Michael Winans Jr., the son of Gospel Hall of Famer Michael Winans Sr., told investigators they could double their money in 60 days, according to Michigan Office of Financial Insurance Regulation Commissioner Ken Ross.
Winans Sr. is the brother of Nashville gospel stars CeCe Winans and BeBe Winans, who have not been implicated in the fraud. Neither they nor their publicists could be reached for comment.
The Office of Financial and Insurance Regulation issued a cease-and-desist order, although Ross said the alleged scheme probably stopped at the end of 2008. Detroit police identified and interviewed at least 180 investors, but state regulators say the actual number of investors is higher.
"Our investigation found that Michael Winans Jr. orchestrated a scheme that resulted in hundreds of Detroit residents losing millions of hard-earned dollars," Ross said in a release. "Promising sky-high, guaranteed returns, these scammers unscrupulously fleeced unsuspecting churchgoers who let their financial guard down."
Winans could not be reached for comment. A phone number linked to his address in the Detroit area was unanswered, and numbers listed for Winans' Detroit-based music publishing company have been disconnected.
Ross said the Ponzi scheme was worth at least $2.6 million but could have been as high as $11 million. He said Winans used connections in Detroit churches to attract investors between early 2007 and late 2008.
Michigan state regulators said Winans, his associates and related business entities violated the state's Uniform Securities Act, and turned over the results of its investigation to local, state and federal law enforcement agencies.
Those found violating the act face a maximum penalty of $25,000 per violation and 10 years in prison.
A Ponzi scheme promises high rates of return for participants, but in reality it pays early-stage investors with fresh money provided as new investors are lured in to take part.
Such schemes collapse when the flow of new investors dries up.
Winans is a third-generation member of one of gospel music's first families. He's the grandson of Delores "Mom" Winans and David "Pop" Winans Sr., who died last year; and son of Michael Winans Sr., a member of The Winans, a quartet of brothers.Another brush with law
It wasn't the first time family members have had problems with the law.
A judge dismissed a misdemeanor domestic violence charge against BeBe Winans in December after he saw a counselor as required by prosecutors.
Tennessean reporter Naomi Snyder contributed to this story. Contact her at 259-8284 or email@example.com
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