Pastor Indicted For Cryptocurrency Scam He Claims God Told Him To Do

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Affinity fraud is the name of the type of fraud where people put undeserved trust in someone offering an investment opportunity because that person is “someone like me.” Affinity fraud works because people trust other people who may share a common bond, such as family, religion or some other group affiliation. The list goes on and on. Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money.

In 2024 civil fraud charges were brought by the Colorado Division of Securities against Colorado Pastor Eli Regalado and his wife who created a cryptocurrency called INDXcoin and sold it to members of his online Victorious Grace Church through a cryptocurrency marketplace that he created and controlled between January of 2022 and July of 2023 The Regalados used their online church the to solicit investments from congregants claiming divine inspiration and telling investors they would have more money than they ever had in their life.

Regalado announced he was selling the cryptocurrency on YouTube, telling people that God told him to do this and that God said it was a safe and profitable investment. It wasn’t. According to Denver District Attorney, John Walsh $1.3 million of 300 investors’ money went to fund the pastor’s and his wife’s extravagant lifestyle which included a home renovation, luxury handbags, cosmetic dentistry and a Range Rover.

The Regalados marketed the INDX coin as a stable and secure cryptocurrency, citing a cybersecurity audit without providing the audit which rated it a 0 out of 10 and called it “catastrophically technologically deficient.”

INDXcoin could only be bought and sold on the Kingdom Wealth Exchange, the online marketplace the Regalados started and then shut down in November 2023 leaving purchasers holding coins that could not be bought or sold rendering them worthless.

Eli Regalado and his wife Kaitlyn Regalado were tried on the civil fraud charges in a bench trial in which they represented themselves before Judge Heidi Kutcher in the Colorado District Court in May, however, Judge Kutcher has not yet issued a ruling on the civil charges. Meanwhile, the two Regalados were indicted recently on forty criminal charges including racketeering, theft and securities fraud related to the same scam

According to District Attorney Walsh, “these charges mark a major step forward in our work to hold the Regalados accountable for their alleged crimes and to bring a measure of justice to the victims.”

What is the lesson that this case teaches us all?

Before investing with anyone, you should investigate the person offering to sell you the investment with the Financial Industry Regulatory Authority’s (FINRA) Central Registration Depository. This will tell you if the broker is licensed and if there have been disciplinary procedures against him or her. You can also check with your own state’s securities regulation office for similar information. Many investment advisers will not be required to register with the SEC, but are required to register with your individual state’s securities regulators. You can find your state’s agency by going to the website of the North American Securities Administrators Association. Many investment advisers will not be required to register with the SEC, but are required to register with your individual state securities regulators.

Anyone researching the Regalados would have found that they were not licensed to sell investments and that they were selling unregistered securities.

As for cryptocurrency investing, it is important to remember that you should never invest in something that you do not completely understand. This was a mistake that many of Bernie Madoff’s victims made. Cryptocurrency scams quite often involve complicated language and investment terms that are purposefully unclear in an effort to confuse potential investors from understanding the real facts. You also may want to check out the SEC’s investor education website at www.investor.gov. Scammers can be very convincing and it may sound like there is a great opportunity for someone to make some money, but you must be careful that the person making money is not the scam artist taking yours. Finally, investing with someone merely because you share the same heritage, nationality, religion or any other affinity is something you should avoid.