What in the Name of God?

Walker went on to read about an investment opportunity in a Minden, Nev.-based "church development" company called Kingdom Ventures (KDMV). 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.