Consumer banking Former Bishop Pleads Guilty to Tarp Fraud A former leader of a Mormon congregation in Connecticut has pleaded guilty to charges he laundered hundreds of thousands of dollars through a bank that received funds from the Troubled Asset Relief Program. February 21

A former bishop of a Mormon church in Connecticut was sentenced to nearly four years in federal prison for running a fraud scheme that roped in a participant in the Troubled Asset Relief Program.

A district court judge in New Haven sentenced Julius Blackwelder to 46 months in federal prison after he pleaded guilty in February to charges of wire fraud and money laundering. He will also spend three years on supervised release, the special inspector general for Tarp announced Friday.

Blackwelder defrauded investors of nearly $500,000 through an investment pool called the "Friends Investment Group." Starting in 2005, he began soliciting investments from members of the congregation of the Bridgeport Ward of the Church of Jesus Christ of Latter-day Saints in Trumbull, Conn., where he was a bishop.

Rather than investing this money, he used it to pay personal expenses, build a 7,000-square-foot home and repay a line of credit from Bank of America (BAC). He also laundered the money through his B of A account, a spokesman for the special inspector said.

"Americans did not bail out banks with Tarp funds so that fraudsters could launder money through them," Christy Romero, the special inspector general, said in a press release. "As a bishop Blackwelder duped members of his own congregation and other victims out of their hard-earned savings only to fuel his Ponzi scheme."

The case was investigated by Romero's office, the U.S. Postal Inspection Service, the Internal Revenue Service and the State of Connecticut Department of Banking.