Saturday, May 06, 2006
John DeVries, a prominent member of the New Life Church in Kelowna,
pressured church members into investing in an ill-fated business by
claiming the investment had been endorsed by God, the B.C. Securities
Commission has alleged.
In a notice of hearing released Friday,
the commission said DeVries, 60, and an associate, Ernest Reed Grafke of
Dallas, Texas, "represented to religiously devout individuals that an
investment in Amber [DeVries' company] was sanctioned by God."
"This put unreasonable pressure on these individuals by exploiting their
beliefs and the trust shared among them within their religious
The commission accused DeVries and Grafke of perpetrating a fraudulent
scheme in which investors lost $10 million US. Of this amount, $2
million US was lost by B.C. residents.
The commission has also accused the Grafke and DeVries, along with his
son David and two pastors at the New Life Church -- Ralph Bromley and
Wesley Campbell -- of selling unregistered securities.
A panel will convene June 5 to set a date for a formal hearing. If found
guilty, the respondents could be barred from acting as officers or
directors of B.C. companies, stripped of their trading rights and fined
up to $250,000 each.
The commission's notice of hearing was released two days after a public
relations agent and a lawyer for DeVries, his son David and Grafke
contacted The Vancouver Sun to provide their version of events before
the commission made its formal allegations.
The lawyer, Carey Veinotte, portrayed his clients as victims of a
massive Ponzi scheme perpetrated by Gregory Setser of Alta Loma, Calif.
During 2002 and 2003, Setser and several associates operated a company
called IPIC International Inc., which purportedly bought and sold large
quantities of merchandise and real estate.
Setser told prospective investors, many of them members of evangelical
Christian groups, they could realize a 25-per-cent return within three
to six months, which could be used to benefit Christian ministries.
But the U.S. Securities and Exchange Commission alleges that Setser
invested little, if any, of the money. Rather he used it to pay earlier
investors, and to support an extravagant lifestyle that included homes,
a yacht and a helicopter.
Veinotte said DeVries, who now lives in the Turks and Caicos, set up
Amber Enterprises Ltd., a Bahamian company, to participate in Setser's
business, which he believed to be a viable business.
He said DeVries raised about $30 million from 600 investors around North
America, including about 80 individuals or families connected to the New
Life Church in Kelowna, for investment in Amber. Amber, in turn,
invested the money in IPIC-related ventures.
He said IPIC began making payments to Amber, but those payments began to
slow in the summer of 2003, prompting DeVries to obtain more security
and press for repayment.
In November 2003, the SEC intervened and charged Setser with operating a
giant Ponzi scheme. IPIC collapsed and, according to the B.C.
commission, Amber investors lost $10 million US. (The Sun incorrectly
reported Friday that B.C. investors lost $12.2 million Cdn.)
According to Veinotte, DeVries was one of the victims, losing $1.2
million. The commission, however, does not portray him as a victim. In
its notice of hearing, it describes DeVries as "the guiding mind" behind
the Amber promotion.
It says son David reviewed and approved all applications from potential
investors, and Grafke was responsible for producing and disseminating
information to potential investors.
For its services, the commission says, Amber collected fees and paid
them to the three men. No amounts are mentioned.
The commission says many of the investors were members of the New Life
Church, or contributors to a church charity called Hope for the Nations.
It alleges that Bromley and Campbell, who are pastors at New Life Church
and officials of Hope for the Nations, used their positions to solicit
investors and further the sale of the securities, which were not
registered for sale.
Their lawyer, Stephen Jackson of Vancouver, said Friday that Bromley and
Campbell personally invested in IPIC and then told other people about
what appeared to be a good investment. He said they did not receive any
"They never suspected that IPIC was fraudulent and they were not aware
of the applicable securities laws. Even if they did know, they would
never have viewed themselves as selling securities. They thought they
were buying goods, not securities."
The board of elders at New Life Church issued a new release Friday
stating that it is "extremely saddened" by the losses suffered by church
"As you can imagine, those who lost money, including those named in the
BCSC notice of hearing, were devastated and embarrassed by the
developments that came to light. . . . As the public can appreciate,
those of our church members who suffered loss wish to put these things
behind them and move on."
The commission further alleges that DeVries and Grafke, in promoting the
Amber investments, falsely represented that:
would be guaranteed higher returns than they could realize in
the stock market.
conducted proper due diligence on the buyers and sellers
involved in the IPIC investments.
business would expand from hundreds of millions of dollars to
spending significant funds to comply with securities regulations
and was compliant with securities laws and current in all
The commission alleges that DeVries and Grafke failed to advise
investors of certain critical facts on a timely basis, or at all,
including the fact that countless products supposedly purchased by IPIC
with investors' money had been stolen or had gone missing, and that IPIC
owed Amber almost $60 million.
"By making deceitful statements to them and by failing to inform them of
material facts, John DeVries and Grafke perpetrated a fraud against
investors," the commission alleges.
The commission also accused DeVries and Grafke of engaging in unfair
practices when they claimed that investments in Amber were sanctioned by
"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," it alleged.
Veinotte earlier told The Sun that his client did not know that IPIC was
a pyramid-like Ponzi scheme. He said after IPIC collapsed, DeVries
contributed $500,000 US to a trust account that the U.S. receiver
established to reimburse those who lost money.
Mike Quilling, one of two Dallas lawyers overseeing the receivership,
said Amber Enterprises, which is probably DeVries, gave him a cheque for
"My impression is he's not a victim, he received more money back than he
put in, and what he did is pay that money to me. He's one of the people
who got off the merry-go-round," he said.