Second minister in pyramid scheme details 'rabbit chase' for money

Jerry Watkins, a partner of another Forest Lake minister on trial, also testified how their partnership was ripped off.

By JON TEVLIN, Star Tribune

Last update: July 24, 2008 - 9:34 AM

By most standards, Neulan Midkiff and Jerry Watkins had already gotten financial results that were otherworldly -- 7 percent monthly interest for them and a few dozen friends and family.

Their investments with Horizon Establishment, run by Travis Correll in Atlanta, had gone so well -- a half-million dollars in fees for Midkiff alone -- that they dared to ask themselves: "Is it possible we can make more money?" That question began a "rabbit chase," in Watkins' words, to capture more investors for their own spinoff, Central Financial Services, of what turned out to be a massive pyramid scheme.

Only this time, Midkiff and Watkins, the men charged with conning hundreds of Minnesotans, would themselves be conned in a new deal that mirrored the one they were staging in Minnesota.

Watkins previously pled guilty to four counts of mail and wire fraud. Midkiff is on trial on charges of mail and wire fraud and evading taxes.

Watkins testified Wednesday that days after he and Midkiff sent a $1.1 million check to West Wing Financial, they were informed that the FBI was interested.

West Wing was supposed to invest the money in overseas banking and return an 8 percent monthly interest payment, but instead they were informed the FBI had detected a "spending spree" with the money, Watkins said.

Watkins, who like Midkiff is a self-made minister from Forest Lake, described how he tried to do due diligence on West Wing. He called the bank listed by the company, even asked for the woman who supposedly held the account. When she picked up, he hung up.

"These were supposed to be private placements available to certain people, and we were not to call the bank directly," Watkins testified Wednesday. "They said we don't like wavy waters."

But when his bank said the FBI had come calling, "it scared me to death," said Watkins. He eventually got someone at the bank to tell him whether there was $1 million in West Wing's account.

The answer made him sick: "There's nowhere near that in the account, my friend," he said the banker told him.

Yet, Watkins and Midkiff continued to take in money from hungry new investors, which they then used to pay off the original investors.

Meanwhile, Watkins and Midkiff tried to scare West Wing into returning the money, even making up a murky letter that alleged they had gone to the "East Coast" and talked to "individuals used to collecting in incidents such as these."

But the Minnesota church leaders did not scare any money from their Las Vegas partners. So they turned back to the guy who had come through before -- Travis Correll.

Soon, however, Correll was under investigation and the money trickled to a halt.

Watkins, who says he and Midkiff were just "a couple of pine knots from Louisiana," began to smell a scandal and got a "blind panic in the back of my head." He realized they too were now paying old investors with money from new investors. But he never called authorities or told investors that Horizon had crumbled. He also kept getting paid.

"It's really hard to turn down $100,000 a month when you've been a poor boy all your life," he testified.

He argued with his wife, who wanted him to stop taking the money, he said. He argued with Midkiff, who fired him. Relieved of the stress of the scam, he took his wife, Misty, to Disney World.

That's where he got the call from Midkiff. Things had been settled with Horizon. If Watkins would keep his mouth shut, Midkiff would pay him $500,000.

Watkins kept his mouth shut.

Within months, investigators were at his door.

Jon Tevlin • 612-673-1702

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