Jury selection began on Tuesday for the trial of Vaughn Reeves, founder and owner of Alanar, Inc. Reeves faces 10 counts of securities fraud in Indiana. Alanar, Inc. was a company allegedly in the business of securing mortgages for church construction projects. Reeves and his three sons, all of whom have plead not guilty, convinced over 11,000 investors into investing around $120 million in the bonds securing the mortgages. In reality, the money was used to pay off older investors, while funding their own personal $6 million spending on planes, vacations and cars.
Investors in Alanar, Inc. were located in Florida, Indiana, Michigan, Oklahoma and Maryland. The company presented itself as the ideal investment for investors with strong religious beliefs, as exhibited in their corporate filings with the SEC. One couple, who still has not had $47,000 of their investment returned, believed they had done the appropriate research and found a good religious organization giving back to the religious community. Unfortunately, 20% of the banks who supposedly secured financing through Alanar, Inc. are now in default, and at least 8 of the 150 churches are in foreclosure. Alanar, Inc.’s corporate receiver has returned approximately $35 million of investor money, and expects to return another $10 million within the next year.