WHEN DALE WALKER,

pastor of the SeaRidge Church in Irvine, Calif., opened his May 2003 issue of Christian Times, a Protestant newspaper distributed throughout the Southwest, he noticed an eight-page ad insert labeled "Christian Investing: Special Report By Undervalued Quarterly." The cover page of the ad quoted Mathew 7:7. "'Ask,' Jesus said, 'and it will be given to you.' "

Walker went on to read about an investment opportunity in a Minden, Nev.-based "church development" company called Kingdom Ventures. The ad included the eye-opening tidbit that research firm Alpha Analytics was recommending shares of Kingdom Ventures, then trading at about 90 cents, with a price target of $9.13.

On Page 2 of the ad, the visage of Pertti "Peter" Luhanto, a middle-aged man with salt-and-pepper hair, smiled serenely back at Walker. "I see this as the ultimate way for me to expand your financial opportunities and your impact in such a positive way that we all touch more lives for His glory," says Luhanto in a letter to his "fellow Christian."

Walker was outraged. "They were using scripture in a twisted way to entice Christians to jump onboard their highly speculative investment," says the 45-year-old pastor.

What Walker couldn't have known at the time was that Undervalued Quarterly was a scam. Its Web site, undervaluedalert.com, has since been shut down. The Internet registry that owned the undervaluedalert name, eNom, said the site had been discontinued for reneging on its contract and sold to a new operator. While it's impossible to visit the old site, a cached version touting a remarkable investment opportunity in a "little known church development company" still exists on Google.

And that Alpha Analytics price target? The report, which SmartMoney.com obtained from Kingdom Ventures, might seem legit to a novice investor, but it's patently fraudulent to the trained eye. There are no names, phone numbers or addresses on it, and the legal disclaimer beneath the company description borders on the absurd.

Welcome to Christian investing, Nevada style.

Kingdom Ventures, which started off making Bible-character teddy bears a few years ago before branching out into such diverse markets as laptop computers, candles, book publishing and Web site construction, is as dicey an investing proposition as a game of Vegas craps. In the 11 months following the company's public offering (shares trade on the over-the-counter bulletin board), it has been involved in a variety of activities so sordid they might make the former managers of Enron blanch. Its stock, which now fetches less than 20 cents a share, has suffered accordingly, plummeting more than 80% from the intraday high of $1.10 it touched on April 29.

You don't have to tell that to investors who bought shares earlier this year. Chris, a 32-year-old engineer who lives in San Diego (he asked us not to use his last name), decided to invest in Kingdom Ventures after reading the Undervalued Quarterly insert in the Christian Times. He says he'd never bought an OTC stock before, but the fact that Kingdom was a Christian company piqued his interest. "I had more faith," he says. The company "talked about being transparent to its investors and doing everything with investors in mind. That turned out to be a lie." After watching the stock steadily deflate, Chris's faith turned to disgust, and he dumped the bulk of his shares in July for a loss of more than $6,000.

The Mission
Like the Blues Brothers, Kingdom Ventures likes to tell people it's on a mission from God. A July press release, for instance, said the company's mandate is to "help churches focus on their core mission reaching people for God." Its fiscal 2002 earnings release on June 18 proclaimed that "Kingdom Ventures believes that you can not regulate integrity, but as a Christian company, Kingdom's executive team knows that they answer to a higher authority."

At least one higher authority has taken an interest in Kingdom Ventures of late: the Securities and Exchange Commission. In its 10Q, filed Sept. 19, Kingdom revealed that the SEC has launched an investigation into speculative trading activities in its stock. "We have been advised that the SEC is investigating possible violations of the securities laws arising from activity in our common stock," the company said in the filing.

The SEC can't confirm the investigation until it reaches a determination as to whether any securities law has been violated. Our-Street.com, a market watchdog based in London that reported a number of suspicious activities by Kingdom Ventures on its Web site, filed a complaint with the SEC about the company earlier this year.

But while Kingdom admits that some of its actions have been ill-advised, it claims it has been duped by its ex-partner, Resource Capital Management, a business developer based in Houston that helped take Kingdom public and was put in charge of its investor relations activities. RCM, alleges Kingdom spokesman Jeff Lambert of PR firm Lambert Edwards & Associates, served as a patsy for a group of pump-and-dump boosters who engaged in speculative activity in Kingdom's stock earlier this year.

"It looks like a penny-stock scheme, it smells like a penny-stock scheme, so it probably is a penny-stock scheme," says Lambert, whose Grand Rapids, Mich. firm was hired by Kingdom in July after Kingdom severed ties with RCM.

Shell Game
Formerly known as Legends of the Faith, Kingdom Ventures, headquartered 10 miles south of Carson City, employs about 200 people. Its chief executive, Gene Jackson, has been aggressively pushing the company to exploit what he estimates as the "$49 billion church market and broader Christian consumer market." But a number of these moves, all announced in breathless press releases, resemble hazy mystical visions more than actual business transactions.

Take, for instance, Kingdom's plan to build Web sites for churches across the nation for free.

On May 6, Kingdom issued a release with the headline, "Kingdom Ventures to provide free web sites to nation's 400,000+ churches." Then, on May 27, the company issued a related release entitled "Ventures Files 8-K with the SEC Total Assets Now Exceed $6 Million." That 8(k), filed May 23, announced the formation of Kingdom Connect, a wholly owned subsidiary of Kingdom Ventures. The entity, according to the 8(k), "has entered into a contract with YourNetPlus.com, Inc. providing for the prepayment of the set up, development, maintenance and service fees associated with 5,000 private label websites to be offered to Kingdom's church clients."

In the May 27 release, the company said Kingdom Connect would issue one million Series A preferred shares to Monroe, N.Y.-based Internet aggregator YourNetPlus.com to prepay for the Web sites (the 8(k) lists it as 750,000 preferred shares). As a result, the "contract has been reflected on the balance sheet of [Kingdom Connect] as a prepaid expense with a value of $5 million, which will be recognized on a straight line basis over the two-year term of the contract."

"This is great news both to our shareholders and our client churches," crowed Jackson in the release. "The contract with YourNetPlus.com increases our total assets to an adjusted $6,047,207."

But that $5 million figure came as a surprise to YourNetPlus.com. When SmartMoney.com contacted the company, its executives didn't know that Kingdom Connect had planned to prepay any fees. "I never heard of any prepayment," says YourNetPlus.com President Vince Dima. "How they came out with $5 million was not something I was involved with. I don't understand what they did there."

Carr Conway, a forensic accountant with Lakewood, Colo.-based Dickerson Financial Investigation Group and former senior staff accountant at the SEC, finds the arrangement highly suspect, especially considering that Kingdom Connect never gave any shares to YourNetPlus.com. "That [$5 million] is a fallacious figure," says Conway after looking over the deal. "It's fictitious from the start and a misuse of accounting."

Perhaps that's why the feds started nosing around. YourNetPlus.com's Dima says Kingdom told him that part of the reason it had to cancel the deal was because of SEC scrutiny, as well as a near total lack of interest in the service by churches.

Kingdom spokesman Lambert admits that the company seems to have been involved in some shady behavior. He places the blame squarely on Resource Capital Management, which was responsible for arranging a number of Kingdom's business deals earlier this year, including the one with YourNetPlus.com.

"Resource took them down a primrose path that turned out to be horrible for the long-term value of the stock," says Lambert.

RCM concocted the YourNetPlus.com agreement, he says, to "improve [Kingdom's] balance sheet to get them closer to a Nasdaq listing." Lambert characterizes the deal as "a shell game that Kingdom Ventures found out about after the fact."

In fact, Lambert says RCM was probably behind the stock-gaming activity the SEC is investigating. When asked whether he thinks RCM, or people associated with it, had a connection to the bogus Undervalued Quarterly ad, he says, "Not a doubt in my mind. There was clearly gaming going on in the stock, and that's the basis for the SEC investigation."

There were a number of huge leaps in the trading volume of Kingdom's stock earlier this year. On April 29, volume jumped more than 200% to 1.2 million shares from 393,100 the day before. Then, on May 27 the same day Kingdom announced its deal with YourNetPlus.com volume went into overdrive, trading at one million shares, 1.1 million, 3.8 million, and one million shares in four consecutive days as the share price fluctuated 38% between 80 cents and 58 cents. In mid-June, volume again leapt to the million-share range for several days in a row. Its average volume is about 114,000 shares, according to Reuters.

RCM held a sizable position in Kingdom Ventures at the time. On Feb. 2, 2003, Kingdom filed a Form S8 with the SEC providing for the issuance of warrants to purchase 7.85 million shares of its stock to RCM as compensation for services. Converting those warrants five million of which were convertible at one cent per share later "contributed $942,217 to [Kingdom Ventures'] operating expenses during the three months ended July 31, 2003," according to the company's second-quarter 10Q.

A spokesman for RCM who asked not to be identified flatly denies Lambert's accusations and any connection to the bogus Undervalued Quarterly ad. "It sounds like they have some problems, and they're trying to throw them at us," says the spokesman. He says RCM hasn't heard from the SEC.

But despite RCM's denials, there does appear to be a direct link between the Undervalued Quarterly ad and RCM. The ad appeared in the May 2003 issue of Charisma magazine, published by Strang Communications, a Lake Mary, Fla., Christian multimedia company. An ad-sales representative for Charisma said a company named Beuphoria placed the insert. The CEO of Beuphoria, said the representative, was listed as Peter Luhanto, and its marketing director was listed as Alvie Merrill. Beuphoria doesn't exist anymore; it was dissolved on Sept. 10, according to the office of the Secretary of State of Nevada. Merrill, who lives in Lake Jackson, Texas the city listed as the mailing address for Undervalued Quarterly denies having any roll in placing the Undervalued Quarterly ad.

Merrill also denies having any connection RCM. Jackson, however, says RCM referred Merrill's company, Merrill Zurich, to Kingdom Ventures to produce Kingdom's press releases. "Merrill Zurich was referred to us by RCM, and they were chosen as the press agent for Kingdom Ventures," says Jackson.

Merrill says he has no business relationship with Luhanto. But recently the two served as executives of a public company based in Las Vegas. A search of Nevada's corporate records shows that Merrill was chief executive of American Market Support Network, which was sold earlier this year and renamed Arizona Aircraft SparesAZAA.OB. On the OTCBB Web site, Merrill is listed as chief executive of AMSN. Luhanto, who couldn't be reached for comment and is thought by at least one source to be in Europe, is listed as its secretary.

Steven Brock, owner of GoPublicToday.com, an investment adviser based in Las Vegas that helped take American Market Support Network public, says he's shocked by the Undervalued Quarterly ad, which he hadn't seen until contacted by SmartMoney.com. "It's just mind-blowing to see [Luhanto] take a position like this," he says. "You're bringing something to my attention that is just shocking to me." Brock says he hasn't seen Luhanto or Merrill in nearly a year.

A Messy World
Intriguing though these connections may be, it will probably take an SEC probe into the activities of Kingdom Ventures and RCM to uncover the truth. Whatever the outcome, Kingdom's management must bear some responsibility for the suspect deals and announcements the company issued throughout the year. Jackson is quoted frequently in the company's press releases, and his name is on each SEC filing.

And while Jackson avows that the company is finished with misleading press releases, a recent imbroglio suggests it still has a tendency to exaggerate the nature of its financial dealings. On Oct. 14, Kingdom announced it had acquired the remaining assets of Christian Times, which had carried the Undervalued Quarterly ad insert that had so disturbed Pastor Walker. "Kingdom Ventures today announced that it has acquired the remaining assets of Christian Times from Keener Communications Group," the company stated in a press release.

Lamar Keener, president of Keener Communications, says that's a lie. "They purchased the name Christian Times," Keener says. "Not the assets. Any claim otherwise is simply not true, and they know it is not true."

When we first questioned Jackson about the deal, he stood by the company's claim that it had purchased the Christian Times assets from Keener Communications. "The reality is that we've claimed very clearly that we bought the remaining assets of the Christian Times" from Keener, the CEO said in an interview. But on Nov. 17, Kingdom issued a press release admitting that it "did not acquire the publishing assets of Keener Communications."

Perhaps the most outlandish episode in the Kingdom Ventures saga is the extraordinary claim by a former Kingdom Ventures executive vice president that the company stole from his credit card. John Howell, who left Kingdom in February, says Jackson requested the use of his American Express credit card to pay company expenses amounting to about $12,000. When he got his bill, he saw that Jackson had charged more than $60,000 to the card. Jackson admits having used Howell's credit card but says Howell himself had made the offer. Howell, now president of California health-food company NutraCea, says he plans to settle the matter with Kingdom Ventures in court in the near future.

Jackson, meanwhile, says he's shaken by the scams he claims others have perpetrated at the expense of his company. "We've been frustrated with the sewer of the OTC," says the CEO from his Nevada home after a cross-country business trip. "It's a messy world to live in, to say the least. If I had it to do over again, I certainly wouldn't have chosen to go this route."

Where will the company go from here? "We have to clean up the image of what Kingdom Ventures is all about," he says. "We just have to stay focused on the business aspect of who we are."

That may prove difficult, however. As of press time, Kingdom's biggest deal yet, the acquisition of Forest, Va.-based American Association of Christian Counselors, which was supposed to add $10 million in annual revenues, seemed to be unraveling. While Jackson declined to confirm that there were any problems with the pact, a mediation hearing between Kingdom and the president of the AACC, Tim Clinton, is scheduled for Dec. 15 in the U.S. District Court in the Western District of Virginia, according to the court's Web site.

Lord, have mercy.