A Ponzi scheme conducted by convicted Minooka businessman Kenneth Courtright is proving a nightmare for several charities that accepted hundreds of thousands of dollars from Courtright and his wife, Kerri, dating back to 2010.
Kenneth Courtright was convicted on seven counts of wire fraud on July 7. He faces up to 20 years in prison at sentencing on October 4. Kerri Courtright was not charged in the fraud.
For Messiah Lutheran Church in Joliet, and two other charities and a high school that accepted more than $1.1 million in donations from Courtright’s businesses, the blowback from his criminal behavior is proving at best a headache, and at worst may be financially devastating. Messiah Lutheran and the others now find themselves defendants in a civil lawsuit and may well have to pay back money they have already spent. In Messiah Lutheran’s case, they stand to forfeit assets they purchased with funds given to them by Courtright.
No trial date has been set, but a hearing is scheduled for July 28 at the Dirksen Federal Courthouse downtown.
Messiah Lutheran’s assets include a 7,400-square-foot multipurpose facility designed and built between 2015 and 2017. The 23-foot-tall space is used by the congregation for basketball, volleyball, banquets and other events.
Not only is a court-appointed receiver demanding the donated money back, she contends that the four organizations — Messiah Lutheran, Don Shire Ministries in Wisconsin, Legacy Families of Channahon, and Joliet Catholic High School — “… knew or should have known of (Courtright’s) fraudulent scheme …” and were fraudulently unjustly enriched under Illinois law.
On Dec. 30, 2019, federal judge Andrea Wood issued a Temporary Restraining Order, or TRO, freezing the assets of Courtright’s businesses, Today’s Growth Consultants, LLC, and The Income Store, and appointing a receiver to take control of the company’s assets.
The receiver, Melanie E. Damian, has reported that TGC/Income Store records “indicate a loss in 2018 of $5.7 million and in 2019 of $7.5 million. Indeed, the payroll expense alone exceeded TGCs website/e-commerce revenue.” In 2018, she said, website revenue was under $2 million, but the purported website payout to investors was approximately $12.7 million. In 2019 website revenue was under $4 million while payouts to website investors was $16.5 million.
The court authorized Damian … “to commence actions to recover assets of the Receivership Estate.” Damian alleges that Messiah Lutheran and the others “received substantial amounts of funds from TGC without providing value to TGC in exchange for those funds.”
In Messiah Lutheran’s case, $780,059 was given it by Courtright in 477 donations between Jan. 10, 2010 and Sept. 6, 2019. Joliet Catholic High School received $151,840.86 over a similar period, Legacy Families received $107,910 and Don Shire Ministries received $72,001 between July, 2017 and Sept. 2019.
“TGC made the transfers at Courtright’s direction, as a result of his fraudulent domination, adverse interest in, and control of TGC and as part of his continued breaches of his fiduciary duties to TGC,” Damian said. As receiver, she brought the lawsuit “to collect monies that were improperly transferred, dissipated, misappropriated, or lost from TGC as a result of the fraudulent transfers to, and unjust enrichment of Defendants.”
Those charitable organizations, she argued in a filing, “received the Transfers without providing reasonably equivalent value to TGC in exchange for those Transfers.” She contends that constitutes “unjust enrichment” and/or “fraudulent transfer.”
Damian added that Messiah Lutheran and others also “… increased the damages suffered by TGC by increasing the amounts owed to investors and creditors, which will be reflected in any restitution that TGC will be required to pay.”
“TGC had the actual intent to delay, hinder, or defraud investors and creditors, and made the Transfers (to Messiah Lutheran and others) to delay, hinder, or defraud investors and creditors.”
“It is inherently unfair and inequitable,” Damian wrote, “violating fundamental principles of justice, equity, and good conscience that the funds of investors defrauded in TGC fraudulent scheme are retained by and used to personally benefit (Messiah Lutheran and the others).”
Damian called Messiah Lutheran and others “insiders,” and argued that they “… knew or should have known of TGC’s fraudulent scheme as insiders of TGC.”
Messiah Lutheran refutes claims that they knew anything about Courtright’s criminal activities when they accepted his donations. In a motion filed May 5, the church’s attorney, James A. Murphy, stated, “it is notable (in a deposition filed by the receiver) that there is no allegation that the Church had anything to do with the Ponzi scheme nor is there any allegation that it knew anything about the alleged Ponzi scheme.”
Murphy added, “Generally, proof of a Ponzi scheme requires a showing that money from new investors is used to pay off old investors.” He told the court he intends to have a Certified Public Accountant, Reid Filotto, “provide an opinion that in certain years where donations made to the Church by Today’s Growth, it cannot be determined from the financial records and documents that money from new investors was used to pay prior investors.”
Filotto’s opinion, Murphy said, “… rebuts the opinion of the Receiver’s expert that there were attributes of a Ponzi scheme from December 2011 through December 2019.”