SEC Obtains Emergency Order Against Purported Life Settlement Co.
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 here.