Sherman Smith, 74, of Monterey, was sentenced today to seven years and three months in prison and ordered to pay $2,187,000 in restitution for a scheme that defrauded church congregants and others, U.S. Attorney McGregor W. Scott announced.
In sentencing Smith, U.S. District Judge Dale A. Drozd said, “Mr. Smith is a con-man and a thief.”
“Smith’s actions in this case went far beyond ‘misappropriation,’” said U.S. Attorney Scott. “In asking for church donations to support his scheme, he targeted widows for their deceased husband’s life insurance money; he asked for money to be withdrawn from retirements accounts; he damaged marriages and family relationships; he took away parents’ dreams of affording college for their children, and he destroyed lives. Today’s sentence is the second federal sentence for Smith, who previously served 37 months in prison for securities fraud that caused a loss of over $5 million with 38 different victims. Our office is committed to protecting the public from financial predators like Smith.”
“Smith abused his trusted role as executive pastor of a community church by diverting funds intended to help the church and congregation to fund his personal and business expenses,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office.
“The FBI is committed to investigating allegations of significant financial crime, especially those involving individuals who exploit trusted, valued relationships. While today’s sentence offers some justice to Smith’s victims, many face a long journey to financial recovery from the hardship this scheme created. We ask the public to commit to researching all financial investment opportunities, regardless of who is proposing or coordinating the investment.”
On Sept. 18, Smith, the executive pastor of a church in Clovis, pleaded guilty to wire fraud. According to court documents, Smith induced investors, including church congregants, to give money to the church by representing that the money would be used to finance a real estate development project for the benefit of the church.
Smith made appeals from the pulpit, via email, and in person for monies to pay off the church’s mortgage and to fund an income-generating development. Smith collected cash, checks, and rolled-over retirement accounts to fund the church’s project, but he did not disclose to investors that he used the money for personal expenses, to operate a publishing business, and to invest in foreign ventures. Smith defrauded investors of more than $2 million.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Laura D. Withers prosecuted the case.