A former usher at Mercer Island Covenant Church pleaded guilty late last month to securities fraud for stealing more than $3 million from church members and others, according to the King County Prosecuting Attorney’s Office.
Stephen J. Klos was charged in April of last year with 28 counts of securities fraud for running a Ponzi scheme, during which $1.4 million was allegedly stolen from several elderly victims in the Seattle area. Klos met victims at his church and told them that he would invest their money, but used most of the money for his personal benefit and to pay back other investors. Investigators said that Klos raised a total of $3.5 million from investors since 2004.
Greg Asimakoupoulos, the former pastor of Mercer Island Covenant Church, said that he had been concerned about Klos as early as 2005. When contacted by a family member of one victim, he and others went to police in 2008. Asimakoupoulos said that Klos had been repeatedly asked to stop soliciting members for his various schemes and was ultimately told to leave the church that year. He later began attending a church in Bellevue.
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.
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.
If convicted as charged, Klos, 86, faces a sentence range of 51 to 68 months in prison.