A convicted con man and former pastor of Westminster-based Church of the Healthy Self was sentenced Friday to 14 years in federal prison for orchestrating an investment scam that bilked people out of more than $33 million.
Kent R.E. Whitney, 39, who is formerly of Newport Beach but currently resides in Northern California, was also ordered him to pay $22,662,668 in restitution, the Orange County District Attorney’s Office said in a news release.
Whitney pleaded guilty in November 2020 to mail fraud and filing a false federal income tax return.
From September 2014 to April 2019, Whitney allegedly schemed to defraud investors through the Church of the Healthy Self, a nonprofit corporation that he founded, and its related entities, including CHS Asset Management Inc, according to the DA’s office. Whitney founded these entities and operated them out of a strip mall in the Little Saigon area of Westminster until it was shut down after the U.S. Securities and Exchange Commission filed a complaint and a judge froze the church’s assets.
Whitney founded the church in 2014, three months after he finished serving a 44-month prison sentence for another commodities investment fraud, authorities said.
At Whitney’s direction, representatives of the church appeared on television and at live seminars from the church’s offices to solicit investments in CHS Trust, the church’s investment arm.
In these appearances, which were were frequently uploaded to YouTube, church representatives made false or misleading claims at Whitney’s direction, including: CHS Trust guaranteed an annual rate of return of 12%; CHS Trust guaranteed a return of principal with no risk because it was federally insured; the worst return received during the previous five years was a 1.5% profit for the month of January 2015; traders used by CHS had not lost money in 15 years; and CHS was audited by accounting firm KPMG.
Only a small amount of investor money went into any trading accounts, the DA’s office said.
Relying on thee false claims, investors sent more than $33 million to the church from 2014 to 2019. As part of the scheme, Whitney directed that monthly statements be sent to victims that contained false reports of investment returns.
Whitney intended to lull victims into believing their money had been invested and was consistent with the false claims made by church representatives, according to the news release. He also made approximately $11 million in Ponzi-type payments to investors, taken from money brought in by later victims.
In addition, Whitney knowingly and willfully signed and filed a false federal income tax return that reported that his total income for the tax year 2018 was $17,539. His real income for that year was at least $452,872, of which approximately $435,333 was obtained via fraud, prosecutors said. The resulting tax loss was at least $130,808.