we're contributing to charities and to education.

The 24-year-old CEO with a heart of gold.

Ephraim Taylor and his story made great fodder for the media, which had already dubbed him a wealth engineer, a market maker, a real estate mastermind, the Warren Buffett of the hip-hop generation, and quote, walking black history.

Ephraim was featured in hundreds of magazine and newspaper articles and was constantly interviewed on daytime TV and cable news.

At 12, his parents said, you better learn to make your own video games because we can't afford to buy you any.

So he did, selling his designs and creating new programs.

Today, he's a financial consultant and oil baron worth millions of dollars.

Tonight, it's one of the best combinations on Earth.

Young and rich, and we're talking very young and very rich.

Our next whiz kid is Ephraim Taylor.

But this is something that I think you leave out of your story so often.

And I'm going to tell you, please, you've got to put this in.

You went home, tell them you created your own daggo video game, did you not?

He made a million dollars before he graduated from high school, and he retired at the age of 19.

Now at the ripe age of 24, he's a multi-millionaire.

He's also the youngest black CEO of a publicly traded company.

He's now the youngest African-American of any publicly traded company, and he's written this book called Creating Success from the Inside Out.

And this morning, I want you to meet Ephraim Taylor here with me in studio with some advice on how you can get rich.

Ephraim Taylor II made the media rounds to promote his book, which was published in November 2007.

It was called Creating Success from Inside Out.

Develop the focus and strategy to uncover the life you want.

It contained all the business and life philosophies you could stand from a 24-year-old.

You have two options in life, Ephraim wrote.

Option one is to work 40 to 50 years for someone else who is buying your time.

Quote, for people who choose this option, life drags by day after day, paycheck to paycheck, blue Mondays to thank God it's Friday, weekend to weekend, vacation to vacation, finally retirement.

Then it's gone, game over.

One day you wake up and you're dead.

Are you wealthy?

And if you can say no, then you have to ask yourself a second question.

Who are you making wealthy?

Alternatively, you can choose option two, which Ephraim shares is, when you decide to acquire as much knowledge as possible and continue growing while working, you literally have no excuse not to, Ephraim admonishes in the most self-unaware, Bill Cosby-esque kind of way.

Speak proper English, pull your pants up, and find a mentor.

Even if you come from a single-parent home, he advises.

Quote, you have nobody but yourself to blame or credit for your successes or failures in life.

Ephraim Taylor II was living proof, after all.

The poor young man was born into a supportive two-parent household with a college-educated father and a stay-at-home mother in one of the most affluent suburbs in the entire country with nothing but free time.

If he could do it, anybody could do it.

I mean, what's your excuse?

You have two choices.

You can either choose to do something about it, or you can choose to be comfortable with the status quo and use it as a crush for the rest of your life.

And that's what separates us out of the world.

Starting in 2007, Ephraim Taylor hit the road hard, turning his personal story and investment philosophies into a full-on speaking circuit.

He was everywhere, up to 70 events a year, collecting about $8,000 per appearance.

One of his biggest gigs came in 2008 when he addressed the Youth Leaders Summit at the Democratic National Convention in Denver.

That same year, Ephraim announced on his blog that Cheney University, the nation's oldest HBCU, had not only named its Entrepreneurship Academy after him, but had also asked him to design the curriculum.

And in that same post, he announced that he joined the board of Big Daddy's Fantasy Sports.

Despite the weird name, Ephraim wrote, we made a lot of money last year.

That one's going to be hard to top, but 2008 was also the year Ephraim Taylor, his wife Michelle, and their two children moved to New York.

City Capitol was opening a new office near Wall Street, he said.

It was a dream come true.

Big things were happening.

From the outside looking in, Ephraim Taylor was on top of the world.

He had it all.

Fame, fortune, family, and a bright future.

However, The truth was that Ephraim Taylor's empire was rotten to the core.

And that's what I'm going to share with you next, ladies and gentlemen.

How to go from rags to riches to rags again.

We're going to talk about not only what it takes to fabricate an entire backstory of success, but how to weaponize it, how to twist it into a sales pitch convincing enough to empty the pockets of strangers, friends, and the faithful alike.

And by the end of this show, you'll have what you need to build a facade and then watch it all crumble while taking everyone else down with you.

Don't touch that dial.

So stay tuned, don't move, get a pen, get a piece of paper, and take lots of notes because we're going to get down into the details of how this stuff works.

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You don't have the education yet.

You don't have the wherewithal, you don't have the pedigree.

But I got God, I got God, I got God, I got God, I got God, I got God, I got God,

yeah,

yeah,

yeah,

yeah,

yeah,

yeah,

yeah, yeah,

cross it up,

cross it up,

cross it up,

cross it up,

yeah,

That man you hear getting crunk for Christ is Bishop Eddie Long at New Birth Baptist Church, a 25,000-member mega church outside of Atlanta.

The televangelist had been heavily criticized in the early 2000s for his tax-free, lavish lifestyle, including driving a Bentley and residing in a $1.4 million mansion.

If you must ask, it's what God wanted, but to make things right, or at least temper the negativity.

Eddie Long invited world-renowned investment expert Ephraim Taylor II to New Birth in October 2009 to hold a three-day investment seminar, which aimed to teach the congregation how to generate their own generational wealth.

Good morning.

I'm Ephraim Taylor, and I would like to thank Bishop Long for extending such a gracious invitation to bring Wealth Tour Live 3.0 to your beautiful congregation at New Birth.

When that day arrived, Eddie Long delivered a glowing introduction of Ephraim.

Your life is about to change, the the bishop told the audience of thousands.

I am responsible for everyone I bring before you and what they say.

And the gentleman that I'm going to bring before you is an ordained minister, Long continued before comparing the upcoming speaker to Moses.

Everything he says

is based off of the word of God.

Put your hands together and receive my friend, my brother, the great Ephraim Taylor.

Ephraim Taylor energized the pulpit like a natural-born preacher.

We're going to show you how to get wealth and use it for the building of his kingdom.

He shouted into the microphone.

They told me before I get up here that don't come up here all week.

You got to be crumped when you come to New Birth.

And I said, all right, I'm going to see what I can do.

I'm still got a little bit of youth on me.

Let's keep it crumped.

Oh, I think it's time to cross it up right now because I believe that many of us are thinking that we are in some type of dark time, as they would say, that there is a recession that is going on.

But I believe for the people of God, especially on this morning, especially for those of you that woke up this morning, put on your clothes to get out looking good and smelling good, got in your nice car, drove away from your nice house.

Don't even matter if you had a house, you are here in God's house on this morning.

So I believe that when the devil decides to show up, and if he wants to come and have the audacity to sit next to you this morning, you need to throw an elbow on the right, elbow on the left, and throw your

All right.

Now who's ready for a presentation about personal finance?

Okay, good.

So many of us, with our wealth and with our knowledge, are just foolish, Ephraim accused before denigrating traditional investment vehicles such as certificates of deposit, mutual funds, and the stock market.

Those are money losers, he warned.

And you'd be better off getting rid of whatever financial advisor told you to invest in those.

If you have anything in your portfolio when you go home, take a look at it.

It's doing under 7%.

Get rid of it.

There was a better way, Ephraim Taylor promised, a more fruitful way, a more divine way to get rich.

And it involved something called a self-directed IRA.

Unlike a common individual retirement account, which is managed by a broker and limited to publicly publicly traded securities such as stocks and bonds.

Self-directed IRAs allow for a broader range of investment options, including real estate and crypto.

And as the name implies, it's self-managed, which requires more due diligence and an appetite for additional risk.

But not in this case.

What was beautiful about what Ephraim Taylor and City Capital offered was that they already had a list of investments picked out for you.

Socially conscious, community-empowering investments, such as inner-city inner-city affordable housing developments and small, minority-owned businesses, including laundromats, juice bars, and gas stations, proven winners that returned double-digit rates of return while being safer than Wall Street stocks.

Plus 20% of the company's profits were donated to charity.

It was an opportunity to change lives and make money.

But, Ephraim warned, opportunities were limited.

So if interested, audience members were encouraged to meet with him and the City Capitol team after the event to sign some paperwork and get started as soon as possible.

That paperwork included forms to roll over existing retirement accounts into newly established, self-directed IRA custodial accounts at the Equity Trust Company, where Ephraim Taylor maintained close ties and full control over the new accounts he facilitated.

I am Equity Trust.

I am Equity Trust.

I am Equity Trust.

In return, investors received promissory notes, which are essentially formal IOUs issued by City Capital, bearing annual interest rates of 12 to 20%.

Easy, risk-free money was tough to pass up.

80 parishioners from New Birth invested more than $2 million at that event alone.

And remember, Ephraim Taylor, the social capitalist, was organizing these events all over the country where he was collecting millions more.

The information tonight was very, very informative.

Well, I thought it was very informative.

I thought it was very informative and, you know, it seems like a great business model.

I thought the information that Mr.

Taylor presented was very informative.

I really just want to say that the information that he's given us is phenomenal, but I think what's so inspirational is to have a young black male that is able to provide such wise counsel and put you in position to really think about your financial future and to not just think about wanting to make a lot of money, but what to do with all of the money.

So it's just really a privilege to be in his company and he's well worth every penny that you need to pay to hear his seminar so thank you so much ephrain and i look forward to being wealthy with you

i uh have some bad news of the millions ephrain taylor and city capital corporation collected from people to invest in socially conscious projects less than 30 percent ever made it that far and the investments that actually were used for real estate juice bars gas stations etc proved to be abject failures.

The rest of the money became Ephraim Taylor's personal piggy bank.

A sliver went to salaries and commissions for his 28 employees.

Another cut was recycled back to earlier investors to create the illusion of healthy returns.

But most of it went straight into Ephraim's lifestyle, covering car leases, credit card bills, and $6,000 a month rent.

at his Trump Place apartment in New York.

He hired a PR agent to hype his book and speaking gigs, and, in the most insulting twist of all, he burned investor cash on studio time and a slick music video for his wife, Michelle's fledgling pop career.

I do what I want and I call the shots.

I move like a billionaire.

I'm the boss, yes, I run this year.

I move like a billionaire.

Don't buy bottles, I buy the brand.

I move like a billionaire.

Life imitates art, but not this time.

Even though he had misappropriated millions and millions of dollars, Ephraim Taylor and his family were nowhere close to being billionaires.

In retrospect, the desperation to keep the scheme from collapsing was apparent.

By the end of 2009, City Capital started leaning hard on existing investors, urging them to roll over their promissory notes for another year with the promise of higher returns.

Those great, socially conscious projects in the pipeline were dependent on those funds, the company pleaded.

Investors who resisted and expressed a desire to withdraw their money were met with a brick wall, unreturned calls, unanswered emails, and sometimes outright lies that they'd already agreed to the new terms.

In the scramble for fresh cash, Ephraim launched a flurry of marketing tactics and side hustles.

He hosted webinars, blasted radio ads, and created a revolving door of websites, including 2outof.com.

And you're probably wondering, 2 out of 5.com, Different, what kind of name is that?

Well, 2 out of 5 is basically derived from a statistic.

The U.S.

government says that only 2 out of 5 businesses even make it.

And I want to help you to be the 2 out of 5.

Next came the death rattle of any collapsing empire.

an affiliate marketing program.

And one of the things that we've been implementing is a nationwide affiliate program.

City Capital offered a $2,000 finders fee for each new self-directed IRA account that a client helped establish.

When that didn't generate enough interest, Ephraim Taylor was like, you know what, fuck it.

Who wants a free house?

Just give us access to your credit.

We even developed a great credit program where individuals who have a 700 FICO score and make at least a household income of $70,000 a year have the opportunity to buy houses using none of their own cash and doing none of the work.

That's right, none of their own cash and none of the work.

Ephraim did manage to squeeze some modest success out of one of his side quests, however, the so-called sweepstakes income generation opportunity.

City Capital claimed to have purchased and placed more than 3,000 sweepstakes machines.

You know those casino-style slots and video poker machines often found in America's methiest truck stops?

City Capital boasted years of experience with these devices, claiming that the top earners generated a staggering 2,400% return per year, while the average machine supposedly delivered 300% or more, and even the bottom 10% allegedly returned 72%.

For a little less than $5,000, investors could claim one of the machines for their own benefit.

Ephraim Taylor promoted the opportunity through his speeches and on sweepincome.com.

This is an opportunity that you can take advantage of right now, but you've got to act fast.

The reason being is, is that we're only opening this up to sell 1,000 of these machines.

And there's thousands of other people that are looking at this opportunity just like you are.

Ephraim's pitch promised a zero maintenance, risk-free path to residual income, combined with an audacious guarantee.

If investors didn't recoup their investment within a year, City Capital would buy the machine back.

No questions asked.

That's right.

I've taken all the risks off the table by guaranteeing that you'll make your investment back or we'll buy the machine back.

So what do you have to lose?

So just pick up the phone, give us a call now, and I look forward to working with you in the many years to come.

And most importantly, at least according to Ephraim, 20% of the revenue from the sweepstakes machines would go to charity, specifically a summer camp for terminally ill teens in Texas.

A camp that, as it later turned out, claimed it never saw a single penny from City Capital.

In fact, hardly anyone other than Ephraim Taylor himself saw a penny from the operation.

Turns out, City Capital owned nowhere near 3,000 machines as it had claimed, and its track record with the ones it did own was abysmal.

The sweepstakes machines were just upfront for another Ponzi scheme.

The only way the operation stayed alive was by recruiting new investors, and almost all of the new money that came in went straight into Ephraim's pockets.

The sweepstakes income generation opportunity was doomed to fail, but its death came even earlier than predicted.

Though the machines were indistinguishable from actual gambling, Ephraim swore otherwise.

No, he told his church-going audience, this wasn't gambling at all.

It was more like the McDonald's Monopoly game, he said.

Harmless, wholesome, totally non-addictive fun.

Several states saw it differently, and by 2010, places like Illinois and Virginia were already raiding and shutting down operations housing these machines for illegal gambling.

Virginia Beach Prosecutor, Prosecutor, Marvee Bryan.

A lot of individuals, as well as a lot of companies, have a lot of money tied up in

what I believe is going to be proven to be illegal gambling in the state of Virginia.

With one source of income suddenly cut off, the domino effect began to unfold.

In August 2010, City Capital Corporation ran out of money.

Ephraim Taylor II abruptly resigned as CEO a few weeks later, and the company's investors would soon discover that they were in fact victims.

I've been to the church for many, many years and I've trusted it a lot.

You know, I believed in them.

You know, I

so when you come before you and say that this is

good,

you know, you believe it.

You trust that.

Lillian Wells had been a parishioner at Eddie Long's New Birth Baptist Church for almost as long as she had worked at AT ⁇ T, about 30 years.

Lillian retired with $122,000 in her savings account and wanted to secure her financial future.

She just wasn't sure of the best approach.

Bishop Long-endorsed Ephraim Taylor arrived at the perfect moment, quoting scripture, promising 20% returns and community empowerment.

At the time, it made sense to Lillian to invest everything she had.

This was as trustworthy a man as she had ever met.

A year later, Lillian Wells was filing for bankruptcy and trying to save her home from foreclosure.

That was my everything,

and

that's it.

It's gone.

Gary and Anita Dorio were in a similar boat.

They first saw Ephraim on stage at Joel Olstein's Lakewood megachurch in Houston.

Anita had just inherited $1.3 million from her father, and the couple handed every cent to City Capital, believing they were funding the Lord's work.

In Delray Beach, Florida, Janet Thompson saw one of Ephraim's ads on B.E.T.

and invested over $27,000.

Trudy Morgan watched him preach at New Birth and bought $30,000 worth of sweepstakes machines.

There were hundreds of stories just like this.

Ordinary people who gave up their life savings for what they thought was a righteous cause and a smart investment, only to have it vanish like it never existed.

When these investors attempted to collect from City Capital, they were met with silence.

The call center was abandoned.

Employees either walked out or simply stopped showing up due to the overwhelming amount of calls they were receiving.

Without warning, City Capitol shuttered its Raleigh, North Carolina office, which was unusual because the victims were still hearing advertisements for the company on the radio.

All told, between 2008 and October 2010, more than 400 people invested over $16 million with Ephraim Taylor in City Capitol.

And by the time it was discovered what had really happened to the money, there was nothing left to take back.

And even Taylor, a huge proponent of personal responsibility and accountability, was nowhere to be found.

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Hello, I'm Bishop Long, and I just wanted to come to you for a few moments to let you know about a situation that we have and one that touches my heart deeply and one that I am working along with my parishioners and my leaders to resolve.

A couple years ago, about a year ago, we had a financial seminar here at the church and we do many financial seminars and other people that we bring into the congregation to help empower the congregation, help empower the community.

We've been known for bringing major speakers from around the world for empowerment to strengthen so there'll be a better quality of life.

We have more productive citizens, people who can help others.

So with all that, we had City Capital come in, Mr.

Ephraim Taylor, who came in and ran a wonderful seminar for us.

But at the same time, we found out later that some of our members had made some investments in IRA's retirement accounts through his business.

And through that,

collectively, about a million dollars has been not returned.

In early 2011, local Atlanta media began reporting on a possible financial scandal.

involving Bishop Eddie Long and New Birth Baptist Church.

In response, Long posted a video on YouTube urging Ephraim Taylor and his former company to do what's right.

According to a press release obtained by the Atlanta Journal Constitution, Long said several members of his church had alerted him to a troubling investment that could eclipse a million dollars, still unaware of the full extent of Ephraim's crimes.

In the video, Long asked the company to return the invested money with interest if possible and stated that neither he nor his DeCalb County megachurch had benefited from the investments his congregation made with City Capital.

Well, I want to let you know New Birth received nor myself any financial blessing or gift from Ephraim Taylor or City Capitol.

It was strictly done to help members, help people in the community to grow and to have a life.

But at this moment, we're joining together as a community to bring answers, to bring resolve, and to come out forward that you would join me and helping me get their funds back and make an appeal to Ephraim Taylor as I'm making it now.

Please do what's right.

You're a great fellow.

You're a great man.

You do great things.

Let's settle this so these families can move on.

God bless you and thank you for this time.

There were, however, a few problems with Bishop Long's heartfelt public appeal.

For starters, it was revealed that New Birth Baptist Church had, in fact, received a financial blessing from Ephraim Taylor.

Bishop Long reportedly took a percentage of City Capitol's product sales and even planned to sell a video of Taylor's presentation at the church.

Furthermore, the idea that Long was blindsided by the scandal soon proved disingenuous.

According to Bishop Long's own assistant, an anonymous caller had contacted New Birth weeks before even Taylor's planned seminar and warned them that it was a scam, stating that there would be no return on investment.

That warning call was documented in an internal church memo, which eventually surfaced.

This document obtained by Channel 2 shows Long was warned about Taylor on October 5th, nearly two weeks before he spoke at New Birth Missionary Baptist Church and swindled a dozen members out of more than a million dollars.

Obviously, not a great look, but at the time, Bishop Eddie Long had other things to worry about.

I cannot get the sound of his voice out of my head, and I cannot forget the smell of his cologne.

And I cannot forget the way that he made me cry many nights when I drove in his cars on the way home, not able to take enough showers to wipe the smell of him off of my body.

Jamal Paris and three other young men have filed sexual misconduct lawsuits against the popular bishop and his 10,000-seat New Birth Missionary Baptist Church.

In an exclusive interview, Jamal Paris told us the bishop lavished money, gifts, and support in exchange for sex and always wanted the young men to consider Bishop Long their daddy.

Bishop Eddie Long, a notoriously anti-gay minister, denied that he had groomed and sexually assaulted four young men who attended his church, and he vowed to fight the accusations.

I've been accused.

I'm under attack.

I want you to know,

as I said earlier, I am not a perfect man,

but this thing I'm going to fight.

And I want you to know one other thing.

I feel like David against Goliath,

But I got five rocks and I haven't pulled one yet.

Eddie Long left his rocks at home and instead threw an undisclosed amount of money at his accusers to quietly settle the matter out of court in May 2011, like any innocent daddy would.

A few months later, in October 2011, the bishop would find himself at the center of more legal trouble.

More legal problems this morning for Bishop Eddie Long.

Ten New Birth and former New Birth Church members have filed a lawsuit, accusing Bishop Long of encouraging them to invest with a man running a Ponzi scheme.

New Birth Baptist Church, Bishop Eddie Long, and Ephraim Taylor were named in a lawsuit brought by 10 former members of the Georgia mega church, which was later expanded into a class action as more victims came forward.

Again, New Birth and Long eventually settled out of court without admitting wrongdoing.

Another class action targeted Taylor, his COO Wendy Connor, and other individuals and companies involved in the scheme, including Equity Trust.

The discovery process further illuminated the truth about the man who had stolen their money, revealing a career littered with prior lawsuits, unpaid judgments, failed ventures, and straight-up dishonesty.

In September 2004, when Ephraim was operating as COC Ventures, he was sued in Missouri for fraud involving $225,000 intended for a church housing project, which ultimately resulted in a confession of judgment that he failed to honor.

The following year, Taylor's Amoro Investment Corporation was sued in San Francisco by an angry investor and hit with a judgment of $1.3 million, followed by another lawsuit in Kansas City for securities fraud of $150,000.

City Capital's illegal sweepstakes operations in Virginia and North Carolina were currently facing investigations and criminal charges, while his other ventures, laundromats, gas stations, juice companies, even a supposed youth football endowment with Snoop Dogg, were mostly fiction or financial failures.

Real estate deals such as the 18th and Vine Jazz District project and the company's biodiesel plans collapsed into losses and forfeited leases, despite Taylor's public proclamations of multi-million dollar successes.

In fact, City Capital wasn't even licensed or registered to sell securities or advise on investments.

By 2007, the company was already drowning.

City Capital had a negative cash flow with less than $100,000 in the bank, was defaulting on its loans, and was quietly selling off assets while promoting Taylor's book and his building wealth tour.

A company called Lucian Development acquired City Capital's real estate assets as part of a repayment in 2009 after being one of the first to discover that its investment was gone.

Lucian's owners, Chris Parris and Perry Santillo, also soon discovered that those assets they had acquired were completely underwater and they had been ripped off again.

Faced with a massive hole in their own books caused by Ephraim Taylor's toxic investments, Paris and Santillo chose deception over disclosure and continued to solicit new investors.

Ephraim Taylor kept up the act as well, even though by the end of 2009, City Capital had accumulated an $18.4 million deficit with no real property.

Yet the media blitz and press releases continued, where Taylor repeated his easily disproven origin story of creating his own video game for a cartridge-based console and burning it onto a CD without a computer in 1994.

The timeline simply doesn't line up.

Taylor's job search website for teenagers GoFairGo was also a complete delusion.

Granted, it was a real idea he had apparently, but it never gained any traction, according to a former investor.

At the very least, GoFair at Go was definitely not valued at $3 million, as Ephraim had claimed.

Every stone unturned revealed another lie.

There was no Wall Street office, no charitable donations, and nobody to blame for his failures but himself.

Isn't that right, Ephraim?

Turns out, the only thing the social capitalist had to show for the millions of dollars he pilfered was his wife's shitty music video in which he makes a cameo.

And yet dozens of media outlets did not bother to fact-check his story, which allowed Ephraim Taylor II to continue his fraud unquestioned for years until it imploded.

Authorities are throwing the book at one son of a preacher man accusing him of targeting Christian churchgoers with a multi-million dollar Ponzi scheme.

Alleged victims tell us he quoted the Bible and gained their trust and then bilked them out of their entire life savings.

The victims' lawsuits caught the attention of the U.S.

Securities and Exchange Commission, which subsequently filed a civil lawsuit against City Capital Corporation, its CEO Ephraim Taylor, and its COO, Wendy Conner, on May 8th, 2012.

Ephraim Taylor professed to be in the business of socially conscious investing.

Instead, he was in the business of promoting Ephraim Taylor.

David Woodcock, director of the SEC's Fort Worth Regional Office, said in a statement.

He preyed upon investors' faith and their desire to help others, convincing them that they could earn healthy returns while also helping their communities.

In reality, City Capital never generated significant, if any, revenue from actual business operations, but instead was wholly dependent upon a continuous stream of new investor funds just to stay open.

Ephraim Taylor responded to the charges by not responding at all.

In fact, no one had seen or heard from Ephraim since the prior year when he addressed the allegations in a statement to the Associated Press.

It is true that many people lost a lot of money, including myself, over the last few years in failed ventures, stocks, and market transactions, but this is a part of investing.

In my case, and that of my former company, Some of the negative effects of a situation with very complex economics impacted businesses, individuals, and families despite our best intentions.

Sometimes people will participate in a game they don't have a stomach for, and when it goes south, they put the blame on those that led the game.

In early 2013, after Taylor failed to respond to investigative subpoenas, a federal judge in Georgia entered a default judgment ordering Helm and City Capital to repay more than $14.5 million to investors, including interest and fees.

His current whereabouts are unknown, the SEC said at the time.

Court filings indicate that Taylor and his wife Michelle had moved from their Trump Place apartment in Manhattan to Brooklyn, only to disappear again a few months later.

Despite earlier promises that investors would receive full refunds, no such payments were ever made, and plaintiffs' attorneys reported difficulty serving him with new lawsuits because they had no idea where he was.

But then, in August 2013, ABC News, which had been following the case, received a tip.

It came from someone who worked at Panacea Massage in Lenexa, Kansas, near Overland Park, where Ethra Taylor grew up.

They said a woman named Liz Taylor had recently rented a room for her massage business, but was struggling to make the $550 rent.

Spa employees told ABC News that it seemed like Liz, who was spotted salvaging a chair destined for a nearby dumpster, was disappointed with her current lifestyle.

There was always a lot of comment about her past having had lots of money.

And she would also make comments about maybe how my purse was cheap and she was used to the Gucci purse.

Yeah, well, what happened to Liz?

The market went into a slump, she told them.

Her husband, who was very smart, Liz added, had some bad luck with their investments.

It happens.

Spa employees said Liz's very smart husband had been hanging around the massage studio a lot.

They were an odd couple, her fellow tenants observed.

Super closed off and unfriendly, whispering all the time.

They seemed to get extra paranoid when the new surveillance cameras were installed in the building.

That's when the spa employees decided to do some due diligence of their own.

She had me walk down the hallway, look at Liz's license, because we call her Liz, and I said, Actually, her license is Michelle.

We spelled it completely out.

She googled it, and then it ended up being the whole multi-million dollar scam thing that all surfaced on the internet.

That's how it all came together.

So it was all within a matter of, you know, 20, 30 minutes.

And then it all just went, ah, I was like, oh my God.

if you're so quick to take someone's money and just leave them high and dry you're capable of anything the spa employee worried that's when they decided to send in the tip ABC nightline showed up in Lanexa Kansas within days with cameras rolling I'm rolling

I'm rolling

what do you say to all those families who say that you cheated them Those families who say that you took their money, sir?

Anything to say to all of those families?

What about the money that the courts are ordering you to pay those families?

Do you plan to pay them back?

There's a lot of people who are hoping to hear from you.

You have any response?

They found Ephraim Taylor II getting into his car at a nearby apartment complex where he lived.

He looked different, slimmer, new hairstyle, no suit, a little older, but unmistakably it was him.

And he refused to comment.

I just know that I can't say anything, Taylor later told the reporters when confronted again.

I just want to keep my life peaceful.

ABC reporters wondered if Michelle Taylor had anything to add.

They waited for her at the massage business.

When she spotted them, Michelle immediately turned around and walked out the front door with the cameras following.

You guys running from everybody?

What do you say to the court?

Do you have anything to say to those people who say that they think that you've

taken money from them?

Do you have anything to say to those families at all?

Not a word.

For victims like 62-year-old Lillian Wells, who had taken up a new career as a realtor after Ephraim stole her life savings, the sight of him was bittersweet.

We are so happy that he's been located, she told the Atlanta Journal-Constitution.

But locating him is one thing.

Now we're just hoping the feds can do something about it.

Eventually, they did.

On June 17th, 2014, 31-year-old Ephraim Taylor was indicted after a joint investigation by the U.S.

Secret Service and the Internal Revenue Service.

Taylor and his former COO Wendy Connor were accused of defrauding more than 400 victims out of $16 million.

Taylor voluntarily surrendered to authorities in Kansas City, Missouri after learning of the indictment.

He was charged with conspiracy, mail-and-wire fraud, and money laundering.

On October 8, 2015, Ephraim Taylor pleaded guilty.

That same day, in a separate hearing, Wendy Connor also pleaded guilty to interstate transportation of money taken by fraud.

She was sentenced to five years in prison and ordered to pay nearly $6 million in restitution.

Taylor's sentencing came on March 17, 2016.

19 years and seven months in federal prison, followed by three years of supervised release and an order to pay nearly $15.6 million in restitution.

Authorities said none of the money had been recovered.

Most of it was spent fueling Taylor's lavish lifestyle, they said.

Acting U.S.

Attorney John Horne summed it up.

Taylor's building wealth tour accomplished exactly the opposite, victimizing hundreds of investors and leaving many of them financially ruined.

At churches across the country, he touted himself as a socially conscious investor, but his investment opportunities were nothing but a Ponzi scheme designed to build his own personal wealth.

This sentencing brings a measure of justice to those who remain devastated by his actions.

There are no winners here.

One man's greed negatively affected hundreds of lives, including those of his own two children.

Kids who will now come of age without their father around.

The very circumstance Ephraim Taylor II once condemned in his book as a barrier to success.

No excuses.

At least the Taylor children still have their pastor-grandfather to serve as a positive role model.

Right?

A pastor of a Shawnee church is being held without bail in Utah, facing multiple felony charges, including rape and kidnapping.

On October 4th, Efren Taylor Sr., 65 of Overland Park, was arrested in Millard County, Utah and charged with rape, forcible sodomy, aggravated kidnapping, forcible sexual abuse, and intentional abuse or neglect of a vulnerable person.

Spindled is written, researched, produced, and hosted by me, a concerned citizen, with original music by Trevor Howard, aka the former, aka King Trevi.

For more information about Swindled, you can visit swindledpodcast.com and follow us on Instagram, Facebook, Twitter, and TikTok at SwindledPodcast.

Or you can send us a postcard at PO Box2045, Austin, Texas, 78768.

But please know packages, we do not trust you.

Swindled is a completely independent production, which means no network, no investors, no bosses, no shadowy moneymen, no sweepstakes machines.

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Fucking bleak out there, huh?

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