The former usher of a Mercer Island church pleaded guilty last week to securities fraud for stealing more than $3 million from church members and others, according to the King County Prosecuting Attorney’s Office.
Stephen J. Klos, 86, pleaded guilty to 10 counts of securities fraud for running a Ponzi scheme that defrauded elderly victims, the prosecutor’s office said today. Prosecutors say Klos and another man, Robert Justice, paid later investors in the scheme with money from new clients, pocketing hundreds of thousands of dollars along the way.
The scheme, according to the state Department of Financial Institutions (DFI), dated to 2004 when Klos began soliciting investments from members of his gym as well as members of the Mercer Island Covenant Church, where Klos served as an usher. The Securities Division of DFI began its investigation in 2007.
The charges, filed in April 2011, arose from losses suffered by 10 people, although charging documents indicate Klos took money from at least 23 families.
Pastor Greg Asimakoupoulos told The Times in April 2011 that Klos, as head usher, was popular among elderly widows and tried to sell anyone in the 400-member congregation, including the pastor, on his scheme. Church members considered Klos a successful retired military man and real-estate investor.
One alleged victim, a 66-year-old Issaquah woman, said she lost $200,000. The woman, who asked not to be named because she doesn’t want her family to know about the loss, said she met Klos at her gym.
Klos had been barred from securities and financial dealings in 1992 for running another Ponzi scheme that raised more than $3.4 million, according to Securities and Exchange Commission (SEC) records. No criminal charges were filed in the case, although SEC records indicate he had to pay back more than $380,000.
Justice pleaded guilty earlier this year to four counts of securities fraud and received a one-year sentence.
Klos faces a sentencing range of 51 to 68 months when he is sentenced in December.