Former Fort Smith associate pastor pleads guilty to mail fraud, false tax return

Thomas James, a former associate pastor at St. James Missionary Baptist Church in Fort Smith, pleaded guilty on Thursday (Sept. 10) to one count of mail fraud and one count of making a false tax return.

According to court records, James, 34, also was previously employed as a broker for Merrill Lynch, but was terminated for lack of production. His broker license went inactive on Sept. 3, 2010. James was not registered with the Arkansas Securities Department as a broker, dealer, agent, or in any other capacity since he was terminated from Merrill Lynch.

After his termination from Merrill Lynch, James continued to sell securities to investors and misappropriated the investors’ funds. As part of his scheme, James approached potential investors, a majority of whom were retired and members of St. James Missionary Baptist Church, with proposals to make investments through him. James then fraudulently induced investors to invest funds through false representations that their funds would be invested in a U.S. Treasury Bond, which were insured and guaranteed by the full faith and credit of the United States Government.

James however did not invest the funds in a U.S. Treasury Bond, but instead converted the funds to his personal use. It was further part of the scheme that James sent statements to investors via U.S. Mail providing investors with false assurances that their funds had been invested in U.S. Treasury Bonds. As a result of the scheme to defraud, the investors lost approximately $200,000.

During a deposition, James admitted that the funds were never invested in a U.S. Treasury Bond, but were placed in his personal account. Additionally, James admitted that he filed false tax returns from 2008-2012, and that he owed the United States additional taxes in the amount of $205,566.46.