Sean David Morton, a nationally recognized psychic who bills himself as Americas Prophet, has been charged by the Securities and Exchange Commission with engaging in a multi-million-dollar stock offering fraud.
The SEC charged Morton and three corporate entities he owns on Thursday with fraud for claiming to use his psychic powers to provide investment guidance to his team. Beginning in or around the summer of 2006, Morton allegedly solicited individuals to invest in several companies that he and his wife, Melissa Morton, controlled Vajra Productions LLC, 27 Investments LLC, and Magic Eight Ball Distributing Inc. under the umbrella of the Delphi Associates Investment Group.
According to the SEC, Morton falsely touted his historical success in psychically predicting the rises and falls of the stock market. He claimed that he would use the funds to trade in foreign currencies and distribute the trading profits among the investors.
However, according to the SEC, Morton lied to investors about his past successes, and about key aspects of the Delphi Investment Group, including the use of investor funds and the liquidity of the funds, and that the profits in the accounts were audited and certified. Morton fraudulently raised a total of more than $6 million from over 100 investors.
Morton used his monthly newsletter, his Web site, his appearances on a nationally syndicated radio show called Coast to Coast AM, and appearances at public events, to promote his psychic abilities. For example, Morton wrote to potential investors in his July 20, 2006, newsletter that: I have called ALL the highs and lows of the market, giving EXACT DATES for rises and crashes over the last 14 years. The SEC alleges that this assertion, like others Morton made in soliciting investors, is false.
Mortons
According to the SEC complaint, Morton placed investor funds in the bank accounts of one of the entities he controlled, and commingled the funds among the entities accounts. In addition, according to the complaint, while Morton promised investors that all of their funds would be used to trade foreign currencies, he in fact invested only about half of the funds with foreign currency trading firms. Unbeknownst to investors, the Mortons diverted some of the funds, including at least $240,000, to their nonprofit religious organization, Prophecy Research Institute. Melissa Morton and PRI are named as relief defendants in the complaint.
The SEC complaint seeks to permanently restrain and enjoin the Mortons from future violations of federal securities laws and seeks a final judgment ordering them to disgorge their ill-gotten gains plus prejudgment interest. The complaint also seeks a final judgment ordering them to provide a verified accounting.
