Probation for Partner in $82 million Ponzi Scheme That Targeted Christians
Brad Heinrichs, who quoted scripture as he sold more than 100 investors—including his own parents—into an $82 million Ponzi scheme, was sentenced to a decade of supervised probation and house arrest, not the 69 years in prison he could have received for seven fraud counts.
Why so light a sentence for someone who was the front person for a massive scam?
Heinrichs’ attorney presented evidence that Heinrichs, who had sold the fake investments since 2005, was unaware he was involved in fraud, and when he realized it in 2014, he informed an investor and an accountant, helping bring the complex scheme to an end.
Stephen Hatch, the alleged mastermind of the fraud, was sentenced in 2017. He is “a con man who will spend the next five years behind bars for tricking Arizona families into investing in his Ponzi scheme,” said the Arizona attorney general.
Heinrichs’ attorney convinced the jury that Hatch had become a mentor to Heinrichs, a 2003 Point Loma Nazarene University graduate, so he could manipulate him into selling fraudulent real estate investments in Arizona, some of which promised annual returns of 25%.
(We reported on the scheme in October, but missed the November sentencing hearing, and are updating our coverage now.)
Heinrichs found investors at church, through friends, and at family gatherings. He said his mission was to help “Christian families” and “the little guy” grow wealthy while also helping build God’s Kingdom.
Some families lost their life savings.
Prosecutors said God talk was an essential part of the appeal to investors, and that Heinrichs “relied on religious affinity to solicit investments, gain trust, and assure investors that they would make money.” Religious assurances were used when clients raised questions.
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Heinrichs also told some clients that Hatch, 72, was a devout Christian who had previously retired from the financial world but was inspired to re-emerge from retirement because he wanted to help fellow believers grow wealthy.
Once the two scammers had cash in hand, it vanished amid elaborate deception. They gave their investors worthless promissory notes, issued fake “Investment Summary” reports that claimed their investments were growing, created 30 business entities to obscure their activities, and managed the whole operation using 17 different sets of financial records.
A representative of the Arizona Superior Court in Maricopa County told MinistryWatch that Heinrichs pleaded guilty to two counts last year: attempted fraud schemes and artifices for defrauding clients to invest in his schemes. But five other counts were dismissed.
Hatch’s children and assorted friends also profited personally from the scheme: some received salaries for doing nothing; others spent on luxury items; others invested in real estate. But none were ever charged as result of Hatch’s plea deal.
But the story may not be over. Attorneys for the Hatch/Heinrichs Victims Recovery Fund are trying to hold the scammers and others who benefited responsible and recover at least some of their lost investments.