Just before the holiday weekend, the SEC obtained an emergency court order
against Daniel C.S. Powell and his L.A.-based company Christian Stanley
Inc. to halt an alleged $4.5 million investment scheme.
The SEC believes that the company, a purported life settlements broker,
and Powell "have spent the past seven years creating the illusion
that it [Christian Stanley] was a legitimate company involved in the life
settlement industry." According to the SEC, however, Christian Stanley's
purported business ventures never existed and the company was never involved
in the brokering of life settlements. Instead, the SEC alleges that Powell
and the company simply used Christian Stanley's name to fraudulently
raise millions of dollars from at least 50 investors nationwide.
The SEC's complaint accuses Powell of promising investors a fixed 5
to 15.5 percent annual rate of return in a fraudulent debenture offering.
The complaint further alleges that Powell told investors that the notes
were backed by assets worth billions, including a coal mine in Kentucky
that supposedly held deposits valued at $11.8 billion.
Instead of using the money to purchase life settlement contracts or to
develop gold and coal mines as promised, Powell and his company allegedly
used investor funds for personal purposes and to make Ponzi-style payments
to other investors. Among other expenditures (including the purchase of
luxury cowboy boots and high-end vehicles), Powell is accused of spending
nearly $5,000 of investor funds to register for a dating service.
"Powell and Christian Stanley created the façade of an actual
business when in reality they have virtually no revenue,"
saidRosalind Tyson, Director of the SEC's Los Angeles Office, in the SEC's
Sept. 2 news release. "Most of the money raised from investors has
been used to finance Powell's extravagant lifestyle and for other
purposes that have not been disclosed to investors."
The Honorable George H. King for the U.S. District Court for the Central
District of California granted the SEC's request for a temporary restraining
order and asset freeze against Powell and his companies last week. A preliminary
injunction hearing is scheduled for Sept. 15.
For more information, read the SEC's litigation release