Life Settlement Fraud

It seems like more and more of this type of fraud is showing up in the industry…

Christian Stanley’s program was labeled as “Reverse Life Insurance”

The Securities and Exchange Commission’s Los Angeles district office has obtained an emergency court order halting all operations and freezing the assets of a company it says has been “creating the illusion” for seven years that it was taking investors’ money and investing it in life settlements.

Instead, SEC attorneys claim in their complaint in federal court, the company, Christian Stanley, Inc., was allegedly used by the founder, Daniel C.S. Powell, 29, to finance “stays at luxury hotels, visits to nightclubs and restaurants,” and for “purchase of high-end vehicles.”

Marc Blau, assistant director of enforcement at the SEC’s Los Angeles office, told  On Wall Street, “Christian Stanley’s actual investment in life insurance policies was de minimis at best.”

The SEC complaint alleges that since March 2009, Christian Stanley and Powell “offered and sold at least $4.5 million in unregistered securities in the form of debentures” to some 50 investors to whom they “promised to pay ‘secured and structured; annual returns ranging from 5% to 15.5%.”

The complaint further alleges, “In reality, defendants applied less than $90,000 of the amount they raised — about 2% — toward these avowed purposes, and have spent over 50% of the remaining investor fund for purposes that bear no relation to the operation of Christian Stanley’s purported business.”

The SEC claims Powell used investors’ money “for such unrelated purposes as sales commissions and Ponzi-like payments to existing note holders,” as well as to make “personal expenditures” allegedly including $21,000 toward his school loans, $5,000 for cowboy boots and “nearly $5,000 for a dating service.”

Source/Full article: onwallstreet.com/news/sec-injunction-ponzi-scheme-christian-stanley-2674981-1.html

Carole Fiedler Life Settlement Broker

Carole Fiedler, a Greenbrae, Calif., viatical and life settlement broker who operates Innovative Settlement Solutions, sued after her $180,000 fee was not paid after she gave advice on whether a $3 million policy should be sold.

She filed a lawsuit Tuesday in Marin County Superior Court in San Rafael, Calif., alleging breach of contract, breach of the covenant of good faith and fair dealing and unjust enrichment.

Fiedler, who says she’s been in the viatical/life settlement business for 19 years, said she was contacted by the insured, Shirley Seid, in June 2009 about selling her Phoenix Life Insurance Co. policy.

When she contacted her, she had been diagnosed with a terminal illness and wanted to get the money so she had control over where the proceeds would go, according to the lawsuit. She wanted to make sure her two stepsons received some of the purchase price, the suit added. Only her daughter and granddaughter were beneficiaries of her life insurance trust.

The suit said the policy had been obtained through premium financing firm BankDirect and Seid paid no premiums for the first two years. The suit said there were concerns that Phoenix would claim the policy was stranger-originated life insurance (STOLI), that Phoenix wouldn’t pay the death benefit because its rating had been downgraded, and that Phoenix would contend that the application was fraudulent.

Ultimately, BankDirect sought to take over ownership of the policy because Seid could not pay premiums. But Fiedler said she got the firm to agree to pay $450,000 to buy it. She said in her suit she also got Habersham Funding, an Atlanta-based provider, to offer $1.02 million for the policy. Seid, however, died within hours after the sales agreement with Habersham was signed, the suit said.

Phoenix then paid the death benefit to the trust, but Fiedler never received her commission, the suit said.

Source: Lawsuit/Life Settlements Report