U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23256 / May 11, 2015
Securities and Exchange Commission v. Christopher A. Novinger, et al., Civil Action No. 4:15-cv-00358-O (N.D. Tex., Fort Worth Division, filed May 11, 2015)
SEC Sues Retirement Planners for Making False Claims to Investors
On May 11, 2015, the Securities and Exchange Commission charged a self-described retirement planning firm and its principals with falsely telling customers that interests in life settlements they offered and sold were "guaranteed," "safe as CDs," and "federally insured."
The SEC also alleges that they used a bogus "net worth calculator" that improperly qualified some prospective investors for purchases by including income that investors hadn't received, such as future pension and Social Security benefits.
The SEC charges were filed in the U.S. District Court for the Northern District of Texas against Novers Financial and its principals Christopher A. Novinger and Brady J. Speers, who live in Mansfield, Texas, and host a financial radio show. The SEC's complaint alleges that from 2012 to 2014, they sold approximately $4.3 million in life settlement interests to 26 investors.
Interests in life settlements are investments based on potential payouts on insurance policies held by others. Typically they can only be sold to investors who meet certain income or net worth levels. The SEC alleges that, to get around those limits, Novinger and Speers provided prospective investors with a net worth calculator that factored in future income to artificially inflate client assets. For example, according to the SEC complaint, one couple's non-homestead assets falsely "ballooned" from $263,000 to nearly $1.5 million when the calculator improperly included 20 years' worth of Social Security and retirement payments the couple anticipates receiving in the future.
In addition to the charges against Novers Financial and the two principals, the SEC charged ICAN Investment Group LLC and Speers Financial Group LLC for acting as unregistered broker-dealers.
The complaint charges Novinger, Speers, and Novers Financial with violating Sections 5(a) and 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder. ICAN and Speers Financial are charged with violating Section 15(a) of the Exchange Act. The Commission seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, against each of the defendants, and civil penalties against Novinger and Speers.
The SEC's investigation was conducted by Ronda Blair and Barbara Gunn of SEC's Fort Worth Regional Office.