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Elder Resident Charged in $3 Million Ponzi Scheme

The 84-year-old resident was charged with 28 counts of securities fraud for allegedly taking $1.4 million from fellow parishioners and acquaintances made through the Mercer Island Covenant Church.

The King County Prosecuting Attorney's Office charged local resident Stephen J. Klos on April 6 with 28 counts of Securities Fraud for allegedly running a Ponzi scheme that bilked several elderly victims out of $1.4 million.

He's no  — the Mercer Island resident believed to be behind the state's largest-ever Ponzi Scheme — but the charges against Klos will likely resonate more deeply with a church and community he's lived in for decades.

According to an indictment filed with King County Superior Court, Klos defrauded at least 23 families of approximately $3.5 million from Feb. 2004 to Sept. 2009. Prosecutors say of that amount, $1.4 million is either spent on his "lavish lifestyle" or returned to investors to create the illusion that they were earning money on their investments. Also charged is his associate and housemate, Robert A. Justice, with five counts of Securities Fraud for his alleged role. The two men are summoned to face the charges later this month.

Investigators from the State Department of Financial Institutions (DFI) discovered Klos has a long history of shady financial dealings and was previously sanctioned by the U.S. Securities and Exchange Commission in 1992. The former securities trader was accused then of also orchestrating a Ponzi Scheme that raised over $3 million.

"Klos fraudulently misrepresented to the victims how he would invest their money, fraudulently represented to the victims his net worth, and fraudulently represented the successful track record of Justice," wrote DFI Investigator Tyler R. Letey. "Additionally, Klos took advantage of multiple elderly individuals and in some cases caused conflict between family members because of (his) intrusion into these families' financial affairs."

Two of the victims listed were Mercer Island residents: Naomi Antle, 85, and Marion Green, who recently passed away at 83 years old. Her daughter, Jane Meadows and husband Mark also invested with Klos. Together, Antle and the Meadows are believed to have lost over $750,000. 

Klos allegedly met his victims at , where he once served as Head Usher, and arranged to meet them elsewhere to discuss investing their money — but in fact, prosecutors say — he used most of the money for his personal benefit and to pay back other investors. Typically, Klos would return to his investors again and again, convincing them to liquidate their savings or refinance their mortgages to help pay for his alleged Ponzi Scheme.

Mercer Island Covenant Church Head Pastor Greg Asimakoupoulos said he was troubled by the fact that Klos — who he described as "a winsome, likable character," — could also be living a double life, convincing himself that he was right as took the money of fellow churchgoers while quoting from the Bible. He removed Klos from his role as Head Usher and managing the collection plate after he repeatedly tried to solicit health advice or gathering signatures from parishioners.  

"A church is a place that takes God's word seriously, it is a place that offers forgiveness for sin, it's supposed to be a safe place," Asimakoupoulos said. "But when someone's seizing on the opportunity of a crowd and finds easy targets where he could gain their trust — like in a church — that only confirmed my suspicions."

When family members began contacting the Pastor in 2008 with allegations of fraud and on one occasion angrily confronting Klos in the church sanctuary, Asimakoupoulos reported it to Mercer Island Police.

The Meadows have since filed for bankruptcy and relocated to Texas, while Antle is reportedly facing the foreclosure of her condominium.

King County Prosecutor Dan Satterberg said elderly victims were targeted in the scheme.

"The defendant used his charm and influence to persuade elderly victims to invest with him but instead used the money for his personal benefit and lifestyle," Satterberg said.

Klos, 84, could face 4 - 5 1/2 years in prison. Justice, 52, could be sentenced to 12 to 14 months as an accomplice. The arraignment is scheduled for April 20 at 8:30 a.m. in Courtroom 1201 at the King County Courthouse.

Jerry Gropp Architect AIA April 07, 2011 at 02:25 PM
It looks like Editor Kendall W. beat the Seattle Times on this sad story.
Kendall Watson July 31, 2012 at 01:15 AM
Did it again, too. ;-)

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