Preying on the faithful?

Preying on the faithful? »Play Video
SEATTLE - It was the one place they felt safe: their church. They never dreamed that's where a man would prey on them. But, he tricked them out of their money and in some cases even their homes by preying on the faithful.

The problem first came to our attention when Cynthia Johnson Colston of Normandy Park contacted us after discovering she'd been wiped out.

"I felt shame... that I let something like this happen," said Cynthia. She was trying to accept the fact that she'd just lost $116,000.

Laurie Balthis, of Grays Harbor County is out more than $40,000. Kojo Aako of Pierce County lost $5,000.

They all invested with a company called "Northwest Financial Solutions", run by a man named Stone Phillips III. In each case, Phillips gained their trust at church.

Following A Pattern

Our investigation uncovered a pattern of Phillips ingratiating himself into local churches, and charismatically collecting clients. In Cynthia's case, it was a Northwest Financial Solutions workshop.

"He did a seminar at Mt. Zion Baptist Church in Seattle," Cynthia explained.

It was a financial management seminar at one of the most prominent churches in the region. Cynthia says Phillips came to a Sunday service and spoke before the congregation, offering to donate money to the church for every person who attended his workshop. Cynthia says the fact that it was at church, made her trust him.

Phillips helped refinance her home and offered to find her a renter. Then, she says he convinced her to transfer her entire 401k into investments with Northwest Financial Solutions. She got a few, sporadic, investment statements in the mail, then nothing.

She got concerned and started calling, only to find Stone Phillips and her money were gone.

Cynthia was in tears. "Someone's gonna hear my story," She told us. "Because he's gotta pay for this."

In Tacoma, at St. John Baptist Church, Phillips conducted another financial seminar. After the meeting, Kojo Aako says Phillips persuaded him to invest part of his retirement fund in Northwest Financial Solutions.

Aako filled out forms to rollover more than $15,000 from his existing retirement account into an account with Northwest Financial Solutions.

When he asked Phillips to give back the money, he says Phillips only returned $10,000. Now he's suing Phillips to try to get his money back.

"But I need the money," Kojo said. He says Phillips knew he was buying a house and needed the money for closing costs and furniture. "I said, 'That's my money, I want to use it!'"

In Laurie Balthis' case, Phillips took out a full-page ad in her church's Christmas program.

"We were impressed by his ad," she said.

Laurie and her husband met with Phillips and he offered to help them refinance their home. KOMO 4 News found that in each case where Phillips was involved in a refinance, the victims believe Phillips was actually handling the transaction. In reality, he was merely referring their business to an actual mortgage broker.

When Laurie and her husband refinanced their home, she says they took out extra money from the equity. Then, Laurie says, Phillips offered to invest the equity in Northwest Financial Solutions.

"So we gave him $41,000," Laurie said. "$40,000 for investments and a thousand for a computer." They got the computer, and a few ambiguous investment statements.

Phillips also offered to find a renter for their home and manage the property; collecting the rent and forwarding rent payment directly Laurie. She says she got concerned when the rent checks stopped coming.

"He was late with two months' payments," Laurie said. When she tried to contact Phillips and collect the money, he could not be reached. Then she realized her $40,000 and Phillips were gone.

He Even Joined The Church

Stone Phillips III even joined Laurie's church, The Christian Faith Center in SeaTac. As with other victims, Laurie told KOMO 4 News Phillips told her he was friends with the church leader.

"He did say, when we were talking, that he was close friends with our pastor," Laurie said.

But Christian Faith Center Pastor Casey Treat says that's not true. Treat told KOMO 4 News he knew Phillips like he knew the thousands of others in his congregation, as someone who attended the church.

"It seems like everybody, including his wife, was ripped off, abused, and misused by this man," said Treat. Treat told us he's had no personal relationship with Stone Phillips. In fact, the church gave Phillips an ultimatum: Stop preying on the faithful, or leave. Phillips left.

"He hurt a lot of people," said Treat.

A State Investigation

We took our investigation to the State Department of Financial Institutions, which regulates all businesses and individuals who deal with securities and investments.

"Mr. Phillips is neither registered with the state as someone who can sell securities, nor were any of the investments registered with the state," said DIF's Martin Cordell.

Based on what we uncovered, and their own probe, the state says Phillips' business is illegal. Earlier this month, state investigators went to court to file a Cease and Desist Order against Phillips and Northwest Financial Solutions.

First Surfaced Here In 1999

According to our research, Phillips first surfaced in the Puget Sound area in 1999 after spending time in California. In 2000, he took out a full page ad in a community business directory touting himself as "one of America's most sought after financial advisors and real estate investment consultants."

KOMO 4 News tried contacting Stone Phillips, but his phone numbers are disconnected. The one number still operating is a recording, which continues to solicit business for Northwest Financial Solutions.

His listed business address is Two Union Square, an upscale business complex in downtown Seattle.

Property managers tell KOMO 4 News there is no record of Northwest Financial Solutions or Stone Phillips III as a tenant at Two Union Square. His Federal Way home and office, where he conducted much of his business, was sold in foreclosure last fall. Two post office boxes, in Tukwila in Federal Way which he used for mailing addresses, are vacated, with a forwarding address in Arizona.

A Man Of Many Names

Our investigation also found that Stone Phillips is not his only name. Court records show he legally changed his name in Feb. of 2000, from Ricardo Martinas Phillips III, to Stone Phillips III.

"He's been known as Ricardo M. Stone Phillips, Ricardo M. Phillips, Richard M. Phillips III, Rilanto M. Phillips," said Martin Cordell, reading from the state's Cease and Desist order. The order cites more than a dozen aliases. And it's feared there may be many more victims who are too embarrassed to admit they've been taken.

A Case Of Affinity Fraud

What happened to these local victims is known as Affinity Fraud, where victims are gained by targeting members of specific groups, such as church groups, racial minorities and senior citizens.

The schemes are successful because people automatically trust fellow members of the group, and the suspects often claim a relationship with the group leaders, or use the group leaders to gain introduction to the group.

The tight-knit nature of the group helps the suspect gain more victims by word-of-mouth referrals to their friends, who automatically trust them. The fraud is further aided by the victims' reluctance to come forward when they realized they've been defrauded.

Out of embarrassment for themselves and for the group, they say nothing which allows the suspect to move on and take more victims.

Victims Urged to Come Forward

The information uncovered in our investigation is triggering new fraud investigations against Phillips by local authorities, who want to hear from anyone who's done business with Stone Phillips III, Northwest Financial Solutions, or anyone connected to Phillips or his companies.

We've received reports that in some of Phillip's transactions, victims have unwittingly given Phillips legal ownership of their homes. Their first indication of a problem was when they lost their homes in foreclosure.

Our last check shows Phillips and Northwest Financial Solutions are now in Chandler, Arizona -- a community noted for it's multitude of churches.

KOMO 4 News would also like to hear from you. If you've dealt with Stone Phillips or Northwest Financial Solutions, please contact us with your story at

For More Information:

To file a complaint about investment fraud --

To file a complaint involving real estate or rental transactions with Stone Phillips or Northwest Financial Solutions --

All complaints should also be filed with the State Attorney General --

For more information about Affinity Fraud --