by Chuck Fager
Wichita, Kansas — Priscilla Deters, 63, of Walnut, California went on trial here Tuesday on 13 counts of wire and mail fraud, in connections with investment programs run by her company, Productions Plus.
In her opening statement, Assistant US Attorney Annette Gurney told the jury of nine women and three men that Deters’ business was actually “a scheme to defraud” churches and their members, and that the “scam” took in “over $6 million dollars” from victims in 21 states. If convicted on all charges, Deters could be sentenced to up to 52 years in prison and fined $250,000.
Among the largest victims of the fraud, according to Gurney, was a group of Nazarene churches in North and South Dakota. The churches were organized by their district superintendent, R.J. Wegner, to pool their money and send it to her, in hopes of doubling it within a year’s time.
The federal indictment alleges that the Dakota churches sent $645,000 to Deters, and instead of doubling it, they lost $505,000.
Defense attorney Steve Gradert opened his defense by asserting that Deters never intended to defraud anyone, and that those who placed funds with her programs knew they were taking business risks. According to Gradert, Deters’ programs were in fact “joint ventures” in which investors expected to share business risks and reap returns as profits accrued to Deters’ businesses.
Rather than planning a scheme to defraud, Gradert contended that Deters was the victim of a conspiracy by certain church and law enforcement officials, who wished to divert attention from their own misdeeds onto her. R.J. Wegner, he alleged, was mong those who hatched this plan.
According to Gradert, a former official of the Friends Church in Kansas was the prime mover behind the effort to transfer blame to Deters. He cited Mauricce Roberts, the former Superintendent of the Wichita-based Mid-America Yearly Meeting of Friends Church, as the chief culprit.
Roberts, who is expected to be a major witness for the prosecution, was forced to resign his position in October, 1994 after the details of his involvement with raising money from churches and individuals to send to Deters became known to the yearly meeting trustees. He has denied taking any of this money for himself. Roberts has been granted state immunity by the Kansas Securities Commission in return for his tetimony, Gradert noted.
Roberts subsequently was hired by another Quaker caught up in scandal, Philip Harmon of Washington state. Roberts became Harmon’s chief operating officer in an investment and health insurance operation that was shut down last year by federal authorities there. Harmon pleaded guilty last October to conspiracy and tax fraud. Seattle prosecutors say more indictments are expected in the Harmon case, and have suggested that Roberts may be among them.
Gradert added that the role of the Dakota Nazarene Superintendent, R.J. Wegner in this plot was crucial. Wegner ignored a 1991 cease and desist order issued by North Dakota Securities Commissioner Glenn Pomeroy, and instead funneled much of the money to Deters through a Nazarene church in California. According to the defense account, Wegner, along with Roberts and others, altered and distorted Deters’ business plans to their own ends, and made many exaggerated claims for it as they urged pastors and churches to invest in it.
The trial should feature some novel twists and turns. One the witnesses to be called is a folk artist from Georgia, Jackson Bailey, who has painted what has been called the largest painting of the Life of Christ in the world. The painting is made up of 50 panels, each eleven by twenty feet, or one thousand feet in length. This huge work, completed in 1970, has never been displayed in public, due to a continuing series of bankruptcies and legal conflicts over it. The painting is currently privately owned and stored in Clearwater, Florida.
Defense attorney Gradert said it was Deters’ vision to make this painting the centerpiece of a travelling multimedia concert presentaion, which she expected churches to use as a fundraiser. However, despite several years of effort and hundreds of thousands of dollars in expenses, Deters never succeeded in gaining control of the painting.
Deters also claimed to be building a lucrative business around large blinking electronic signs. However, it has yet to produce much in the way of profits, Gradert acknowledged. Several of Deters’ sons worked in this business, however, and were paid handsomely, despite its negligible returns. At least one of her sons is likely to testify.
Prosecutor Gurney contended that her investigators found that Deters spent at least $600,000 of investors’ money on herself, her family members, and other personal expenses, despite pledges that no such diversions were contemplated. According to Gurney, there was no legitimate business income involved in her operation.
Instead, the prosecutor called Productions Plus a “Ponzi” scheme. Named after Charles Ponzi, a swindler who rose to brief prominence in Boston after promoting such a plan, “Ponzi schemes” are frauds in which investors are lured by the promise of very high profits, and early investors are paid off with the funds of later investors, until the scheme collapses.
U.S. District Judge Monti Belot said the trial may last two weeks.
NOTE: The outlines of the prosecution and defense arguments closely parallel and corroborate my reporting in “Fleecing the Faithful”.