Kent R E Whitney

A former Chicago options trader from Newport Beach is set to plead guilty to orchestrating a roughly $33-million church-based investment scam. Kent R.E. Whitney, 38, agreed to plead guilty to one count each of mail fraud and filing a false federal income tax return, according to a plea agreement filed Wednesday in U.S. District Court. According to his plea agreement, Whitney ran the Ponzi scheme from September 2014 until April 2019 out of Church for the Healthy Self, which he founded and operated out of a Westminster strip mall. The church appeared to have no sanctuary. At Whitney’s direction, church representatives appeared on television and at live seminars at church offices to solicit investments in CHS Trust, the church’s investment arm, and made several false or misleading claims, authorities allege. They included guaranteeing an annual rate of return of 12%, guaranteeing a return of principal with no risk because CHS Trust was federally insured and boasting that the church’s traders had not lost money in 15 years. Whitney and his associates targeted the Vietnamese community by advertising on Little Saigon radio and television stations as well as on YouTube. The scheme identified at least 355 investors. Investors sunk more than $33 million into the scheme over the 4½ years, but in reality, little of that money went into any trading accounts, court documents state. But Whitney directed that monthly statements be sent to investors showing falsified reports of returns, authorities say. Whitney also admitted that he filed a false federal income tax return in 2018 claiming $17,539 in total income even though his true income was at least $452,872, largely obtained through the fraud scheme. The resulting tax loss was at least $130,808, according to the plea agreement. Whitney faces a sentence of up to 23 years in federal prison. He has a previous federal conviction for defrauding investors in a commodities scheme. He had been released from prison a few months before forming Church for the Healthy Self. The FBI investigated the case with the assistance of the U.S. Securities and Exchange Commission.