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

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Friday, February 15, 2013

SEC Obtains Default Judgment Against "America's Prophet"

The SEC announced today that a Manhattan federal district court entered default judgments against Sean David Morton (Morton), whom the SEC describes as "a nationally-recognized psychic who bills himself as 'America's Prophet'," and his wife, relief defendant Melissa Morton, and corporate shell entities co-owned by the Mortons (including the Prophecy Research Institute).  The SEC charged Morton with engaging in a multi-million offering fraud. According to the Commission's complaint, Morton fraudulently raised more than $5 million from more than 100 investors for his investment group, which he called the Delphi Associates Investment Group (Delphi Investment Group).

According to the Commission's complaint, Morton used his monthly newsletter, his website, his appearances on a nationally syndicated radio show called Coast to Coast AM, and appearances at public events, to promote his alleged psychic expertise in predicting the securities markets, and to solicit investors for the Delphi Investment Group. During these solicitations, Morton made numerous materially false representations. For example, Morton falsely told potential investors that he has called all the highs and lows of the stock market, on their exact dates, over a fourteen year period. In private one-on-one correspondence with potential investors, Morton was even more aggressive in his solicitation. For example, Morton wrote to a potential investor urging he invest more money in the Delphi Investment Group "RIGHT NOW…[Because] [o]nce the DOLLAR starts to DROP, which will happen soon, we are set to make a FORTUNE!"

Bizarrely, according to the SEC, the defendants never properly answered the allegations in the complaint. Instead, the Mortons filed dozens of papers with the Court claiming, for instance, that the Commission is a private entity that has no jurisdiction over them, and that the staff attorneys working on the case do not exist.

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