Church founder says he's victim

The defendant took the stand to fight charges that he bilked investors out of millions. The founder of Shiloh Family Church said he was conned by a smooth-talking Atlanta businessman.

By JON TEVLIN, Star Tribune

Last update: July 30, 2008 - 11:45 PM

For nearly a month, U.S. prosecutors called more than a dozen witnesses to the stand to testify in the fraud case against Neulan Midkiff. On Wednesday, defense attorney Doug Olson called only one: the defendant, who portrayed himself as a country bumpkin hornswoggled by a slick Atlanta businessman whose company turned out to be a huge national Ponzi scheme.

"I'm not a businessman," Midkiff said repeatedly during more than eight hours of testimony at his trial in U.S. District Court in Minneapolis.

But in taking the stand to defend himself, Midkiff also allowed prosecutor Tim Rank to introduce evidence that Midkiff was involved in a half-dozen other companies, all of which were shut down as frauds by the Securities and Exchange Commission. They included companies selling fraudulent insurance policies and shares in phone booths.

During questioning by his attorney, Midkiff, the founder and "apostle" of Shiloh Family Church and head of His Feast of Tabernacle Ministries, looked and sounded every bit like a soft-spoken minister with a Southern accent. He wanted to help friends and neighbors reap good returns on their investments, and used his own proceeds to further his missions in Ukraine and Israel, he said.

Midkiff told how he met Travis Correll and how Correll persuaded him to invest an initial $20,000 in Horizon Enterprise, which claimed it put money in foreign banks and returned 8 percent in interest each month.

Instead, records show that investors were paid with their own principal and money from new investors in a scheme that took in as much as $390 million nationally. Midkiff's offshoots in Minnesota generated about $30 million, as news of astronomical gains spread from Forest Lake across the suburbs and south to Louisiana.

Midkiff testified he never thought the business was a scam.

"I had no reason to doubt [Correll]," he said. "The program was working. To me, it was an opportunity."

The scam began to crumble in late 2004. Investors' "interest" checks began to bounce. Midkiff said Correll blamed tightened banking security after 9/11.

Midkiff said various illnesses and medications affected his judgment and made it hard for him to recall details during that period. He said they may have also caused him to yell at a client who brought a financial expert to a meeting.

Under cross-examination, he cited numerous injuries and illnesses to explain why he hadn't paid taxes since 1989. At one point, he said, he fell down some stairs; he also said he had suffered a heart attack.

Not a U.S. citizen

After the Minnesota Department of Commerce tried to make a deal with him for back taxes, Midkiff fired his Certified Public Accountant and went with a company that purported to help people settle debt. The company told him he was not considered to be a U.S. citizen, and didn't have to pay taxes.

It's a tactic often used by tax protesters, including the recently convicted tax evader Robert Beale.

Midkiff was at times combative during cross-examination. He repeatedly denied having seen documents demanding back taxes, or documents showing his participation in other Ponzi schemes that were found at his home.

Several victims have testified that Midkiff encouraged them to get second mortgages on their homes or take out loans to invest with him, but he vigorously denied it. While bank statements show his company, Joshua Tree, paid investors with their own money, he said his bookkeeper and partner handled those transactions and he didn't know about it.

"I was not selling this product, I was referring people," said Midkiff, who nonetheless pocketed $280,000 in "referrals" during one stretch. "I didn't have to do anything. The phone would just ring and ring and ring."

Closing arguments are set for today, then the case will go to a jury.

Jon Tevlin • 612-673-1702