Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Saturday, September 3, 2011

SEC HALTS FRAUD CONDUCTED BY PURPORTED LIFE SETTLEMENT COMPANY

The SEC announced that it obtained an emergency court order to halt an alleged $4.5 million investment scheme by a Los Angeles-based company that purports to broker life settlements.  According to the SEC's complaint, Daniel C.S. Powell and his company Christian Stanley Inc. have spent the past seven years creating the illusion that it was a legitimate company involved in the life settlement industry. Contrary to what investors were told, Christian Stanley has never purchased or generated any revenue as a result of brokering the sale of a single life settlement. Instead, Powell used the Christian Stanley name as a vehicle to raise at least $4.5 million in an unregistered offering of debenture notes and spent most of the money for purposes unrelated to its ostensible business operations. Powell misused investor funds to finance his stays at luxury hotels, visits to nightclubs and restaurants, and purchases of high-end vehicles.

According to the Commission’s complaint, Powell raised funds from at least 50 investors nationwide in the fraudulent debenture offering, promising investors fixed interest returns ranging from 5 to 15.5 percent annually for five-year terms. Powell claimed the notes were backed by assets such as a gold mine in Nevada and a coal mine in Kentucky that he said held coal deposits valued at $11.8 billion.

The U.S. District Court for the Central District of California yesterday granted the Commission’s request for a temporary restraining order and asset freeze against Powell and his companies. The court also appointed Robb Evans and Associates LLC as temporary receiver over the entities.

http://lawprofessors.typepad.com/securities/2011/09/sec-halts-fraud-conducted-by-purported-life-settlement-company.html

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