Pyramid scam's bookkeeper admits that she lied, hid records

Her testimony shed new light on the scheme, which cost Minnesota investors $30 million.

By JON TEVLIN, Star Tribune

Last update: July 23, 2008 - 8:19 AM

The bookkeeper for a company that turned out to be a church-based pyramid scheme testified Tuesday that when the Securities and Exchange Commission froze the accounts of the Joshua Tree Group, she was told by its founder, Neulan Midkiff, to remove records and computers from the office.

She also testified that she lied about that fact to the grand jury that heard evidence in the case.

Amie Jo Black's story in some ways mimicked those told by others who invested with Neulan, who was both her boss and her uncle. Like hundreds of others, she at first believed in the promise of his investment program so much that she took out a second mortgage to invest in it. Months later, as checks from a connected national scam bounced, Black said she began to "have concerns" about its future.

But Black told no one.

Midkiff is now on trial for his actions directing the scheme, which prosecutors say swindled hundreds of Minnesotans out of a combined $30 million.

The 66-year-old founder and self-proclaimed "apostle" of Shiloh Family Church of Forest Lake faces charges of mail and wire fraud, money laundering and failing to pay taxes on millions of dollars of income.

Clients were promised 7 percent monthly returns in an international banking investment. But the monthly payments were actually the principal from new clients.

Midkiff's attorney said his client was himself duped by Travis Correll, an Atlanta man who ran a larger scheme called Horizon Establishment. Correll has admitted that he ran a pyramid scheme and has been sentenced to 12 years in prison.

Black's testimony in U.S. District Court in Minneapolis shined the clearest light yet on the complicated scam, which juggled accounts of more than 500 Minnesota investors and up to $1.5 million a month.

Asked by a prosecutor what would have happened had she reported her suspicions about the company to investors, Black replied, "It would have fallen apart."

Black, who has no accounting experience, said she lied to the grand jury about hiding records "out of fear." She was paid $1,000 a month by Midkiff for part-time work. He also donated $30,000 to her children's school and paid for an addition on her house.

Black testified that Midkiff was making "lots" of money while the scheme was still operating. Before it started, he was living in "a trailer house," she said.

Now, he lives "in a house on the lake," she said.

Though Midkiff pitched the scheme to clients at his ministry offices in Blaine, it was run out of an apartment in Forest Lake.

Several members of his family invested, worked for him or were "intermediaries" who received large commissions for bringing in new investors. Hundreds of victims were neighbors from Forest Lake.

Jon Tevlin • 612-673-1702