"Let no man deceive you with vain words:
for because of these things cometh the wrath of God upon the children of disobedience. 
Be not ye therefore partakers with them."
Ephesians 5:6-7 (AKJB)

WESLEY CAMPBELL PONZIE SCHEME

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BCSC settlement helps investors partially recoup money lost in Ponzi scheme

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Vancouver - British Columbia residents, who lost about $1.3-million in a U.S.-based "Ponzi" scheme, could recover about half of their money after the B.C. Securities Commission negotiated a settlement with four men involved in getting people - mostly Christian evangelicals - to invest in the venture.

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John DeVries, Ernest Reed Grafke, Ralph Bromley and Wesley Campbell have admitted that they directly or indirectly got B.C. residents to invest in securities of Amber Enterprises without being registered and without filing a prospectus as required under securities laws.

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DeVries, a Turks and Caicos resident, established Amber to allow people to invest in IPIC Investments - a California-based operation that supposedly ran an import-export business, but was found to be a Ponzi scheme after U.S. regulators raided it and a receiver took over its affairs. (A Ponzi is an investment scam that pays out current investors with money from new investors.)

In the settlement, DeVries and Grafke have together agreed to pay $500,000 to the BCSC for restitution to B.C. Amber investors. DeVries was the president, secretary and sole shareholder of Amber and Grafke is a Texas pastor who introduced DeVries to Gregory Setser, a former pastor who ran IPIC. Grafke was also responsible for overseeing the production and dissemination of information materials to potential investors in Amber.

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As part of the settlement, DeVries and Grafke agreed they will consent to an order by the Supreme Court of British Columbia enabling the B.C. Civil Forfeiture Office (CFO) to provide restitution to investors. The BCSC will forward the monies collected from the two men to the CFO once the Court issues the consent order. Devries and Grafke have also been banned from the B.C. capital markets, with DeVries out for 17 years and Grafke out for 15 years.

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Bromley, a former pastor at Kelowna-based New Life Church, has agreed to pay the BCSC $9,000 and has been banned from the capital markets for five years except in limited circumstances.

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Campbell, a co-founder and former pastor of New Life Church, received a two-year ban from the capital markets except in limited circumstances.

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The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlement on our website www.bcsc.bc.ca by typing in the search box the names of the individuals or Amber Enterprises or 2007 BCSECCOM 54. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.

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The Civil Forfeiture Act was brought into force on April 20, 2006.  It is intended to deter unlawful activity by providing the legal mechanisms necessary to allow for the forfeiture of property acquired through unlawful activity. The Act also allows the Civil Forfeiture Office to manage and dispose of forfeited proceeds, and includes the authority to make payments to eligible victims, as in this case.

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2006 BCSECCOM 251

Notice of Hearing

John DeVries, David DeVries, Ernest Reed Grafke,
Ralph Bromley and Wesley Campbell

Section 161 of the Securities Act, RSBC 1996, c. 418

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1 The Commission will hold a hearing at which the Executive Director will tender evidence, make submissions and apply for orders against John DeVries, David DeVries, Ernest Reed Grafke, Ralph Bromley, and Wesley Campbell (collectively, the Respondents) under sections 161, 162 and 174 of the Securities Act, RSBC 1996, c. 418. (the Act).

¶2 The Executive Director alleges that the following conduct and activity was contrary to the public interest.

Background
1. Amber Enterprises Ltd. (Amber) was incorporated in the Bahamas. It has never filed a prospectus under the Act.

2. John DeVries has residences in Peachland, British Columbia and the Turks and Caicos Islands. He was the President, Secretary, Director and sole shareholder of Amber.

3. David DeVries is the son of John DeVries. He is a resident of the Turks and Caicos Islands.

4. Ernest Reed Grafke (Grafke) is a resident of Texas in the United States.

5. John Devries, David DeVries, and Grafke managed the day to day operations of Amber.

6. The New Life Church (NLC) is located in Kelowna, British Columbia. Hope for the Nations (HFTN) is a registered charitable organization operated largely by members of NLC. Wealth for the Nations (WFTN) is the governing body that oversees and distributes charitable funds generated through companies such as Amber. WFTN is based out of Barbados. The members of these organizations share certain common religious beliefs.

7. Ralph Bromley (Bromley) is a resident of Kelowna, British Columbia. He is a close personal friend of John DeVries and the President of HFTN and a pastor at NLC.

8. Wesley Campbell (Campbell) is a resident of Kelowna, British Columbia. He was a director of HFTN and a co-founder and pastor of NLC.

9. None of the Respondents has ever been registered under the Act.

Misconduct
10. Between the spring of 2002 and November of 2003, John DeVries, with the assistance of the other Respondents, obtained funds from investors based on the promise that if they invested in Amber, they would receive the full return of their principal investment, together with a fixed amount of interest, in a single payment within a few months following their initial investment.

11. The Respondents told investors that the interest to be paid on the principal investments in Amber would be derived from profits earned by IPIC International Inc. (IPIC). Amber entered into joint venture agreements with IPIC who purportedly used investors’ capital to purchase bulk lots of goods overseas for import to the United States and resale to large well-known retailers within the United States.

12. Investors invested by entering into partnership agreements with Amber (Partnership Agreements).

13. John DeVries was the guiding mind behind the Amber promotion.

14. David DeVries was responsible for overseeing administrative operations, including reviewing and approving all applications for investment in Amber by potential investors.

15. Grafke’s management responsibilities included overseeing the production and dissemination of information materials to potential investors in Amber.

16. Many of the investors in Amber were members of NLC, affiliated churches or regular contributors to HFTN. Campbell and Bromley both used their positions as pastors of NLC to solicit investments in Amber by members of HFTN and NLC.

17. For its services, Amber collected fees that were paid out to John DeVries, David DeVries and Grafke.

Illegal Trading and Distribution
18. All of the Respondents were directly or indirectly involved in soliciting, facilitating or negotiating the Amber securities, contrary to 34(1) and 61 of the Act.

Misrepresentation and Fraud
19. John DeVries and Grafke, in promoting the Partnership Agreements, made false statements to investors and potential investors, including, among other things, claims that:

(a) Investors would be guaranteed margins which were higher than anything they could receive in the stock market;

(b) Amber had conducted proper due diligence on the buyers and sellers involved in the IPIC investments;

(c) Amber’s business would expand from hundreds of millions to billions;

(d) Amber was completely compliant with respect to securities laws and up to date on all filings; and

(e) Amber was spending significant funds to comply with securities regulations.

20. In making these and other statements, John DeVries and Grafke made misrepresentations, contrary to section 50(1)(d) of the Act.

21. John DeVries and Grafke also omitted to advise investors and potential investors of certain material facts on a timely basis or at all, including, among other things, that:

• • (a) Amber had no other source of revenue other than its dealings with IPIC;
    
    (b) Amber was owed almost $60 million by IPIC; and
    
    (c) countless products supposedly purchased by IPIC with investors’ monies had been stolen or had gone missing.

22. By failing to inform investors and potential investors of these and other facts, John DeVries and Grafke made misrepresentations, contrary to section 50(1)(d) of the Act.

23. In making deceitful statements to them and by failing to inform them of material facts, John DeVries and Grafke perpetrated a fraud against investors, contrary to sections 57 and 57.1 of the Act.

24. Overall, investors suffered losses totaling approximately $10 million USD. British Columbia investors suffered losses totaling approximately $2 million USD.

Unfair Practice
25. John DeVries and Grafke, while engaging in investor relations activities or with the intention of effecting a trade in a security or both, represented to religiously devout individuals that a investment in Amber was sanctioned by God. This put unreasonable pressure on these individuals by exploiting their beliefs and the trust shared among them within their religious community, contrary to section 50(1)(e) of the Act.

26. John DeVries and Grafke exploited the common religious affiliation and beliefs among potential investors by making representations about investing in Amber that could not be objectively verified.

Hearing Process
3 At the Hearing, the Respondents may be represented by counsel, make submissions and tender evidence. The Respondents are requested to advise the Commission of their intention to attend the Hearing by informing the Secretary to the Commission at PO Box 10142, Pacific Centre, 701 West Georgia Street, Vancouver, BC V7Y 1L2 phone: (604) 899-6500; email: commsec@bcsc.bc.ca.

4 The Respondents or their counsel are required to attend at the 12th Floor Hearing Room, 701 West Georgia Street, Vancouver, British Columbia, on Monday, June 5, 2006, at 10:30 am if they wish to be heard before the Commission sets a date for the Hearing.

5 If the Respondents or their counsel do not appear at the Hearing, the Executive Director will apply to have questions of liability and sanction heard at the same time. Determinations adverse to the Respondents may be made in their absence.

6 May 4, 2006
Brenda M. Leong, Executive Director

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Alleged scam connected to British Columbia church

Bilked investors of $10 million

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KELOWNA, B.C. — Three Central Okanagan residents have been told to appear before the B.C. Securities Exchange Commission to face charges of an investment scam connected to the New Life Church in Kelowna.

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It’s alleged that a ‘Ponzi’ pyramid scheme cost investors more than $10 million, including $2 million in losses incurred by Okanagan residents who bought into the scheme.

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John DeVries, who ran the investment program under Amber Enterprises; Ralph Bromley, president of the Hope for the Nations (HFTN) charity — which is run by New Life Church (NLC); and Wesley Campbell, a director of Hope for the Nations and New Life Church pastor, have been summoned to face a commission hearing.

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The commission alleges they acted “contrary to the public interest” and will seek fines against them.

Also called before the commission are David DeVries, John’s son who lives in the Turks and Caicos Islands, and Reed Gafke of Texas.

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“There were over 100 (investors) here,” said one Kelowna investor, who asked not to be named.

“Some people put second mortgages on their houses. Some were single moms who lost everything. There are some human stories that are terrible in this.”

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Investment money was raised among members of the church by John DeVries through two companies: Amber Enterprises and Wealth for the Nations (WFTN).

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The investments failed after the U.S.-based partner of Amber and Wealth for the Nations — Gregory Setser and his company, IPIC International — were indicted by the Securities and Exchange Commission in the United States.

The U.S. government alleges Setser illegally raised $160 million from investors associated with evangelical Christian congregations

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The commission’s filing states that Setser has spoken in Kelowna at Wealth for the Nations investment seminars organized by DeVries, where Setser promised investors returns that were higher than anything they could make in the stock market.

John DeVries also lives in the Turks and Caicos Islands as well as having a residence in B.C.’s Peachland.

He could not be reached for comment on the allegations.

A Ponzi scheme is a type of illegal pyramid named after Charles Ponzi, who duped thousands of Americans into investing in a postage stamp speculation scheme in the 1920s.

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New Life Church is located on Highway 97 in the Okanagan.

Hope for the Nations is a registered charitable organization operated largely by members of New Life Church.

Wealth for the Nations, which is based in Barbados, is the governing body of Hope for the Nations, reports the commission.

“Many of the investors in Amber were members of NLC, affiliated churches or regular contributors to HFTN,” said the filing by the commission.

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“Campbell and Bromley both used their positions as pastors of NLC to solicit investments in Amber by members,” It said.

Neither Campbell nor Bromley were available for comment Friday.

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Malcolm Petch, an elder of the church, issued a written response Friday.

“As you can imagine, those who lost money, including those named in the (B.C. commission’s) notice of hearing, were devastated and embarrassed by the developments that came to light in late 2003.

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“We believe that our church members were acting from the heart to give, and to help children in need,” wrote Petch.

“The church continues to support all of our members and stands with them as they walk through these matters.”

He said Bromley, Campbell and John DeVries have pledged to co-operate with the regulatory bodies.

In a Dec. 13, 2003, story in The Okanagan Saturday which first brought the situation to light, DeVries stated in a letter to investors that his company in B.C. “was in no way aware of any of the alleged wrongdoing by Greg Setser.

“This does not mean that our business is finished; rather, we are transforming and developing plans to go forward,” wrote DeVries. “We would very much appreciate your joining us in prayer for the wisdom of the staff and the efforts of the government regulators and others involved in the investigation and recouping of assets.

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“You have the unwavering commitment of the WFTN and Amber team to conduct all areas of our business prayerfully, honestly, with every ounce of wisdom God entrusts to us.

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“Thank you for your prayers demonstrating you really are in this with us for Kingdoms sake.”

The alleged wrongdoing occurred between the spring of 2002 and November 2003.

No date has been set for the commissions hearing.

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Millions of dollars lost to con artists

By FRANK STIRK Senior Correspondent | June 9, 2006

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ABBOTSFORD, BC—Three years into a government-funded program of alerting churches about people who attach themselves to congregations just to steal their money, hospital chaplain John Haycock believes the message is beginning to make a difference.

"We stopped a scam at a church here in Abbotsford," he says. "We stopped a person who at that point already scammed almost half a million dollars from that church and close to $5 million from the bigger community."

With a grant from the B.C. Securities Commission, Haycock and Seamus Mackrell, a fellow chaplain at a hospital in nearby Chilliwack, tour churches with a multimedia presentation on how to avoid becoming victims of what is known as "affinity fraud."

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Commission spokesman Andrew Poon calls it "fraud among friends."

"Often what [affinity fraudsters] do," he says, "is pitch an investment scheme to some of the higher profile members in the group, convince them…this is something you can 'legitimately' gain a return on, and then use the fact that they have high-profile members involved to sway other members in the community."

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Haycock adds they are highly adept at "what language to speak, what words to use…to scam you from your money."

So in a church setting, for example, they can easily con members into thinking they share the same beliefs as a way of building trust.

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Yet once trust is gained, the investment pitched and the money changes hands, they disappear, leaving their victims financially ruined. "They've no remorse, they've no guilt—nothing," says Haycock.

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Sometimes, the con man may have little direct contact with the church—which is what apparently happened at New Life Church in Kelowna.

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In early May, the commission named two of its pastors, Wesley Campbell and Ralph Bromley, and members John DeVries and his son David in a "notice of hearing" on various fraud-related charges. Also named was Dallas, Texas preacher Ernest Grafke.

The commission alleges that in early 2002, John DeVries set up a company called Amber Enterprises to obtain funds from investors who were then invested in IPIC International Inc., an import-export company headed by Gregory Setser of California.

In November 2003, IPIC collapsed. It was revealed it had defrauded investors of $10 million U.S. worldwide, including $2 million U.S. from B.C. investors, some of them members of New Life Church.

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Among the allegations leveled by the commission, DeVries and Grafke were said to have claimed "that an investment in Amber was sanctioned by God," and that Campbell and Bromley both purportedly "used their positions as pastors" to solicit investments.

In a statement, the church insisted that these individuals had also been scammed. It also pointed out that every investor had agreed in advance that part of their profits would go "to help children in need."

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Lead pastor Kim Unrau says his members "responded very well" when told of the notice of hearing.

"We did some stuff out of James—'Rejoice and count it pure joy when you face testing and trials,'" he says. "They chose to rejoice in the test, even though we don't like it, we don't understand it."

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Haycock commends New Life's stated willingness "to support all of our members and [to stand] with them as they walk through these matters."

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But he cautions pastors whose churches have been hit by affinity fraud not to overlook the "secondary losses" that can last for decades.

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"Are you going to allow people honestly to tell their stories, share the pain of the community?" he asks. "Many of these people would be on the verge of retirement, so…what they dreamed about is gone."

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A date for a hearing into the commission's allegations will be set on June 12. It can ban individuals found guilty from the B.C. securities market for life and fine them up to $250,000. Companies can be fined as much as $500,000.

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New law brings restitution in faith-based Ponzi scheme

B.C. Securities Commission invokes the province’s Civil Forfeiture Act to secure $500,000 for 80 B.C. investors

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The B.C. Securities Commission has, for the first time, invoked the province’s Civil Forfeiture Act to secure $500,000 restitution for 80 investors from British Columbia who lost a combined $1.3 million in a massive faith-based Ponzi scheme run out of California.

The restitution is included in a settlement agreement the commission negotiated on Jan. 25 with John DeVries, a leader of the New Life Church in Kelowna, B.C.; Reed Grafke, a pastor at the Gateway Church in Southlake, Tex.; and two other men connected to the NLC in Kelowna, Ralph Bromley and Wesley Campbell.

The BCSC also broke new ground by alleging the respondents exploited the religious affiliation of investors by claiming the investment was “sanctioned by God.” However, because the case was settled in advance of a hearing, this allegation was not formally tested.

The investment scheme was the brainchild of Gregory Setser, a pastor from California. In 1999, he and several others set up International Product Investment Corp. to buy bulk goods from overseas suppliers and sell them to major retailers such as Home Depot and Costco. Investors were promised returns of 25%-50% within three to six months, which they could donate to charity.

Setser and his colleagues pitched their scheme through evangeli-cal churches in the U.S. and Canada. One person who liked the idea was DeVries, an influential member of the NLC in Kelowna. DeVries set up a Bahamian-registered company called Amber Enterprises Ltd. , through which he solicited investments in IPIC. In all, he raised US$30 million from 440 investors, including C$5.8 million from 80 investors in B.C. Most were Christian evangelicals and some were members of the NLC.

The scheme initially appeared to work. Money flowed back to Amber, which, in turn, forwarded about US$1.5 million of profits to charitable organizations on behalf of investors. But in the summer of 2003, payments began to slow. DeVries became suspicious and halted further investments.

The U.S. Securities and Ex-change Commission and the FBI conducted an investigation and found no evidence of an import business. They said Setser used the money to finance a luxurious lifestyle, including a 33-metre yacht, a private aircraft, a helicopter and numerous exotic homes.

In November 2003, the SEC raided IPIC’s office and charged Setser and several others with fraud and operating a Ponzi scheme. The company collapsed and a receiver was appointed. When the dust settled, investors had collectively lost US$160 million. Setser and several others were subsequently convicted of fraud and are to be sentenced shortly.

In May 2006, BCSC executive director Brenda Leong issued a notice of hearing alleging that DeVries, Grafke and the two pastors at the NLC, Bromley and Campbell, had sold or facilitated the sale of Amber securities, which had not been registered for sale in B.C.

Leong alleged De-Vries was the “guiding mind” behind the promotion, and that Grafke helped produce and distribute promotional material. She also alleged the two men made misleading statements about IPIC and the returns it would produce.

She further alleged that DeVries and Grafke had engaged in unfair practices by telling church members that investments in Amber had been sanctioned by God: “De-Vries and Grafke exploited the com-mon religious affiliation and beliefs among potential investors by making representations about investing in Amber that could not be objectively verified.”

This was a key component of the BCSC’s case. The commission has been waging an educational campaign to combat so-called “affinity fraud,” in which promoters use their membership in an organization — often a church group — to gain the trust of other members. This was the first time it had been cited as an unfair practice.

In the settlement agreement, all four admitted they had sold unregistered securities, but otherwise denied any wrongdoing. They said they had no idea Setser was running a Ponzi scheme and insisted they were victims.

DeVries noted that he and his family lost C$1.1 million in the scheme, and he had contributed US $430,000 to a trust set up by the receiver to compensate Amber investors. He also had undertaken not to file any personal claims with the receiver.

But Leong still wasn’t satisfied. “We were very firm that we expected restitution to be made in this case,” she says.

Under the settlement agreement, DeVries and Grafke agreed to pay C$500,000 to victims through the B.C. Civil Forfeiture Act, which came into effect last April. The act enables the province to seize property, goods or cash deemed by a civil court judge — on a balance of probabilities rather than the criminal standard of beyond reasonable doubt — to have been gained illegally or used in the commission of an illegal act. It is the first time the BCSC has used the act.

@page_break@DeVries and Grafke have agreed to pay the money to B.C. Supreme Court in two instalments: $300,000 on Feb. 28 and $200,000 on April 28. The court will then forward it to the B.C. Civil Forfeiture Office for distribution to victims.

DeVries also has agreed to a 17-year suspension from the B.C. securities market; Grafke, to a 15-year suspension. Bromley and Campbell have agreed to five- and two-year suspensions, respectively. Bromley also has agreed to pay $9,000 restitution.

As far as the religious aspect is concerned, DeVries and Grafke admitted only that “IPIC, through Amber, was able to expand the Ponzi scheme into the B.C. evangelical community, causing significant losses to the investors.”

There was no reference to using religious affiliation or invoking God to exploit investors. “This was a novel allegation and one that has not ever been tested,” says Leong.

“Had the negotiations fallen apart, we were quite prepared to go to a hearing and present evidence on all the allegations,” she continues. “But in the interests of the restitution order, we agreed to the settlement as you see it.” IE

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