Highlander says he still talks to Kingsmore regularly and does not believe she deliberately tried to defraud others. "I do not believe Kathy Kingsmore would take people unless somebody took her," he says. What could have possibly happened to the investors' money? "I have asked her," Highlander says. "She says she will tell me someday."
Ed Highlander is not the only person the SEC has talked to about Kathy Kingsmore. In October, government lawyers took a deposition from another member of Prestonwood Baptist Church, Charles Adams, who knew Highlander and apparently did business with Kingsmore.
Although the SEC appears interested in Highlander's and Adams' relationships with Kingsmore, neither Highlander nor Adams has been accused by the SEC of wrongdoing.
In his sworn testimony, Adams is vague about whether he had introduced Kingsmore to Highlander. Adams identifies himself as a broker in the oil and gas business. In response to an SEC subpoena of his financial records, Adams produced a copy of his 1995 tax return, showing an income of $187,598.
Adams' wife plays piano for the Prestonwood Baptist Church. Charles Adams says in testimony that he met Kingsmore two years ago at a party for the church's Sunday school.
On several occasions, according to Adams' testimony to SEC lawyers, Kingsmore asked to pass money through Adams' bank account and then send the money to her parents. Adams says he believed Kingsmore owed her parents money.
At one point, Adams testifies, Kingsmore told her parents that she had invested their money with Adams. Adams says that wasn't true, but that he went along with the deception because Kingsmore asked him to.
Only once did he actually get involved in investing with Kingsmore, Adams says in his testimony, and that was when he was supposed to invest $100,000 of hers. Adams says that the deal ultimately made no money, and that he returned the $100,000 principal to Kingsmore. Adams could not be reached to comment for this story. The telephone number he provided to the SEC is no longer working. Adams' attorney did not return phone calls from the Observer.
Something or someone seems to be missing from the picture the SEC has drawn of Kathy Kingsmore. At a minimum, she does not exhibit any sense of where her actions are leading her and taking others.
Earlier this year, Kingsmore began telling friends that her family was thinking of summering in Florida, perhaps renting a place while the Kingsmores' $800,000 beach house was under construction. But several investors, still waiting for their money, warned her not to go. "I and several others told Kingsmore that she had better not leave town before repaying the investors," Mark Ward states in his affidavit.
In late July, Kingsmore told neighbors that the family was going to Six Flags Over Texas amusement park. The Kingsmores did not return that day, and haven't been back to their house since, although Kingsmore called investors from time to time during the summer.
In August, Paul Gage, an investor from Bedford, told the SEC that he got such a call. Kingsmore would not tell him her location, Gage said. But she described her life as difficult. She was living out of suitcases. She was afraid to return to Dallas for fear that her phone had been tapped and bank records intercepted, Gage said she told him.
Gage, the investor upon whose shoulder Kingsmore was figuratively crying, had lost some $75,000 by investing with the music minister's wife.
But shifting truths and mood swings were all part of dealing with Kathy Kingsmore. "She would wake up in the morning and it would be a whole new day and a whole new reason why she couldn't give you the money," says one person who invested money with her.
Kingsmore's temperament, the investor recalls, ebbed and flowed, curiously following banking hours. When the banks were open--and Kingsmore presumably had access to all the money people had given her--she seemed fretful, afraid people were going to ask her to produce their cash. But when the banks were closed, the investor says, Kingsmore would relax. If someone asked for his money, she could rightly claim it wasn't available just then. Says the investor: "Weekends were a breeze for her.
