Host: Al Letson

Executive Producer: Kevin Sullivan

Executive Editor: Susanne Reber

Editorial Director: Robert Salladay

Managing Director: Christa Scharfenberg

Lead Sound Designer and Engineer: Jim Briggs

Reporters: Trey Bundy, Reveal; David Evans, Bloomberg Markets; Susan Ferriss, The Center for Public Integrity

Producers: Stan Alcorn, Julia B. Chan, Peter Haden, Delaney Hall, Ingrid Lobet, Michael Montgomery, Neena Satija, Ike Sriskandarajah, Laura Starecheski and Amy Walters

Show Editor: Patricia Flynn

Editor: Fernando Diaz

Senior Management for CIR: Joaquin Alvarado and Robert J. Rosenthal

Senior Management for PRX: John Barth, Kerri Hoffman and Jake Shapiro

Track list:

Support for Reveal is provided by the Reva and David Logan Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation and Mary and Steven Swig.

Reveal transcripts are produced by a third-party transcription service and may contain errors. Please be aware that the official record for Reveal's radio stories is the audio.

Al: From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson. Today on the show:

Male: Hah...oh...

Al: You know there's more to this story.

Male: Everybody, I just finished teaching the Art of Yen course. I teach traders all over the world how to trade the Japanese Yen.

Al: Masters of the Art of the Con.

Male: We know what it takes to dominate this financial market, and we can teach you to do just the same.

Male: I said to myself, "I'm not gifted at this area. If this guy is doing it. It's all he does all day long, let me put the money with him, let him do that."

Al: Also, a woman says she was abused and shunned by her faith.

Candace: Because I had been told, "Don't speak of this, it's a confidential matter, the congregation doesn't need to know this."

Al: She was left behind by her family.

Candace: Even when I was speaking on the stand, I looked out, and my mother and dad wouldn't look at me.

Al: These stories and more, on this hour of Reveal.

From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson. There's always more to the story. That's usually how we end our show, but today, that's where we're starting. A story can surprise you and move you, and it usually does lead to another story. Sometimes, the stories we share can spark change, but they can also show us how someone doing wrong can get away with it for years.

Back in February, we took a look at the culture of secrecy within the Jehovah's Witnesses, and just a note here, that this story covers some difficult material related to sexual abuse. Our story began with Candace Conti. When she was in grade school, she went on field service calls, trying to recruit people to join the Jehovah's Witnesses, with a man named Jonathan Kendrick.

Candace: He was very dominating. He commanded a presence. To me, he was just big, you know?

Al: When they were alone, Candace says, Kendrick would take her to his house and molest her. Kendrick denies this claim and was never prosecuted for it, but a jury in a civil lawsuit found wrongdoing. Candace blames the policies of the Jehovah's Witnesses for failing to protect her from abuse, and across the country, lawsuits against the organization are mounting. But the witnesses are fighting these claims in court. They argue their child abuse policies should be protected by the First Amendment. To them, it's a matter of religious freedom. Reveal reporter Trey Bundy and producer Delaney Hall tell the story.

Delaney: Last year, a package arrived at the Center for Investigative Reporting. It was a plain manila envelope. Trey Bundy opened it up.

Trey B.: It was this stack of documents, and one of the first things we saw was "Confidential".

Delaney: A man with ties to the Jehovah's Witnesses had sent the package. The envelope was filled with documents from the Watchtower Bible and Tract Society, the global headquarters of the Jehovah's Witnesses in New York. That's where the organization's governing body lives and works.

Trey B.: They are the spiritual leaders of the organization. They are the equivalent of the Pope in the Catholic church.

Delaney: That means they set policy for the organization, and distribute it through memos sent to elders at congregations across the country.

Trey B.: Okay,here we go...

Delaney: Trey started reading through the documents. The language is this mix of corporate policy and Bible verse.

Trey B.: And so from Ecclesiastes 3:7, they say, "There's a time to keep quiet, when your words should prove to be few."

Delaney: The memos described how congregation elders should handle allegations of child sex abuse.

Trey B.: "Improper use of the tongue by an elder can result in serious legal problems for the individual, the congregation, and even the Society." And by that, they mean the Watchtower Society.

Delaney: And boiled down, here's what the memos said.

Irwin: "Keep your mouth shut. Do NOT go to law enforcement."

Delaney: Irwin Zalkin is a lawyer in San Diego. He has more than a dozen sex abuse lawsuits pending against the Watchtower. He studied these memos and deposed leaders in the organization. He says the policy on sex abuse is clear.

Irwin: "You come to us first. Don't you tell anybody. You don't warn parents in the congregation, we'll decide what happens here." That's their policy.

Delaney: Which is in line with the organization's general mistrust of the outside world.

Trey B.: They look at the rest of the world as being diseased, as being controlled by Satan. So essentially, they are told not to mix with the rest of the world any more than they have to.

Delaney: Trey decided to learn everything he could about this closed community, and in the process, he discovered the Watchtower has worked with local congregations to hide sex abuse from law enforcement. The organization's policies are wrapped in biblical language, and those policies have allowed perpetrators to escape the law, and in some cases, to abuse multiple victims. Which brings us back to Candace Conti. She experienced the effects of the Watchtower's policies firsthand. She says that after Jonathan Kendrick molested her, she didn't tell anyone about it. She kept attending meetings at her North Fremont congregation. The elders there had known her pretty much all her life.

Candace: In particular, Larry [Lamberdon 00:05:12], Michael Clark, [Abrahamson 00:05:14], they all watched me grow up. You know what I mean? It is that tight-knit of a community. I mean, there really is no outside, this is your association.

Delaney: What Candace did not know, was that least two of those elders were already aware that Kendrick had a history of abuse. Just a year before, he'd told them that he'd sexually molested his thirteen year old step-daughter. Here's Trey again.

Trey B.: When the others in Fremont discovered that Kendrick had abused his step-daughter, they notified the Watchtower, in writing. A couple of weeks later, the Watchtower sent a letter back to North Fremont, saying that what Kendrick did was considered "uncleanness."

Delaney: "Uncleanness" is a term from the Bible, and it's considered a minor offense.

Trey B.: Because of that, the sanctions against him wouldn't be as harsh.

Speaker 1: Good morning. This marks the beginning of video tape number 1 in the deposition of Michael Clark. (audio continues in the background)

Delaney: Years later, in a legal deposition, a Fremont elder known as Michael Clark acknowledged that, yes, they had known that Kendrick had abused multiple victims.

Speaker 1: Did you notify law enforcement of the information that you had received about the touching of these two girls by Mr. Kendrick?

Michael: No.

Speaker 1: Why not?

Michael: Our legal department advised me-

Delaney: At this point, Jehovah's Witness' lawyer James McCabe jumps in.

James: I'm going to object. I'm going to ask you not to say what they advised you, but you can just say that you contacted the legal department and you acted accordingly.

Michael: I'll join in that objection.

Delaney: Clark also said that the Fremont elders didn't inform the congregation about Kendrick's abuse.

Michael: We don't make that public... To the congregation. That's confidential.

Speaker 1: And that's the policy and the practice of the Jehovah's Witnesses, that you learned as an elder, correct?

Michael: Yes.

Delaney: So parents in the congregation, including Candace's parents, weren't notified that Kendrick was a child abuser. Kendrick separated from his wife, and when he moved to a new congregation in Oakley,a town about an hour north, they weren't notified, either.

Male: Okay, the whole letter? "Dear Brothers, enclosed are the publisher cards of Brother Jonathan Kendrick, and our comments...(audio continues in the background)

Delaney: Roger Bentley served as an elder in Oakley for almost three decades. He loved his job. He called himself "God's Coworker." A little while after Kendrick arrived, Roger and the other Oakley elders got in touch with Kendrick's old congregation. They asked the elders there to send a letter of introduction, which they did. It mentioned that Kendrick had had a rocky marriage, but for the most part, it was positive.

Male: "... The skills of Brother Kendrick vary from violin playing and topiary, to woodworking and welding. He is a very interesting individual who has taken the lead with some young ones in the congregation and helped them from veering off course."

Delaney: The letter didn't mention child abuse. In fact, it implied that he was good with kids.

Male: You know, looking back, now what I know, this is crazy.

Delaney: So Kendrick began to settle in. He met and eventually married a woman in the congregation named Linda Hood. Roger actually officiated. And then, things went bad.

Speaker 2: Mr. Kendrick, can you state your name and spell your last name for the record?

Jonathan: Jonathan Kendrick. K-E-N-D-R-I-C-K. (audio continues in the background)

Delaney: A few years after they got married, Kendrick sexually molested Linda's granddaughter, "Beth". That's not her real name, by the way. We don't reveal the identities of child sex abuse victims if they want to remain anonymous. Kendrick admitted to it, and eventually served less than a year in jail. This is from a legal deposition in 2012.

Speaker 2: When did you sexually touch her granddaughter *****?

Jonathan: January, right? January or February, when she was six.

Delaney: Kendrick has never admitted to abusing Candace, but in the same deposition, he did confess to molesting his step-daughter from his previous marriage, back in Fremont. And he talked about how the elders there responded.

Speaker 2: What did Brother [Abrahamson 00:09:28] say, in this regard?

Jonathan: He said to not be alone with children, not allow myself to get in a position where claims could be made against me.

Delaney: The Watchtower requires strict communication with congregation elders, and attorney Irwin Zalkin says that almost two decade ago, the organization sent out a letter asking for information very relevant to this story.

Irwin: They send out a letter to every elder in the entire United States that said, "We want you to give us all your information on anyone that's a known child sex abuser in your congregation."

Delaney: They required congregations to answer specific questions related to the nature of the abuse, the name of the offender, and when it happened. So Zalkin figured-

Irwin: There must be a database for this. They didn't just do this for the fun of it.

Delaney: Zalkin subpoenaed the Watchtower, to turn over that database when he was working on another case, but they refused. They said their data on child abusers is mixed up in millions of other documents, and it would take too long to search them. When the Watchtower wouldn't hand over that information, the judge in the case struck their defense and awarded a $13.5 million default judgement to Zalkin's client.

Seven years after Jonathan Kendrick molested "Beth" in Oakley, Candace Conti learned about the abuse.

Candace: I had this sense of guilt...You know? What if I did something? What if I hadn't been such a coward? What if I had done something to maybe, protect this other child, you know?

Delaney: So Candace decided to bring a civil lawsuit against Kendrick, the North Fremont congregation, and the Watchtower. In 2012, a jury found that the organization was negligent because they'd known that Kendrick was dangerous. They awarded Candace more than $15 million in damages, to be paid by Kendrick, North Fremont, and the Watchtower. But the Watchtower and the North Fremont congregation appealed.

James: May it please the court, James McCabe on behalf of the North Fremont congregation of Jehovah's Witnesses. I have two points...(audio continues in the background)

Delaney: We attended that appeal hearing and listened in on the Watchtower's arguments. Witness lawyers talked about the First Amendment, and the Constitutional Right to Religious Freedom.

James: The religious beliefs and standards of Jehovah's Witnesses were at play in this case form start to finish...(continues)

Delaney: Mainly, in the Watchtower letters that outline sex abuse policy.

James: ... And the elders were counseled in that letter to give special heed that the council did not reveal the confidential talk of another. Quoting from the Bible, book of Proverbs, Chapter 25, Verse 9...

Delaney: Because those policy letters are filled with references to scripture, lawyers argue their First Amendment right to religious freedom protects them from scrutiny. But guess who isn't buying that? Zalkin.

Irwin: That's not the law. The law is that, you know, we can't question what you believe. Believe what you want to believe. But we can question your conduct.

Delaney: But as the Watchtower faces a growing number of sex abuse lawsuits across the country, they are actually doubling down on their policies. Their most recent memo about how to handle crimes came out late last year. Again, it discourages elders from reporting to police, and it advises them to rely on internal judicial committees instead.

Trey B.: And then it lists the types of crimes that they're talking about. Murder, rape, child abuse, fraud, theft, and assault. They're, essentially, strengthening their original position. "We're not going to cooperate, we're not going to talk."

Al: The Watchtower wouldn't agree to an interview with Trey, but the organization did send a statement. It said, "The Jehovah's Witnesses abhor child abuse," that "congregation elders comply with child abuse reporting laws," and that they're "committed to doing all they can to prevent child abuse." As for the Candace Conti case, a few months ago, the California court of appeals found the leadership of the Jehovah's Witnesses wasn't required to warn congregants about Jonathan Kendrick. They knocked Candace's original award down from about $16 million to just under $3 million. The Watchtower appealed that ruling before settling with Candace for an undisclosed amount. For more on this story, let's bring in reporter Trey Bundy. Hi, Trey.

Trey B.: Hi, Al.

Al: So, what kind of reaction did you get to this story when it first aired?

Trey B.: The reaction was immediate. Within a few days, we'd received hundreds of messages: emails, Facebook messages, phone calls from people who were telling us that they had been abused as young Jehovah's Witnesses, and also people that they knew. It basically reinforced what we'd been learning all along, which was that, this is not an isolated problem, and that young Jehovah's Witnesses are abused in many congregations in many parts of the world.

Al: If so many people in the organization have been abused, how is the Watchtower able to keep it quiet for so long?

Trey B.: The Witnesses are an insular group. They are taught not to associate with the rest of the world any more than they have to. So one of the ways the organization enforces its will is through "shunning" or the threat of "shunning." For instance, in an abuse case, somebody speaks up, or calls the police when they've been instructed not to, that can be a disfellowshipping offense. That's something we came across in California, in Oklahoma, and other parts of the country. Once they're disfellowshipped, everybody else in the congregation is instructed to shun them, and that includes-(audio ends)

Section 1 of 3 [00:00:00 - 00:15:00]

Section 2 of 3 [00:14:56 - 00:30:00] (NOTE: speaker names may be different in each section)

Trey Bundy: Everybody else in the congregation is instructed to shun them and that includes their friends, their family, if they work for Jehovah's witness it can include their employer. The stakes are really high.

Al Letson: That's Reveal reporter Trey Bundy, telling us about his investigation into the Jehovah's Witnesses. We're going to take a break and when we come back we'll hear the story of a woman who says she was shunned by the Jehovah's Witnesses, after accusing an organization elder of abusing her. That story when we come back on Reveal.

From the center for investigative reporting in PRX, this is Reveal. I'm Al Letson. Before the break, Reveal reporter Trey Bundy, was telling us about his investigation into the Jehovah's Witnesses. The group has faced lawsuits for failing to protect children from abuse. Trey has been looking at the practice of shunning, how it can be used to keep people from coming forward to report abuse. Trey went to McAlester, Oklahoma to meet 46 year old Debbie McDaniel. She says a Jehovah's Witness elder abused her from the age of 8 to 13. When she was older, he kicked her out of the congregation. Debbie has tattoos on her arms, back and neck that she says, tell the story of her life.

Debbie : Then the one down the back of my neck says, "I am not anti-religion, religion is anti-me." So that just kind of speaks for itself.

Al Letson: Trey Bundy picks up the story there.

Trey Bundy: So Debbie was born in Houston and lived there until she was about 5 years old. Her dad, a man named Wendell Marley, worked for NASA and was by all accounts a brilliant engineer. He helped design the spacecraft that put Neil Armstrong on the moon. But then one day, he gave it all up.

Debbie : When he met Jehovah's Witnesses and thought he had found the true religion and the world was ending anytime. He just walked away from his career.

Trey Bundy: Wendell moved Debbie and the rest of the family to McAlester, Oklahoma where he quickly rose through the ranks of the local kingdom hall. That's the place of worship for Witnesses. Wendell became the number 2 guy and the number 1 guy was an elder named Ronny Lawrence.

Debbie : I was introduced to Ronny as somebody quite Christ like. People revered him.

Trey Bundy: But Debbie told me that when she was 8 years old, Ronny started abusing her. The abuse went on for 5 years. She didn't tell anyone about it but she did get angry. She told me she became rebellious as a teenager and started drinking and having sex. When Ronny found out about it, he decided to dis-fellowship her for sexual immorality. At that point, Debbie told her mom for the first time that Ronny had abused her.

Debbie : I said well, "I find it funny that the man who messed with me my whole life, my whole childhood, is now in a position to dis-fellowship me from the organization." And my mom was furious, livid. She said, "You're going to lie about this man of God, now?" She said, "you're just trying to get him back for dis-fellow shipping you for your wrongdoing." And I thought, "you know, they're never going to believe me."

Trey Bundy: Being thrown out of the congregation was terrifying for Debbie, like it is for many witnesses. She was completely isolated from her friends and family. She thought her eternal soul was on the line.

Debbie : Just trying to adjust to life outside the organization was too much for me and I just wanted back in.

Trey Bundy: To get back in, she had to write a letter of apology to the elders; including Ronny. By this time, Debbie had figured out that she was a lesbian. But she just pushed those feelings aside. She married a Witness and had a kid, she threw everything she had into the organization.

Debbie : Door to door, study for the meetings, make every meeting, I was going to be the best Jehovah's Witness I could be.

Trey Bundy: A decade passes and other people in Debbie's congregation have started to come forward saying Ronny abused them too. I've looked at letters from elders to the watch tower and they show that Ronny was dis-fellow shipped. He repented and was welcomed back on the condition that he named all of his victims and write them letters of apology.

Debbie : So he says, " Debbie, I humbly want to apologize for the hurt and pain I have caused you and for denying it. I've truly sinned against you, Jehovah, and the congregation. I betrayed the trust."

Trey Bundy: It was hard for Debbie to be around him and she worried about other kids in the congregation. She says the elders told her to drop it and keep quiet.

Debbie : I had been told through the whole proceedings with Ronny, "don't speak of this, it is a confidential matter. The congregation doesn't need to know this and if you talk about it, that's grounds for dis-fellow shipping."

Trey Bundy: Eventually, Debbie couldn't take it anymore. She left her marriage and was dis-fellow shipped again, this time for coming out as gay. That's when the shunning got really bad. Her daughter Marley was 12 years old and got caught in a nasty custody battle between her parents. Marley says her dad and Debbie's family coached her on what to say in text messages to her mom.

Marley: They used to sit me down and actually tell me what to say or text me something and say just to copy and paste it and send it to her.

Debbie : This text message came from Marley and she said, "you want to know why I'm devastated? I lost my mother, my best friend. You turned to Satan and you're going to die."

Marley: I thought that there would come a point when God would judge us all and then mom would basically be destroyed. That's what I've heard my whole life

Trey Bundy: The shunning and harassment got so intense that Debbie finally went to the police about it. Her whole story came pouring out. The police had never been informed about Ronny's abusive children. They started an investigation and there was a hearing and at that hearing, Debbie says, "The shunning continued." She remembers going into the court room and her parents were sitting behind Ronny on his side.

Debbie : They wouldn't look my direction. Even when I was speaking on the stand, I looked out and my mother and dad wouldn't look at me in the face.

Trey Bundy: The charges against Ronny Lawrence were dismissed because of the Statute of Limitations. But court records and letters from McAlester elders to the watch tower back up Debbie's story. Ronny is still a Jehovah's Witness and Debbie still runs into him around town.

"Hello, Mr. Lawrence?"

Mr. Lawrence: "Yes, sir."

Trey Bundy: "Hi, my name is Trey Bundy."

I went to his house to see him.

"There's a lot of people in this town that believe that you did commit these crimes."

Mr. Lawrence: "Well, what do you want me to say?"

Trey Bundy: "I want you to tell me whether you committed these crimes."

Mr. Lawrence: "No I didn't, that's odd. They're not blaming me and neither was anyone else so."

Trey Bundy: "Well, there's a lot of documentation. Why did you write letters of apology if you didn't commit these crimes?"

Mr. Lawrence: "It had to do with several things.

Trey Bundy: "Was a part of it getting back into the organization? Was that part of the condition of coming back to the organization?"

"Okay, thank you."

Debbie has built a new life, but she keeps a permanent record of the past.

Debbie : My daughter Marley was so attached to the organization and so I did a tattoo of her holding a maze behind her. It felt like she was trying to come out of the organization but the maze was the organization and she was hanging on to it. So I added that.

Trey Bundy: But Marley has come out of the organization. She and Debbie have reunited and they live together now. But since they've become close again, the Witnesses have started to shun Marley too.

Marley: Well obviously all my friends, a couple of years ago, were all Jehovah's Witnesses. So I've lost pretty much all of them and then the rest of my family have pretty much blocked me on social media and things like that. You can't leave and not be deemed mentally diseased, I guess. So something has to be wrong with you. They have to make up something.

Al Letson: That story was reported by Reveals Trey Bundy and produced by Delaney Hall. To read more about Debbie's experience with images and additional sound from Oklahoma visit revealnews.org. It's really worth checking out.

And now we turn to a story that affected thousands of people. They were investing in foreign exchange. The market where people place bets on currency. Turns out, Foreign Exchange is the largest financial market in the world. 100 times the volume of the New York Stock Exchange on any given day. But it's lightly regulated so it's fertile ground for fraud. We met Ted Limey, truck driver from North Dakota who's looking for a safe place to invest his NASDAQ. When he googled secure investment, a company by that very name securedinvestment.com appeared.

Ted Limey: I checked their background, I checked the articles on the corporation that I could find. I could get them any time of day, their emails were promptly returned. They were very professional.

Al Letson: Over the first half of 2014, Limey invested his savings. $19,000 with Secured Investment. He watched his money grow online, checking his account several times a week. Now around this same time, reporter David Evans noticed the same website. He's an investigative journalist with Bloomberg Markets Magazine. When he came upon the site, it was full of highly produced animations but they made what seemed like impossible claims.

David Evans: There is no risk to the initial investment. In the past 5 years, they have had only a few days with negative results. In fact, I'm earning about 1% of profit daily.

Al Letson: But in the middle of Evans investigation, May 1st, 2014, the site went dark. The company claimed to have 100,000 investors. All of them, like Ted Limey, went from tracking their investments online to getting an error message when the logged on.

Ted Limey: When I felt cold shivers go up and down my spine was when I couldn't get them on the phone and the email to customer service came back to my address undeliverable. It was just like somebody had drained the blood out of my body.

Al Letson: His money was gone. All $19,000. Since David Evans reported this story of that site, federal prosecutors in Brooklyn have tried to track down the scam artist behind Secured Investment, with no luck yet. And Evans has continued to investigate the unlicked corners of foreign exchange trading. Now, he's found another case of foreign exchange fraud. An investigation that federal agencies worked on for years and that devastated thousands of investors in Jamaica. Here's David Evans.

David Evans: It left investigators in 3 countries shaking their heads over a prosecution that never happened. We call this story The Conman and his Mentor.

Al Letson: The conman was a young guy, living in Jamaica named David Smith. He's got a business degree and he opens his own foreign exchange trading fund back in 2005.

David Evans: Problem is, he starts losing his clients money and fast. He's making bets on foreign currency and he's just not very good at it. So he signs up for classes at this school in Florida, the largest school for foreign exchange trading in the United States; Market Traders Institute. It's run by Jared Martinez and his sons in Orlando. He's the mentor and he goes by the nickname FX Chief.

Al Letson: Martinez likes to use that title, FX Chief and appear in videos like this one where he shows of his karate moves.

Jared Martinez: Ha, oh. Everybody, I just finished teaching the art of Yangcors. I teach traders all over the world how to trade the Japanese yen.

Al Letson: So he's just putting it out there that this foreign exchange trading is not for the faint of heart. But his pitch is that with him, you too can master the game.

David Evans: Jared Martinez says that 90% of speculators in foreign exchange lose money. But he claims his $8,000 course can teach you to earn consistent profits, making for ex safe, easy and predictable for ordinary folks like you and me.

Al Letson: A man of many talents, Martinez is also pretty adept at ping pong. As you can hear in this promotional video he had made.

Jared Martinez: (ping pongs in the background) Yes, that's how you do it. Everybody I've built this company up from my own personal constitution and the values of my family which are integrity, responsibility, and respect.

Speaker 9: "Love you daddy."

Jared Martinez: "I love you too."

We are the world leaders in financial education, we know what it takes to dominate this financial market and we can teach you to do just the same.

Al Letson: So, you have David Smith in Jamaica and he's losing his investors money, he's losing his family's money and he goes to school in Florida and meets this foreign exchange guru, Jared Martinez. Next thing you know, they've developed a business partnership but there was a big problem.

David Evans: When Smith goes back to Jamaica and tries trading with the methods he learned at Market Traders Institute, they don't work. Smith was still losing money. But he didn't let that stop him.

Al Letson: Instead, he sets up an office in a shopping center in Kingston and claims you can make a 10% return on your investment per month. And Evans says thousands of Jamaicans hand over their savings.

David Evans: Now expecting 10% per month, may not sound crazy. But think about it, that's more than doubling your money every year. That's almost impossible. This was actually nothing but a ponzi scheme with new money going to payback the earlier investors.

Al Letson: It turned into almost a frenzy. A mania for foreign exchange investing on the island and in the Jamaican Diaspora. David Evans met a number of these victims, including Chris Walker.

David Evans: A Florida physician who's originally from Jamaica. His family was taken out.

Chris Walker: I hate to say it was a first class operation in terms of it being professionally organized. And I said to myself, "I'm a physician, I'm not gifted at this area. If this guy is doing it, that's all he does all day long, let me put my money with him. Let him do that."

David Evans: Dr. Walker's family lost $2.5 million.

Al Letson: It wasn't just David Smith, this rush to invest was also stoked by his mentor. Jared Martinez would come down to Jamaica and hold seminars on foreign exchange .

David Evans: The mentor was building up the reputation of the con. And he described David Smith as his most successful student. Sometimes Smith would actually come up on the stage at these events, cheered like a rock star. We got access to a video that was taken at David's 38th birthday party at an estate in Kingston in front of hundred of investors, and you could actually hear Jared Martinez heaping praise onto David Smith.

Jared Martinez: He has helped so many people with the returns that he brings and there's been a lot of controversy about it. But it has been a real deal. And on behalf of everybody here David, we'd like to say "thank you for being our Jamaican Moses."

Section 2 of 3 [00:14:56 - 00:30:00]

Section 3 of 3 [00:29:56 - 00:52:01] (NOTE: speaker names may be different in each section)

Speaker 1: We'd like to say thank you for being our Jamaican Moses.

Louis: When I saw that video, I thought we had ourselves a successful criminal prosecution. Alas, it was not to be.

Al: That was Homeland Security Agent Louis [Skenderis 00:00:14].

David: It's really unusual for someone inside an investigation like this to speak their mind so candidly, but Agent Skenderis got official permission to talk. He helped build the case against Smith.

Al: Okay, so now, fast forward. A Jamaican official gets suspicious and tips off law enforcement. Authorities begin investigating in Jamaica and neighboring Turks and Caicos Islands, and the U.S. Justice department wonders why Smith is wiring his investors' money to a partnership with Martinez in Florida. Evan says the money is not even being traded or invested.

David: The cash is just circling back to Smith in the Caribbean. The feds started investigating those wire transfers as a money laundering operation. Then Smith's computers were seized and federal agents begin sorting through thousands of wire transfers between Jamaica and Florida. Hundreds of millions of dollars. Meanwhile, Smith's operation is shut down and he winds up in prison on an island in the Turks and Caicos.

Al: The con man is in prison, but not his mentor. Instead, Martinez is referred to as an unindicted co-conspirator in the U.S. documents charging Smith with wire fraud and money laundering. Homeland Security Agent Skenderis says Smith agreed to testify against his mentor in exchange for a lighter sentence.

Louis: Because we brought him here as a witness against the Martinezes and he agreed to plea guilty as part of the plea deal. He got the statutory minimum of thirty years.

Al: But David Smith never got to testify against Martinez because he was never charged. Even though Skenderis says they had plenty of evidence against him.

Louis: We're talking about twenty million dollar wires coming in on a Tuesday and leaving on a Friday. That ain't right. When I'm looking at these, I go, "I'm doing this case. It's great."

Al: Federal documents say David Smith and his co-conspirators, whom we now know to be Martinez and his sons, laundered more than a hundred million dollars for David Smith. Skenderis says when Homeland Security and the FBI raided Martinez's office and home in Florida, they found evidence he was shredding documents.

Louis: We go in the house and one of the FBI agents has to go to the bathroom. She's like, "Agent Skenderis, you need to come over here." Like, "Yeah, what's up?" Oh, shredded financial documents in the toilet! He was hand-shredding documents and flushing them in the toilet. That's an American classic. There's a picture of me with his barbecue tongs pulling documents out of the toilet.

Al: Yet, even with the shredding of documents, even with David Smith the con willing to testify against his mentor, even after authorities shared a lot of evidence, Martinez was not indicted. In Jamaica, one person left perplexed is Peter Bunting. He's the one who originally reported the Ponzi to law enforcement. He's now Jamaica's national security minister.

Peter: I was surprised, to be honest with you, that they didn't seem to face any consequences.

Al: FBI and IRS agents were also mystified, including Agent Skenderis.

Louis: Spent three years on that case. What are you going to do? I was unable to stop them because I'm not a one-man show. I'm part of a team and the team failed, but someone needs to stop him at some point.

Al: While looking for documents in the courthouse in Orlando, David Evans says he bumped into federal prosecutor Bruce Ambrose. Here's what happened.

David: I explained hundreds of millions of dollars were wired from the Caribbean to Orlando and back to David Smith and Ambrose agreed with me. He told me, "It was a huge washing machine," but he didn't explain why Martinez wasn't indicted and he declined to be interviewed.

Al: Jared Martinez hasn't been willing to talk either, and he's still in business.

David: He's still selling his eight thousand dollar foreign exchange trading classes to eager students. As for the victims like Chris Walker, the doctor in Florida, they haven't seen any payout on the money they lost.

Chris: To this day, Mr. Evans, we have not gotten one penny of restitution. My dad is going to be ninety years old.

Al: David Smith? He's sitting in a prison in Turks and Caicos appealing a local court's decision to extradite him to the United States to serve out his thirty year sentence.

Thanks to Ingrid Lobet for producing the story. If you want to learn more, you can find a link to David Evans' Bloomberg Market story on our website, revealnews.org.

When we come back, a story that lead the governor of Virginia to re-examine the way cops deal with kids in school. That's next on Reveal.

From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson.

Today, we are retracing some of the investigative work from the last year and catching up with what reporters have uncovered since. One story that had a huge impact had to do with police officers in schools. Our partners at the Center for Public Integrity analyzed national data from the Department of Education and ranked all fifty states for how often schools get police involved with students. The state of Virginia came out on top.

Children have been referred to police in Virginia at almost three times the national rate. Many of those kids have special needs or are African American. After our story first aired, the state started re-examining how children are dealt with in schools. We'll talk about that in a little bit, but first, we wanted to listen back to reporter Susan Ferriss' story that centered on Kayleb Moon-Robinson, a sixth grader living in Lynchburg, Virginia in the Blue Ridge Mountains.

Susan: I'm sitting with Kayleb Moon-Robinson in his living room, watching Pokémon on TV.

Kayleb: Now he has to go to the champion.

Susan: Kayleb's in sixth grade. He's good at math and science and he loves electronics.

Kayleb: I like the Wii U, and Xbox 360, my tablet.

Susan: Kayleb's also been diagnosed with autism. Last fall, Kayleb was a student at Linkhorne Middle School in Lynchburg. He got in trouble. He was sent to the office. When he got there, he got upset and kicked over a trashcan. A school police officer saw it and filed a misdemeanor disorderly conduct charge against him. Just a few weeks later, Kayleb's teacher told him to stay behind while other kids left the room. He didn't listen.

Why didn't you want to stay in the classroom?

Kayleb: Because I wanted to go out in the hallway and talk with the other kids.

Susan: And what happened?

Kayleb: I got in trouble.

Susan: Out in the hallway, Kayleb ran into the school police officer. He'd been sent to get him.

Kayleb: He grabbed me and tried to take me to the office. I started pushing him away. He slammed me down and then he handcuffed me.

Susan: A teacher says Kayleb cussed at the cop after the officer grabbed him around the chest. Kayleb's mother, Stacey Doss, remembers getting a call from school.

Stacey: When I got there, the school was very quiet. It seemed like the police were more in charge than the school. The officers were ... It's like the had kind of taken over everything.

Susan: Stacey got upset when the officer told her he was charging Kayleb again with disorderly conduct, but that wasn't all. He was also charging him with felony assault on an officer.

Stacey: I'm like, "Well, why's it a felony?" He stated to me it was because he was an officer and because Kayleb fought an officer, that escalated the charges. I thought in my mind, Kayleb is eleven. He is autistic. He doesn't fully understand how to differentiate the roles of certain people.

Susan: The police took Kayleb to the juvenile courthouse in handcuffs. We tried to talk to the police, the principal, the school board, and the district superintendent, but they wouldn't agree to an interview. Instead, they sent us a written statement. It said that police become involved in incidents that are criminal in nature or appear to place the safety of students and staff at risk. What kind of criminal incidents are we talking about? Linda McCausland's been a juvenile public defender in Virginia for nine years. She has a lot of clients charged at school and to prove it, she pulls out a stack of her case files for the week.

Linda: A thirteen-year-old who's charged with disorderly conduct at school. A thirteen-year-old who breaks a school window and is charged with destruction of property. A twelve-year-old who made a fist at the officer at school and got obstruction of justice.

Susan: That twelve-year-old was at her cousin's school when she saw a fight. She pulled her cousin out of it and a school cop grabbed her and charged her with trespassing, disorderly conduct, and resisting arrest.

Linda: The girl was saying to get the f off me, you can't touch me. She pulled her arm away and because she clenched her fists when she did that, they said therefore, it was obstruction of justice because she was threatening the officer.

Susan: McCausland says cases like these should be handled outside court.

Linda: This one's a sexual battery at school. This girl is charged with pushing another girl and kissing her.

Susan: How old is the girl?

Linda: She is fifteen. It's pretty serious charge. I mean, sex abuse. She's in the age that she can't give consent to sex, but yet we can give her charges that she's the perpetrator.

Susan: How do you think schools need to limit the involvement of police?

Linda: Everything before charges file, they should go through the principal to see if this is something we want to do because surely it can't be for good for the schools to keep seeing these kids coming to the courts.

Susan: Julie McConnell teaches law at the University of Richmond and runs a children's rights clinic. As a former prosecutor and public defender, she's seen it from both sides.

Julie: Prosecutors are under a lot of pressure, sometimes from their own office, to not compromise.

Susan: Are people really locked in? I mean, why would a prosecutor go forward with some of these cases?

Julie: Some offices have a no-plea-agreement policy. We will not reduce charges, we will not take any plea agreements. You either go to trial or you plead guilty. I think that's a really unfortunate situation in a few jurisdictions.

Susan: McConnell says the problem starts with schools and police.

Julie: I do think that officers see their role and their real value in the school as being able to be the law enforcement voice. You know, to come in and charge. Unfortunately, I don't think they're necessarily trained to be the mediator. They don't necessarily even believe in that, or know that it can effective because that's not what they've been trained to do. They've been trained to be police officers.

Susan: McConnell is for limiting the role of police and making sure they're trained to work around kids. Police officer Don Bridges is with the National Association of School Resource Officers. He says his group does offer training.

Don: As I'm doing my training, one of the phrases that I'll always say, when you're in the building as a police officer, you have to learn to stay in your lane. You have to know specifically what it is that you should be doing. As long as there's nothing where there's a weapon, something that's going to cause immediate public harm, charging of a student within a school setting should be the absolute last resort.

Susan: But the reality is that school districts have a lot of autonomy over discipline and policing. The federal government can hold schools accountable. To find out more, we went to talk to Catherine Lhamon. She's the Assistant U.S. Secretary of Education for Civil Rights.

Catherine: Our federal civil rights laws demand that our students are treated equally.

Susan: Two years ago the Department of Education asked all schools in the country to report how many times they'd suspended students or referred them to law enforcement whether the kids were arrested or not. Lhamon didn't like what she found.

Catherine: Black boys in particular are suspended and expelled from schools at rates that are, most recent data's three times the rate of their white peers. Black girls are more likely to be suspended and expelled from school than most boys and any other girls. Students with disabilities are subject to discipline at rates that well exceed their peers without disabilities.

Susan: We wanted to dig deeper. We crunched the department's numbers to see how states ranked when it came to their schools referring kids to cops and courts. Here's what we found.

In the U.S., six kids out of a thousand were referred to law enforcement, but in Virginia, that number was much higher. Sixteen out of a thousand. What was also striking; almost thirty percent of those kids had special needs. The Department of Education can withhold money from districts found to violate the civil rights of these students.

Catherine: A red flag for us consistently is catch-all terms, like disorderly conduct that leave too much discretion that is unfettered and so can leave the possibility for discrimination.

Susan: But before cutting off money, Lhamon's office has been trying the friendly approach with some school districts, including the one where Kayleb Moon-Robinson is a student.

Catherine: We entered into a resolution agreement with the Lynchburg school district to ensure that the district will bring in a consultant that will help the district to manage the ways that it metes out school discipline and ensure more equitable school discipline going forward.

Susan: The district promised in August to reduce the number of suspensions of African American students. We told Lhamon what happened to Kayleb who's African American and has special needs.

Catherine: This really upsets me. I wouldn't want that for my own daughters, I wouldn't want that for any child I love in school. I very much hope that we can make sure that all of our kids are treated appropriately in school.

Susan: Back in Lynchburg, Kayleb had his juvenile court hearing. After it was over, his mother called us from outside the courthouse.

Stacey: I'm just stunned more than anything. I'm very shocked and very stunned. [crosstalk 00:14:42]

Susan: The judge found Kayleb guilty of all charges. Two disorderly conducts and felony assault on a police officer and he had a deputy take Kayleb to look at a jail cell.

Stacey: He said that Kayleb had been handled with kid gloves and that he understood that Kayleb had special needs, but that he needed to man up and that he needed to behave better and that he needed to start controlling himself or else they would eventually control him.

Susan: How is Kayleb doing?

Stacey: He's here with us. Would you like to speak with him?

Susan: Yes. Kayleb, do you understand what happened in the courtroom?

Kayleb: No, I do not.

Susan: You don't understand?

Kayleb: No.

Stacey: I guess that's the hard part, is that he doesn't understand. I don't even know where to start to explain it to him.

Al: It's been four months since we first broadcast this story and Kayleb is still waiting for a final decision from the judge. He has a court date on August 31st and his mother has been getting offers for legal assistance. Meanwhile, there's been such a huge reaction to this story statewide. It looks like there may be some policy changes coming in Virginia from as high up as the governor's office. For more on that, let's bring in Susan Ferriss.

Susan, can you start off by telling us what Governor Terry McAuliffe has done since the story came out?

Susan: The governor has appointed a task force, I guess you could call it, of cabinet members and others to look in to the referrals, the numbers we reported, and look into the roots of why referrals happen and to look into how they could be reduced because he wasn't happy seeing these numbers reported out of Virginia. He's got the Secretary of Education involved, public safety official, the Director of Juvenile Justice, and they're all working together now to study the issue and come up with recommendations. It sounds like they're open to legislation that could be recommended to possible propose as soon as next year.

Al: So that's what the governor's done, but what's been the reaction in the public?

Susan: The public reacted pretty strongly to the story. There were lots of local radio and TV and newspaper outlets that began demanding answers from their different school districts and police departments. They wanted to know more about why these numbers were so high for Virginia.

Al: Actually, a change.org petition started around Kayleb, right?

Susan: That's right. The petition has gathered about more than a hundred thousand signatures asking for the charges against Kayleb to be dropped and for him to be absolved?

Al: Why do you think people are latching on to this story?

Susan: I think they're latching on to it because the numbers were so great and there's been growing concern about zero tolerance policies in school, whether they be removing kids from school on suspension or expulsion or even sending them into the criminal justice system. I think that that's had a big impact on people. I also think that the fact that the numbers were so racially disproportionate was of concern to people. You have chapters of the local NAACP and cities in Virginia that are talking about this with their local police. I think the concern about so many special needs kids being a proportion, a large proportion, of kids that get referred to law enforcement.

Al: Mm-hmm (affirmative). You were part of this story for about six months, meaning that you were deep into it for a good little chunk of the year. Was there anything that surprised you in the response when all of this came out?

Susan: Yeah, I think what really surprised me was how many people came forward whose kids had been in the system to talk about their experiences with kids being arrested at school, and/or cited and forced into court. Many of the cases were very questionable. Yet they also felt that once the child got in the system, they were often advised to take plea agreements or take a diversion that was offered, a kind of mandatory program, like counseling program or filling out papers admitting that they had committed some sort of infraction even though the parents felt like their kid really had not done anything that approached a crime.

Al: With all this going on, it seems like a lot of people are getting upset at the way these incidents are being handled, but is that frustration actually turning into change? The way it turns into to change, obviously, is from the people with power, so are they doing anything about this?

Susan: I would say yes, that there has been a reaction from local police departments in Virginia, in addition to the governor's office that suggests that there's a willingness to make some changes. In fact, in one district outside of Richmond, Henrico County, the police chief there has already said that he's doing a complete overhaul of how school policing is handled and the terms for which police can get involved in incidents and really returning more of [what's 00:20:03] should be handled by school as a discipline question or a behavioral problem to the school officials. Also, the police department in Lynchburg is reviewing Kayleb's case now to see if there was anything improper done during the arrest.

Al: Susan Ferriss from the Center for Public Integrity. Thank you so much for bringing us up-to-date with this story. Also, thanks to our producers Julia B. Chan and Jocelyn Frank.

Our reporters are always digging deeper. For more on what you just heard plus our latest stories, go to revealnews.org. Join our conversations on Face Book or Twitter. Thank you for listening.

Our show was edited by Patricia Flynn and is produced by Stan Alcorn, Julia B. Chan, Delaney Hall, Peter Haden, Laura Starecheski, Michael Montgomery, Neena Satija, Ike Sriskandarajah, and Amy Walters.

Thanks to editor Fernando Diaz for his help. Our lead sound designer and engineer is my man, Mr. J Breezy, Jim Briggs. Our editorial director is Robert Salladay and our managing director is Christa Scharfenberg. Deb George is our senior editor. Susanne Reber is our executive editor and our executive producer's Kevin Sullivan.

Our theme music today is from Camerado/Lightning. Support for Reveal is provided by the Reva and David Logan Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation. Reveal is a co-production of the Center for Investigative Reporting and PRX.

I'm Al Letson, and remember; there is always more to the story.

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