Bilked Christians Must Go to Ohio Court

Ephram Taylor

Liberty City Church of Christ in Miami and five individuals lost their bid to hold a self-described “Social Capitalist” to account for allegedly losing their retirement savings in an $11 million Ponzi scheme that preyed on churchgoing African-Americans in 43 states.

U.S. District Judge Edward Davila Friday dismissed the church suit against City Capital Corp. and Ephren Taylor II and others, saying the plaintiffs must go to Ohio to sue, as required by the terms of the custodial accounts.

The church opposed going to Ohio because the state severely restricts the ability to recover class damages and thus, they argue it would impair their rights.

The San Francisco lawsuit accused Taylor of targeting hundreds of religious leaders, their churches and faith-based groups in 43 states and enticing them to transfer retirement funds to his shell companies.

In April 2012, the Securities and Exchange Commission charged City Capital, Ephren W. Taylor II, Donald MacIntyre and Alan Lipinski with operating a Ponzi scheme to swindle more than $11 million, primarily from socially conscious African-American churchgoers. Lipinski is from Santa Clara and served as City Capital vice president. MacIntyre living in San Jose and served as CEO and board chairman of City Capital, according to the suit.

Taylor allegedly offered investments in funds he promised would bear annual interest rates of between 12 percent and 20 percent, telling investors their funds would be used to purchase and support various small businesses, such as a laundry, juice bar or gas station.

The SEC filed the complaint in Atlanta, Georgia. The action is still pending.

The SEC alleged that City Capital never generated significant – if any – revenue from actual business operations.

Instead, money from new investors was used to pay the interest to older investors as well as City Capital executives. But the funds dried up in 2010, according to the SEC, leaving parishioners high and dry.

Davila said the church failed to meet its burden to show that “bringing the action in Ohio would contravene California public policy so as to sufficiently counter defendants’ motions to dismiss.” [Davila order here.]

Case: Liberty City Church of Christ v. Taylor, No. C12-4392EJD

SEC Action: SEC v. City Capital Corp., No. 12-cv-1249WSD



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