Cliff Buchan
News Editor

A federal investigation of a fraudulent high-yield investment scheme involving figures in Georgia and Texas now includes the probe of a Forest Lake man.

The probe by the U.S. Securities and Exchange Commission and the FBI is focusing locally on Neulan D. Midkiff, a figurehead in the Shiloh Family Church, Forest Lake, and other religious organizations.

The federal agency has sued to halt what it calls a high yield offering fraud and to freeze assets for investors, including some in the Forest Lake area.

On December 7, 2005, the SEC filed an emergency action in United States District Court for the Eastern District of Texas against Travis E. Correll of Atlanta, individually and d/b/a Horizon Establishment, and his companies The Net Worth Group, Inc. (ìNet Worth Groupî) and Travis Correll & Company, Inc. (ìTC&Co.î), Gregory Thompson of San Antonio, TX, and his company TNT Office Supply, Inc., (ìTNTî) Dwight J. Johnson of Garland, TX, Harry Robinson ìRobbieî Gowdey of Frisco, TX, individually and d/b/a Atlas and Jericho Productions, Grant Cardno of Norfolk Island, a territory of Australia and his entities, The Liberty Establishment, Inc. (ìLibertyî) and Sovereign Capital Investments, S.A. (ìSovereignî), Neulan D. Midkiff of Forest Lake, and his entity, Joshua Tree Group LLC (ìJoshua Treeî).

The court action filed in United States District Court for the East District of Texas charges that the defendants are engaged in an ongoing fraudulent high yield investment scheme by which they raised approximately $36 million since July 2004.

The court granted a temporary restraining order, asset freeze and other emergency relief against defendants Correll, TC&Co., Net Worth Group, Thompson, TNT, Johnson, Gowdey, Midkiff and Joshua Tree, the Forest Lake organization.

In its complaint, the Security and Exchange Commission alleges that the defendants are offering and selling interests in purported foreign and international bank deposit programs (collectively ìBank Deposit programsî) promising four to 12 percent monthly returns without risk to their investment principal.

The SEC also alleges that investors send or wire their money to TNT or to one of Correllís entities -- Net Worth Group or TC&Co, and that all of the funds are then transferred to a Horizon Establishment bank account controlled by Correll. According to the complaint, investors are told that Correll, the ìmoney manager,î forwards investor funds to Cardno, who deposits them in an offshore reserve account; Cardno, identified as the ìtrader,î with exclusive contracts with international banks, supposedly uses the monies in the reserve account to participate in trading programs and loan programs.

In reality, according to the complaint, the bank deposit program does not exist and none of the investorsí funds are sent to Cardno, his entities or to any offshore account for investment. Instead, as set forth in the complaint, all of the investor funds are commingled among various Correll-controlled accounts, and the ìinvestment returnsî paid to investors are Ponzi payments, i.e., they derive from the proceeds of more recent investors.

Ponzi schemes are named after a Charles Ponzi who conducted such a scheme in 1919-1920. A Ponzi scheme is an investment scheme in which returns are paid to earlier investors, entirely out of money paid into scheme by new investors. The scheme is another form of Pyramid schemes.

The commission also names in its complaint, as relief defendants, Banner Shield, LLC, Hospitality Management Group, Inc., Creative Wealth Ventures, LLC and JTA Enterprises based on their alleged improper receipt of investor funds. As part of its emergency relief, the court issued an order freezing any investor funds in the relief defendantsí control.

The SEC alleges in its complaint that defendants Correll, individually and d/b/a Horizon Establishment, TC&Co., Net Worth Group, Thompson, TNT, Johnson, Gowdey, individually and d/b/a Atlas and Jericho Productions, Cardno, Liberty, Sovereign, Midkiff, and Joshua Tree each violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

In addition to the emergency relief that has been granted, the SEC seeks against each of the defendants permanent injunctions, disgorgement plus prejudgment interest and civil money penalties.

Locals not talking

Efforts to reach Midkiff and other leaders produced little information.

Telephone calls to both of the homes listed as residences for Midkiff and his wife, Donna, were not returned. They were also not available for comment through a telephone number to their Feast of Tabernacles Ministries. The ministries also carries a Forest Lake Post Office Box, 444, as its local address.

Shiloh Church co-pastors, Matthew and Wendy Goers of Forest Lake were reached by telephone on Dec. 29 but declined to comment on the whereabouts of Midkiff.

ìI donít know how available he is now,î Matthew Goers said.

The Shiloh Church web page identifies Midkiff as an apostle.

As part of his function with the church, the Apostle Midkiff and his wife Donna, described as a Prophetess of the Feast of Tabernacles Ministries, conducted five-day personal prophecy training programs.

FL Police role

Forest Lake Police Department investigators have had a minor role in the on-going probe but have been given a hands-off directly by FBI agents, city police said last week.

Officers here were notified but had no part in the execution of search warrants in December carried by FBI agents from Minneapolis and U.S. Postal Service inspectors on Dec. 10 at the Midkiff home at 7580 Hilo Lane N.

Police said a search warrant was also executed at the Shiloh Church, 21288 Harrow Ave. N.

Representatives of Hays Financial Consulting, LLC, of Atlanta, the court appointed receiver, have also carried out functions in Forest Lake where Midkiff assets were seized.

Forest Lake investigator Bruce Peterson said the police here have found no criminal acts in the Midkiff matter, but have been turning over information to postal inspectors and the FBI. A postal investigator was in Forest Lake on Dec. 29 meeting with Peterson.

The SEC in its findings posted on its web site also acknowledges the assistance of the United States Attorneyís Offices and the Federal Bureau of Investigation in Atlanta, Minneapolis, Dallas and Fort Worth and the United States Postal Inspection Service in Minneapolis.

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