MEMPHIS, Tenn. (AP) — A former Tennessee House member and three of his relatives have been convicted by a federal jury in a multi-million dollar Ponzi scheme that was promoted on Christian media and centered on buying and selling gold and silver coins, federal prosecutors said Wednesday.
Former state Rep. Larry Bates; his sons, Chuck and Robert Bates; and Robert Bates’ wife Kinsey, were found guilty of mail and wire fraud during a five-week trial in Memphis.
Prosecutors said the Bateses worked through First American Monetary Consultants, which had offices in Memphis and Boulder, Colorado. More than 360 people lost more than $21 million in the scheme, which lasted from 2002 through October 2013.
Larry Bates, who served in the House in the 1970s, promoted the company though Christian television and radio programs, prosecutors said. Bates held conferences predicting an economic collapse and emphasizing the need to invest in precious metals. Evidence at trial showed he diverted more than $4 million to the creation of International Radio Network, a Christian radio system.
Customers gave $87 million to the company for the purpose of buying precious metals. But prosecutors said the Bateses kept money from the payments for their personal use, including commodities trading and a 10,000 square-foot house in Middleton, Tennessee. By 2009, the company had more than $26 million dollars in unfilled orders.
Victims tried to take possession of their coins, but they couldn’t. They were told that the coins were scarce, the coins were coming from Europe, and the U.S. Mint was shut down.
A receiver appointed to take over First American Monetary Consultants found that the company had few assets and was unable to compensate the victims. Charles Grimsley, a pastor in Mesa, Colorado, testified that he and his wife gave the company more than $200,000 of their retirement money and received nothing.
“People need to be mindful of this terrible fact and work hard to protect themselves and their families from those who prey on others, like the Bates family preyed on so many innocent victims,” said Larry Laurenzi, acting U.S. attorney in the Western District of Tennessee.
Larry Bates was convicted on all 46 counts stated in an indictment. Chuck Bates was found guilty of 18 counts of mail and wire fraud and one count of conspiracy. Robert Bates was convicted of five counts of mail fraud, three counts of wire fraud, and one count of conspiracy. Kinsey Bates was convicted on one count of conspiracy and two counts of wire fraud.
Each count carries a potential sentence of 20 years in prison. Sentencing is set for Aug. 3.
This story has been corrected to say the Justice Department announcement came Wednesday, not Monday.