The U.S. Securities and Exchange Commission or SEC filed a civil suit Thursday against Sean David Morton, a psychic and self-described "America's Prophet", alleging he lied about using his psychic expertise in raising more than $6 million from investors.
The SEC filed the lawsuit against Morton, aged 51, who resides in Hermosa Beach, California, and three companies he co-owns with his wife Melissa Morton under the name Delphi Associates Investment Group. The lawsuit was filed in the U.S. District Court for the Southern District of New York.
The SEC noted that the $6 million in investments that Morton received from more than 100 allegedly were placed in bank accounts for various entities, including Vajra Productions LLC, 27 Investments LLC and Magic Eight Ball Inc. The SEC alleges those companies, and others that received money, were simply shell companies controlled by Morton and his wife.
According to the SEC, Morton fraudulently solicited individuals over nationally syndicated radio broadcasts, public appearances and monthly newsletters to put money into Delphi Associates. Morton's newsletter is a paid subscription-only periodical sent out on an approximately monthly basis to about 20,000 subscribers worldwide.
The SEC said that in soliciting these individuals, Morton claimed that he would use his psychic expertise to provide investment guidance to his investing team, and falsely touted his historical success in psychically predicting the various rises and falls of the market. The SEC noted that Morton wrote to potential investors in his Newsletter dated July 20, 2006, "I have called ALL the highs and lows of the market, giving EXACT DATES for rises and crashes over the last 14 years."
Morton further claimed that he would use the pooled funds to trade in foreign currencies and distribute pro rata the trading profits among the investors. However, the SEC says Morton lied to investors about his financial successes and about key aspects of the Delphi Associates Investment Group, including the use of the investors' money.
The SEC alleges that While Morton promised investors that all of their funds would be used to trade foreign currencies, he invested only about half of the funds with foreign currency trading firms and diverted some of the investor funds.
Further, the SEC said, the Mortons used at least $240,000 of the funds for their own nonprofit religious organization, Prophecy Research Institute, or PRI.
The SEC is seeking a final judgment ordering the Mortons to disgorge their ill-gotten gains and pay civil penalties.
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