Ex-Hedge Manager/Pastor Blames Partner

Date: Monday, January 14, 2008
Author: HFN Daily Report

A former pastor of a church in Colorado Springs, Colo. who is accused of defrauding his own parishioners through a hedge fund operation said he wasn't responsible for the loss.

Douglas Scott, who founded the River of Life Church, testified at his criminal trial that he relied on XL Capital Partners fund manager Hamilton Bird as to how the fund was going, according to a report in the Colorado Springs Gazette. XL was founded by Scott, Bird and David Newton and collected almost $24 million from 450 investors, who were mostly church members or religious organizations.

Scott also testified that XL's investors who he "loved and respected" were "devastated" when the hedge fund collapsed.

But prosecutors charge that Scott, Hamilton, and a third officer, David Newton, used the firm's money for personal and unauthorized business expenses, such as a new home and a corporate jet.

XL is in receivership, while the church has closed.

The firm's three principals have already settled civil suits against them and agreed to pay back about $21.65 million.

Newton agreed to a plea bargain in his criminal case and got 15 years probation and community service. He also agreed to testify against his partners.

Bird is set to go to trial at the end of March. He already has two felony convictions, which under Colorado law, means his sentence would triple if he is found guilty of another felony.

Scott could go to jail for four to 12 years, if he is convicted.