A Tennessee-based advisor touting a “faith-based investing” strategy is facing SEC charges that he defrauded several clients out of millions.
The commission filed its complaint against Cookeville, Tenn., resident Donald Anthony Wright and his SEC-registered firm Retirement Specialty Group in Tennessee federal court Monday.
Wright was the president and CEO of RSG, which he co-owned with his wife and has been SEC-registered since 2002. The firm’s managed assets totaled approximately $26.8 million. RSG advertised its approach as faith-based, and most of its clients were Christian. According to the complaint, Wright was formerly Senior Pastor of Faith in the World Church and often promoted his advisory business through a SiriusXM talk show and podcasts.
According to the SEC, in 2021, Wright wanted to buy a Christian-focused, Texas-based media marketing company representing several “prominent Christian pastors and evangelists.” The price was $20 million, and Wright was unwilling (or unable) to find “traditional” funding sources, according to the complaint.
Wright soon made contact with at least three note issuers that offered to help him secure financing to purchase the media company; one issuer said it would loan Wright about $500,000 but only if Wright sold $1 million of the issuer’s promissory notes to investors, which would serve as collateral for the loan. Other issuers said they’d only float the financing for Wright if he provided some capital, according to the SEC.
At points, Wright sold forged promissory notes not authorized by the issuer; of the $2.42 million in promissory notes Wright sold, about $950,000 consisted of three forged notes he sold to two advisory clients and one other investor, according to the SEC. But Wright continued to give his clients false statements, including that the notes were “safer and more stable” than the stock market.
“In many instances, Wright knew these statements were false,” the complaint read. "For example, Wright knew that he would send a substantial amount of investment proceeds to overseas bank accounts in exchange for promises that Wright would quickly receive hundreds of millions of dollars in financing to purchase the faith-based media marketing company.”
Wright never disclosed the risk of the notes, and by now, the notes that have become due are in default, according to the SEC, who claimed that none of the investors have gotten back any of their principal or interest.
Wright offered various defenses for why this was, including that the money was “tied up in England” and that governments needed to ensure “the money is clean and no terrorists were involved.” He also argued the non-payment was due to the SEC’s investigation, according to the complaint.
Additionally, last September, Wright told at least one client that RSG was about to receive an $8.1 million wire transfer, which Wright would use to repay the client. He attached a wire transfer confirmation to the message.
“In reality, the wire transfer confirmation was fake, having been altered by Wright,” the complaint read. “RSG never received the $8.1 million.”
An attorney for Wright did not respond to a request for comment prior to publication.
According to an SEC press release, Wright agreed to a permanent officer-and-director bar and to be banned from participating in the purchase or sale of securities in certain instances. However, there was no additional settlement order indicating this immediately available, and the SEC did not respond to requests to clarify. In addition to the bars, Wright consented to pay disgorgement, prejudgment interest and civil penalties, which will be determined at a later date, according to the SEC's release.
In June, the SEC released an investor alert urging clients to be wary of “affinity frauds,” in which the fraudsters are (or claim to be) members of the group they’re targeting. Particularly, the commission warned fraudsters could target a religious group, including “a particular denomination or church."
