SEC files fraud charge against Arvada man

By David Milstead, Rocky Mountain News (Contact)

Published July 29, 2008 at 8:46 p.m.

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DOCUMENT: SEC vs. Anderson

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An Arvada man who made headlines two years ago with a promise of $150 million to his church faces civil fraud charges by the Securities and Exchange Commission.

Stanley W. Anderson's donation to the Presbyterian Church (USA), announced in June 2006 at its annual meeting, was described as the largest gift in the church's history.

Anderson told The Denver Post at the time that most of the pledge would arrive in about a month from "off-shore investments we have been working on for quite a period of time."

The SEC says Anderson and four partners were actually conducting a Ponzi scheme, taking $5.1 million from investors while promising short-term returns of up to 1,000 percent through trades in notes issued by European banks. Some of the money was used to pay debts of and civil judgments against Anderson's business, E-Smart Services.

"All of the essential representations made to investors and potential investors were false and, in fact, the program defendants described did not exist," the SEC said in its civil complaint against the men.

After a front-page Denver Post article in June 2006 on the $150 million donation, Anderson's aggrieved lenders, partners and investors approached the newspaper with stories of money provided but never repaid.

Anderson, 63, of Arvada, founded ProCard, an early leader in corporate purchasing cards, in the late 1980s. Investors in the company forced him out by the mid-1990s, and the company was sold in 2000 for about $25 million.

Anderson did not return a phone call Tuesday morning seeking comment. Joey Bailey, the chief financial officer for Presbyterian Church (USA), said it had not received any money from the pledge. "The church would continue to hold Mr. Anderson and his family in our prayers," he said.

Of the $5.1 million invested, the SEC says $2.93 million was used for payments to early investors or was misappropriated.

The SEC said Anderson and Edwin A. Smith, 57, another E-Smart Services executive, "pocketed" $372,500 and $673,285, respectively, and together misspent another $1,516,420. Of the $1.5 million, $415,000 went to Ponzi payments and $360,000 went to unrelated civil judgments and loans.

The SEC said Charles L. Kennedy, 66, a Florida pastor who recruited investors for the scheme, took $245,000 before it ever got to Anderson and Smith.

The SEC said Michael D. Norton, 60, and Nicholas R. Fair, 61, acted as sales agents, with Norton receiving $98,450, minus $31,000 he used to pay off investors. Fair misappropriated at least $7,000 and received $16,000 in commissions, the SEC said.

Attempts to reach Smith, Kennedy, Norton and FairTuesday were unsuccessful.

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