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SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD

 
Anonymous Coward
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03/05/2010 12:45 AM
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SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
ABC NEWS:

Self-Proclaimed 'Psychic' Charged with Investor Fraud

March 04, 2010 6:03 PM

ABC's Matthew Jaffe reports from Washington:

A self-proclaimed psychic who called himself "America's Prophet" and claimed the ability to predict stock market changes was charged today by the Securities & Exchange Commission with multi-million dollar securities fraud.

Sean David Morton started to solicit investors in the summer of 2006 by promising to use his psychic abilities for investment guidance, the SEC alleged in the complaint.

Morton "I have called all the highs and lows of the market, giving exact dates for rises and crashes over the last 14 years," Morton said in a newsletter to potential investors. Along with his newsletter, Morton also used his website, public speaking engagements, and appearances on a nationally syndicated radio show to promote his Delphi Investment Group.

According to George Canellos, director of the SEC's New York Regional Office, "Morton's self-proclaimed psychic powers were nothing more than a scam to attract investors and steal their money."

In all, Morton raised more than $6 million from over 100 investors in 2006 and 2007. Morton invested about half the funds with foreign currency trading firms and diverted some of the investor funds, including at least $240,000 into his and his wife's non-profit religious organization, Prophecy Research Institute.

Morton, his wife Melissa Morton, and three corporate entities that they own under the umbrella of the Delphi Associates Investment Group were the subject of the SEC charges.

The SEC complaint can be found HERE.

AND NY POST

[link to www.nypost.com]

Too bad he couldn't foresee getting caught.

Federal regulators filed suit today against a self-proclaimed psychic who allegedly scammed $6 million by conning suckers into believing that his extrasensory abilities would make them "piles of money" by trading foreign currencies.

Sean David Morton -- who bills himself as "America's Prophet" -- "falsely touted his historical success in psychically predicting the various rises and falls of the market," according to the Securities and Exchange Commission.

The California-based huckster -- whose Web site shows him posing with celebs including Sting, Robin Williams and the late Farrah Fawcett -- solicited investors on late-night radio shows and at the 2006 "New Life Expo" in New York City, the Manhattan federal court filing says.

The suit seeks to put an end to Morton's alleged fraud and force him to cough up his "ill-gotten gains" along with unspecified fines.

Morton, 51, allegedly lied repeatedly to more than 100 investors in his Delphi Investment Group, which the SEC says "was not an actual company but was simply a moniker Morton used."

He falsely claimed investor funds would be placed into three different accounts called "Vajra Productions," "27 Investments" and "Magic Eight Ball Distributing," that were really just shell companies, the suit says.

In reality, the SEC says "he invested only about half of the funds with foreign currency trading firms" and diverted the rest, including $240,000 that went to a non-profit religious organization called the Prophecy Research Institute that he runs with his wife, Melissa, who's also named in the suit.

Morton, who's slated to appear later this month at the New Life Expo at the New Yorker Hotel, couldn't immediately be reached for comment.

Read more: [link to www.nypost.com]
Anonymous Coward
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03/05/2010 12:47 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Is this article legit or just more like opinion?
Anonymous Coward (OP)
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03/05/2010 12:49 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
I wonder if George Noory is going to comment on this tonight.

In its charges filed in US Dist Court in NY, the SEC SPECIFICALLY mentions Coast to Coast AM several times as a primary conduit for the alleged multi-million dollar fraud.

It even quotes EXACT show dates with Noory.......


This could get ugly quickly.
Anonymous Coward (OP)
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03/05/2010 12:51 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Is this article legit or just more like opinion?
 Quoting: Anonymous Coward 907294


Highly legit. $6 Million plus alleged scam pulled off and Coast to Coast AM was a primary conduit mentioned in the filing.

I have a copy of the SEC's complaint filed in US District Court in NY.
Anonymous Coward
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03/05/2010 12:56 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
I wonder if George Noory is going to comment on this tonight.

In its charges filed in US Dist Court in NY, the SEC SPECIFICALLY mentions Coast to Coast AM several times as a primary conduit for the alleged multi-million dollar fraud.

It even quotes EXACT show dates with Noory.......


This could get ugly quickly.
 Quoting: Anonymous Coward 805053


Yeah, I wondered that myself, if Noory will address this. Noory has his head so far up Morton's ass...
Anonymous Coward (OP)
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03/05/2010 12:58 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Is this article legit or just more like opinion?


Highly legit. $6 Million plus alleged scam pulled off and Coast to Coast AM was a primary conduit mentioned in the filing.

I have a copy of the SEC's complaint filed in US District Court in NY.
 Quoting: Anonymous Coward 805053


GEORGE S. CANELLOS
Regional Director .JUDGECHIN Attorney for Plaintiff SECURITIES AND EXCHANGE COMMISSION New Y ork Regional Office
3 World Financial Center, Suite 400 New Y ork, New Y ork 10281-1022 (212) 336-1020
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-against -
SEAN DAVID MORTON, V AJRA PRODUCTIONS, LLC, 27 INVESTMENTS, LLC, and MAGIC EIGHT BALL DISTRIBUTING, INC.,
Defendants,
- and-
MELISSA MORTON, and PROPHECY RESEARCH INSTITUTE,
Relief Defendants

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") for its Complaint against defendants Sean David Morton ("Morton"), Vajra Productions, LLC ("Vajra"), 27 Investments, LLC ("27 Investments"), and Magic Eight Ball, Inc. ("Magic Eight Ball") (the three entities are referred to herein as the "Entities" and Morton and the Entities, collectively, are referred to as the
"Defendants"), and relief defendants Melissa Morton and Prophecy Research Institute ("PRJ") (together, the "ReliefDefendants") alleges as follows:


SUMMARY

1. From the summer of 2006 to the end of 2007, Morton, a nationally-recognized psychic who bills himself as "America's Prophet," fraudulently solicited individuals to invest in the Delphi Associates Investment Group ("Delphi Investment Group"). 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. 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, 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 ofthe funds, and that the profits in the accounts were audited and certified.

2. All together, Morton fraudulently raised more than $6 million from more than 100 investors for the Delphi Investment Group.

3. Morton enticed investors through his monthly newsletter, The Delphi Associates Newsletter ("Newsletter"), his website, www.delphiassociates.org ("Website"), his appearances on a nationally syndicated radio show with an average audience of nearly three million listeners called Coast to Coast AM ("Radio Broadcast"),[b/] [i/] and at public events, including in New York City, to promote his psychic abilities.

4. In his Newsletter, on the Radio Broadcast, and at public events, Morton made numerous materially false representations relating to his psychic abilities in order to solicit investors for the Delphi Investment Group. For example, Morton wrote to potential investors in his Newsletter dated July 20,2006 that: "I have called ALL the highs and lows of the market,
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giving EXACT DATES for rises and crashes over the last 14 years." (emphasis in original.) This assertion, like others Morton made in soliciting investors, is false.
5. Morton, who did not seek accreditation status from the Delphi Investment Group investors, placed investor funds in the bank accounts o f the Entities, which were shell companies controlledbyMortonandhiswife,MelissaMorton. Mortonand/orMelissaMortoncommingled the investors' funds among the Entities' accounts.
6. While Morton promised investors that all oftheir funds would be used to trade foreign currencies, in fact, he invested only about half ofthe funds with foreign currency trading finns. Unbeknownst to the investors, instead ofinvesting all ofthe funds into foreign currency trading firms; Morton, and/or his wife, Melissa Morton, diverted some ofthe investor funds. For instance, the Mortons diverted at least $240,000 o f investor funds to their own nonprofit
religious organization, PRJ. 7. In raising more than $6 million from investors around the country, the Defendants
violated the registration provisions ofthe federal securities laws by failing to file a registration statementwiththeCommission. NoneoftheEntitieshasfiledregistrationstatementsforany offering of securities.
8. By virtue of the conduct alleged herein, each ofthe Defendants, directly or indirectly, singly or in concert, engaged in acts, practices, transactions, or courses ofbusiness that violated Sections 5(a), S(c) and 17(a) ofthe Securities Act of 1933 ("Securities Act") [15 U.S;C. §§ 77e(a), 77e(c), and 77q(a)];and Section 10(b) ofthe Securities ␣ ␣ ␣ ␣ ␣ ␣ ␣ Act of 1934 ("Exchange Act") [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 c.P.R. § 240.10b-5].
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9. Unless each of the Defendants is permanently restrained and enjoined, they will again engage in the acts, practices, transactions, or courses ofbusiness set forth herein and in acts, practices, transactions, or courses ofbusiness ofsimilar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 10. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) ofthe Securities Act [15 U.S.c. § 77t(b)] and Section 21(d) ofthe Exchange Act [15 U.S.c. § 78u(d)], and seeks to permanently restrain and enjoin Morton, Vajra, 27 Investments, and Magic Eight Ball from future violations o f Sections 5(a), 5(c) and 17(a) o f the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)], and Section 10(b) ofthe Exchange Act [15 U.S.c. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.lOb-5]. The Commission also
seeks a final judgment ordering the Defendants to disgorge their ill-gotten gains and pay . prejudgment interest thereon on a joint and several basis,· and to pay civil monetary penalties
pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)], and Section 21 (d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. The Commission further seeks a final judgment ordering the Relief Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon, and ordering the Defendants and Relief Defendants to provide a verified accounting. Finally, the Commission seeks all other just and appropriate relief.
JURISDICTION AND VENUE 11. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
.22(a) ofthe Securities Act [15 U.S.c. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
12. Venue lies in this District pursuant to Section 22(a) ofthe Securities Act [15 U.S.c. § 77v(a)], and Section 27 ofthe Exchange Act [15 U.S.C. § 78aa]. The Defendants,
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directly or indirectly, have made use ofthe means or instrumentalities of, or the means or ' instruments oftransportation or communication in, interstate commerce, or ofthemails.in connection with the transactions, acts, practices, and courses ofbusiness alleged herein. Certain o f these transactions, acts, practices, and courses o f business occurred within the Southern DistrictofNewYork. Forinstance,MortonsolicitedinvestorsfortheDelphiInvestmentGro​up at a "New Life Expo" held in New York City in October 2006 (the "New York Expo"). Morton
provided investors and potential investors, including investors residing in New York, with a letter titled "RE: Foreign Exchange Trading with The Delphi Associates Investment Group" (the "Offering Letter"), which described the three investment vehicles -- Vajra, for investments of $5,000 - $25,000; 27 fuvestments, for investments of$25,001 - $50,000; and Magic Eight Ball, for investments of greater than $50,000.
DEFENDANTS 13. Morton is 51 years old and resides in Hermosa Beach, California. Morton is the
founder, writer and publisher ofthe Newsletter, and was a regular guest on the Radio Broadcast. Morton is a co-owner and officer ofVajra, 27 Investments, and Magic Eight Ball. Morton is also a co-owner and managing trustee ofPRl. Morton is currently a defendant in two pending private civil actions: Dunn v. Morton, etal., No. 021136/07 (NY. Civ. Ct. 2007), and Saunders v. Morton, et aI., No. 2:09-cv-00125 (D. Ct. Vt. 2009). Morton was also a defendant in Bassv.
Morton, et aI., No. CV-08-253-EFS (B.D. Wa.) in which the court entered final judgment against all defendants, including Morton, and held Morton jointly and severally liable for more than $217,000 plus prejudgment interest, attorneys fees and other costs. fu all three ofthese cases, an investor in the Delphi fuvestment Group has alleged that Morton, Vajra, 27 Investments, Magic
Eight Ball, and other individuals conducted a fraudulent investment scheme.
5.
14. Vajra is a Nevada New Mexico registered limited liability company, with a registered address of 14290 Freshwater Avenue, Burbank, California 91502. During the summer of2006 to the end of2007, investor correspondence for Vajra was addressed to Morton and sent toMorton'sresidentialaddress. Vajrahasnotfiledaregistrationstatementinconnectionwith thesecuritiesofferedintheDelphiInvestmentGroup. Vajrawasnamedadefendantinallthree
o f the actions listed in paragraph 13. 15. 27 Investments is a New Mexico registered limited liability company, with a
registered address of3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for 27 Investments was addressed to Morton and sent to Morton's residential address. 27 Investments has not filed a registration statement in connection with the securities offered in the Delphi Investment Group. 27 Investments was named a defendant in all three o f the actions listed in paragraph 13.
16. Magic Eight Ball is a California registered corporation, with a registered address of 3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for Magic Eight Ball was addressed to Morton and sent to Morton's residential address. Magic Eight Ball has not filed a registration statement in connectionwiththesecuritiesofferedintheDelphiInvestmentGroup.​ MagicEightBallwas
named a defendant in all three ofthe actions listed in paragraph 13.
RELIEF DEFENDANTS 17. Melissa Morton is 42 years old and resides in Hermosa Beach, California:
Melissa Morton and Morton had sole access to the funds deposited with the Entities described above. Melissa Morton is a co-owner ofVajra, Magic Eight Ball, 27 Investments, and PRI. Melissa Morton was named a defendant in all three of the actions listed in paragraph 13.
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18. PRI is a nonprofit religious organization set up pursuant to Internal Revenue Code § 501(c)(3). Morton's Newsletter is published through PRI. PRJ's address is the same as the Mortons' residential address. The Mortons are the owners and sole directors ofPRI.
FACTS A. Morton Solicited Investors for the Delphi Investment Group
19. Beginning in or around the summer of2006, Morton solicited individuals to invest in the Delphi Investment Group which was not an actual company but was simply a moniker Morton used for the group. Morton represented to investors that the Delphi Investment Group would use the pooled investor funds to trade in foreign currencies and would distribute
pro rata the trading profits among the investors. 20. Morton solicited investors through mailings as well as on the Radio Broadcast, at
public conferences, inCluding the New York Expo, and at a retreat which took place from September 7 through September 10, 2007 at the Mount Shasta Resort, Mount Shasta, California ("Mount Shasta Retreat"). Morton also listed the Delphi Investment Group on his Website and directed investors to email him at his email address.DAIG888@aol.com.
21. Morton's Newsletter is a paid subscription-only periodical sent out on an approximatelymonthlybasistoapproximately20,000subscribersworl​dwide. IntheNewsletter, MortonsolicitedinvestorsbytoutingthesuccessoftheDelphiInvestm​entGroup. Forexample, in a July 20, 2006, Newsletter, Morton wrote that the Delphi Investment Group had already been extremely successful: "[W]e are averaging 3 to 5% PER DAY, and in the last month we have
had gains of 12%, 19% and 26% in a single day." (emphasis in original.) 22. On the Radio Broadcast, Morton also touted the success of the Delphi Investment
Group. For instance, during a February 27,2007 Radio Broadcast, Morton stated that his
7
psychic advice and management had proven to be extremely profitable: "We started with about $35,000 and right now we're managing, I'm actually managing four separate funds that are worth about $4.5 million total. .. "
23. At the New York Expo, Morton solicited attendees to invest in the Delphi . Investment Group by claiming that everyone of the current investors had already received huge
profits and that investing in the Delphi Investment Group would also bring about spiritual happiness and promote good works. And, at the Mount Shasta Retreat, Morton held "financial' surVival" workshops, and solicited attendees by telling them that the Delphi Investment Group was the best investment they could make, and that he could make the investors "piles of money" but that they should act quickly.
24. MQrton also solicited investors in his Offering Letter, where Morton explained that he would use so-called psychic techniques to make his investment projections. The Offering Letter further states that Morton would then create a chart ofhis projections, which he would send to his trader, who was to rely on the charts to "place[] ... positions based on [Morton's] analysis and projections."
25. The Offering Letter also states that Morton and the investors will share in the profits from the investments in the foreign currencies and divide the returns on the investments as a "50/50 SPLIT ofPROFITS ONLY!" and that the process will "be completely TRANSPARENTandTOTALLYONTHEUPANDUP!"(emphasisinorigina1.). Mortonalso falsely assured his investors that "the Feds can't look over our shoulder, interfere or regulate any ofit."
26. In one-on-one correspondence with potential investors, Morton was even more aggressive in his solicitation. For example, on October 7,2006, Morton wrote to a potential
8
investor, Investor G, in two separate emails: "The more [money] you get me the MORE 1 can make for you" and "[g]ive ME enough money to help YOU! Give me enough so that the average profits will make a DIFFERENCE in your life." (emphasis in original.) In a subsequent email, after Investor G had already invested with the Delphi Investment Group, Investor G told Morton that he would like to invest in other types o f investments such as the stock market. .
Morton replied, "for RIGHT NOW you will make the most with [the Delphi Investment Group].
Once the DOLLAR starts to DROP, which will happen soon, we are set to make a FORTUNE!"
(emphasis in original.)
B. Morton Made Material Misrepresentations to Investors in the Delphi Investment Group
i. Misrepresentations Concerning Past Predictions of the Market
27. Morton knowingly, or with reckless disregard, made materially false representations about the accuracy o f his past market predictions to solicit investors for the Delphi Investment Group. For example, in his July 20, 2006 Newsletter, Morton falsely wrote that: "I have called ALL the highs and lows ofthe market, giving EXACT DATES for rises and·· crashes over the last 14 years." (emphasis in original.) Morton repeated this false claim in the Offering Letter, which stated, among other things, that: Morton "gave EXACT DATES and
NUMBERS for various highs of gold and silver." (emphasis in original.) 28. Similarly, Morton's Website falsely states that the "ASTONISHING PSYCHIC
HITS" Morton has made in his Newsletter include "The EXACT dates for prices of GOLD" from 2004 to 2007 (emphasis in original) and that Morton "predicted exact dates for the post- 90's decline ofthe [DJIA] and NASDAQ, and has given the exact levels - and timing - oftheir subsequentriseandfall." TheserepresentationsaboutMorton'spriorpredictionsaboutthe
market, like the ones in Morton'sOffering Letter and in the July 20,2006 Newsletter, are false,
9
as shown by the following examples summarizing some ofMorton's false representations and the actual market activity that took place:
Mortons' False Representations Predicted in an October 20,2000 Newsletter that "around October 31... [a] serious plunge in the market will come directly before the elections .... [M]id February will be the next abject bottom, as once again the market will continue to go up and bounce providing [a] sucker's rally. Feb/March 2001 will see the abject floor of 8000.... "
Predicted in an April 13, 2001 Newsletter that the NASDAQ "should hit 2000" in mid-May, "zig zag" between 2000 and 2395.03 all summer, "plummet" down to 1034.51 and then 701.78, before "skyrocket[ing]" in 2002 to 4100 and beyond to 7321.74 in 2003 "or at least 6035."
Predicted during a November 21,2001 Radio Broadcast: "I'llgiveyoutheexactdate... April2002.... etweenAprilandJuneof 2002 [the DJIA] is going to be the steady rise
.in the market. That's where it's going to really pickupandpickupstability. ByDecemberof next year, ... it'll be back up into the realm [of] high 11,000, 12,000 or so...."
Actual Market Activity From October 30, 2000 through November 17, 2000, the DJIA was steady; with a high closing price of 10,977.21 on November 6, and a low closing price of 10,517.25 on November 13. From October 31, 2000 through the end ofthe year, the DJIA moved generally within the mid 1O,000's. Prices remained relatively steady through mid-February 2001, and there was no "bottom," as the market moved within the 1O,900's and the 1O,400's throughout February. In February and March, 2001, the DJIA never hit the lower reaches of9,000, let alone 8,000.
The NASDAQ: (a) first closed above 2000 in mid-April, just days after Morton's prediction, not in mid-May; (b) did not reach a high of 2395.03 during the summer; (c) did not plummet in 2001 to anywhere close to 1,034, instead staying above 1,387 all year; and (d) did not skyrocket to anywhere near 4,100 in 2002 or 6,035 in 2003, instead staying under 2,100 during those two years.
From April through June, 2002, the DJIA . generallytrendeddownwardfromahighof 10,381.73onApril10,2002toalowcloseof 9,120.11 on June 26, eventually closing the year at 8,341, nowhere near 11,000.
!
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Urged in a June 23, 2000 Newsletter: "Buy GOLD! RIGHT NOW! A T $290 per oz. by the end ofthis year that will be a STEAL!..." Gold will "skyrocket. .. to upwards of around $350 over the summer, and $375 and above by the fall." (emphasis in original).
Stated in an October 17,2002 Newsletter: "Forget about gold. It's going NOWHERE." (emphasis in original).
Goldin fact did not "skyrocket" during the summer of 2000 or reach $375 per ounce by the fall. In fact, gold prices never hit $300 per ounce during this period: After peaking at just over $292, it trended downward during the summer to the low $270's before moving back to the upper $270's in late August, and then trending slightly downward through September
to the mid-$270's.
Gold, which was trading around $311 per ounce at the time ofthis Newsletter, rose over 10% to almost $350 per ounce by the end of 2002, and almost 20% to over $415 per ounce by the end of2003.
ii. Misrepresentations Concerning the Use of Investor Funds
29. Morton knowingly, or with reckless disregard, made material misrepresentations to investors concerning the use of the funds they invested with the Delphi Investment Group. For example, in the Offering Letter, Morton assured investors that the investor funds will "be used EXCLUSNELY for FX trading. ANY OTHER USE OF THE FUNDS IS STRICTLY PROHIBITED, IS MISAPPROPRIATION and a CRIMINAL ACT." (emphasis in
original.) In the Offering Letter, Morton also told investors that their funds would be placed into accounts with Bank of America "and are then directly transferred to the corresponding accounts with [the foreign exchange trading firm] to be used for trading on the Foreign Exchange markets." However, between June 2006 and November 2007, investors invested approximately $6 million with the Delphi Investment Group, and only about $3.2 million ofthe $6 million
raised was deposited into the foreign exchange trading accounts.
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30. Instead ofbeing deposited into foreign exchange trading accounts, some investor funds were transferred directly to various individuals or other entities - including approximately $240,000 to PRJ, a nonprofit religious organization set up and owned by the Mortons.
31. In the Offering Letter, Morton knowingly, or with reckless disregard, falsely told investors that their funds would be placed into one ofthree investment accounts: Vajra (for investments of$5,000 - $25,000); 27 Investments (for investments of$25,001 - $50,000); or Magic Eight Ball (for investments ofgreater than $50,000). Morton also explained to investors in the Offering Letter that only he and his wife, Melissa Morton, had access to the funds
deposited in any of the Entities. 32. However, the investor funds were not always deposited into the accounts held in
thenameofeachoftheEntities. Instead,attimes,andunbeknownsttotheinvestors,the investor funds were deposited into one o f the other Entity accounts.
33. Furthennore, while Morton maintained a separate account at Bank of America for each of the Entities, he controlled all of the accounts, and unbeknownst to the investors, transferredfundsbetweentheaccountstherebycomminglingtheinvest​orfunds. Forinstance, from December 2006 through March 2007, Morton transferred at least $185,000 from the 27 Investments account to the Magic Eight Ball account, and at least $178,000 from the Vajra
accounttotheMagicEightBallaccount. InAprilandJuly2007,Mortontransferredatotalof $25,000 from the Magic Eight Ball account back to the Vajra account. In August 2006, Morton also transferred more than $350,000 from the Vajra account to the 27 Investments account, and . in April 2007, Morton transferred at least $150,000 from the 27 Investments account back to the Vajra account.
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iii. Misstatements Concerning an Audit of Delphi Investment Group
34. Morton knowingly, or with reckless disregard, also made material misrepresentations concerning alleged audits performed by PricewaterhouseCoopers for the Delphi Investment Group. During a February 27,2007 Radio Broadcast, Morton falsely stated: "we've had a Pricewaterhouse audit actually on the accounts that shows from ... the first ofJune through November 15t\ a 117% profit on those accounts." Similarly, in a January 27,2007 email responding to a potential investor's inquiries about investing with Morton, Morton falsely
. stated: "Recently we had the accounts audited by PRlCE-W A TERHOUSE who gave us their certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) In fact, these accounts were never audited by PriceWaterhouseCoopers, and no auditors "certified and verified" profits in any of the Entities' accounts.
iv. Investors Found Morton's Misrepresentations to be Material
35. More than 100 people from numerous states invested over $6 million in the DelphiInvestmentGroup. ManyinvestedwithMortonafterhearingMortonontheRadio Broadcast; reading his Newsletter; attending the New York Expo; attending the Mount Shasta Retreat; and/or after learning about Morton from another potential investor.
36. Many investors did not have a pre-existing relationship with Morton, but invested in the Delphi Investment Group based upon Morton's representations in the Newsletter, the
. Radio Broadcast, and/or the New Y ork Expo or Mount Shasta Retreat. 37. For instance, Investor S first learned through the Newsletter - which he
subscribed to - that Morton was seeking investors for the Delphi Investment Group. Investor S emailed Morton inquiring about the Delphi Investment Group, and, in response, received the OfferingLetter. InvestorS'sdecisiontoinvestwasinfluenced,inpart,bytheOffering​Letter
13
and the July 20,2006 Newsletter discussed above, including Morton's statement in both documents that he "called ALL the highs and lows ofthe market, giving EXACT DATES for rises and crashes over the last 14 years." Investor S initially invested $5,000 in Vajra in April 2007. Based on several accounting statements he received which indicated that his investment
was profitable, and the claims made by Morton in the Offering Letter and the July 20, 2006 Newsletter, Investor S invested an additional $130,000 in Vajra in July 2007. Although Investor S subsequently sought to redeem his investment, to date, Investor S has not received any of his funds.
38. Investor M heard Morton discuss the Delphi Investment Group on the Radio Broadcast on January 1, 2007 and contacted Morton, requesting information on investing with theDelphiInvestmentGroup. OnJanuary27,2007,MortonrespondedtoInvestorM'srequest in an email stating that he had "already turned down some very big money firms wanting to use myuniqueabilities...." Withknowledgeorrecklessdisregard,Mortonalsofalselywrotethat "[r]ecently we had the accounts audited by PRICE-WATERHOUSE who gave us their . certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) Morton further wrote to Investor M that the Delphi Investment Group began with $35,000, and
that the accounts were then worth "about$3.5 million with about 70 investors" and that, despite the "GLOBAL MELTDOWN ofthe US dollar... we have STILL averaged about 10% per month." .(emphasis in original.) Morton attached the Offering Letter to his email. Based on Morton's discussion on the Radio Broadcast, and the correspondence, including the misrepresentations in the Offering Letter discussed above, on or around February 23,2007,
InvestorMinvested$10,000withtheDelphiInvestmentGroup. Subsequently,InvestorM sought to redeem his investment, but, to date, he has not received any ofhis funds.
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C. Morton Sold Unregistered Securities in Non-Exempt Transactions 39. Despite pooling all ofthe investor fimds for the alleged purpose ofinvesting in the foreign currency market, infonning investors that they were to share in the profits and that
they would receive pro rata distributions ofthe profits made from the efforts ofMorton's trading team, none ofthe Entities has filed with the Commission registration statements for any offering o f securities.
40. Morton did not take steps to ensure that his investors were accredited or sophisticated.
41. In fact, Morton disregarded evidence that certain investors were not accredited or sophisticated. For instance, on March 1,2007, Investor B - who had already invested $80,000- emailed Morton and told him she was considering investing an additional $90,000, plus another $125,000 for her 91 year-old mother. Investor B told Morton, "both my mother and I would need to withdraw the earnings quarterly or semi-annually as we are both living offthe earnings
ofthese fimds." Morton responded that "[t]he fimds are liquid, so OF COURSE we can do payouts on a regular basis." (emphasis in original.) Investor B invested her additional $90,000 . but when she hesitated investing her mother's fimds, Morton stated that a major investor was coming on board, "which means higher margins, more security and bigger profits for everyone."
As a result, Investor B's mother invested $125,000. The so-called "major investor" never made this investment in Morton's entetprise.
FIRST CLAIM FOR RELIEF Violations of Section 17(a) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
42. The Commission reallegesand incotporates by reference paragraphs 1 :- 41, as though fully set forth herein.
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43. From at least 2006 through 2007, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, by use ofthe means or instrumentalities of interstate commerce, or ofthe mails, in connection with the offer and sale, ofsecurities, knowingly or recklessly: (a) employed devices, schemes and artifices to defraud; (b) obtained
money or property by means of, or otherwise made, untrue statements ofmaterial fact or omitted to state material facts necessary in order to make statements made, in light ofthe circumstances under which they were made, not misleading; and/or (c) engaged in transactions, acts, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon purchasers of securities offered and sold by the Defendants and upon other persons.
44. As part and in furtherance ofthe violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, employed the deceptive devises, schemes, artifices, contrivances, acts, transactions, practices, and courses of
. business and/or made misrepresentations and/or omitted to state the facts alleged above. 45. The false and misleading statements and omissions made by Morton, Vajra, 27
Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
46. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions more fully described above in paragraphs 1-6,21-34,37,38, and 41, were false or misleading.
47. The material misrepresentations and omissions were in connection with the offer or sale of securities.
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48. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated, Section 17(a) ofthe Securities Act [15 U.S.c. § 77q(a)].
SECOND CLAIM FOR RELIEF Violations of Section lOeb) of the Exchange Act and Rule IOb-S
(Morton, Vajra, 27 Investments, and Magic Eight Ball)
49. The Commission realleges and incorporates by reference paragraphs 1 through 41, as though fully set forth herein.
50. From at least 2006 through 2007, Morton, Vajra, 27 fuvestments, and Magic Eight Ball, directly or indirectly, singly or in concert, by use of the means or instruments of transportation or communication in, or the means or instrumentalities of, interstate commerce, or by the use of the mails, inconnectionwiththepurchaseorsaleofsecurities,knowinglyorreck​lessly: (a)employeddevices, schemes, or artifices to defraud; (b) obtained money or property by means of, or otherwise made, untrue
statements ofmaterial fact or have omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, transactions, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon the purchasers of the securities offered and sold by the Defendants and other persons.
51. As part and in furtherance ofthis violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball, directly or indirectly, singly or in concert, employed the deceptive devices, schemes, artifices, contrivances, acts, transactions, practices, and courses ofbusiness and/or made misrepresentations and/or omitted to state the facts alleged above in paragraphs 1-6,21-34,37,38, and .. 41.
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52. The false and misleading statements and omissions made by Morton, Vajra,.27 Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
53. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions, more fully described above in paragraphs 1-6, 21- 34,37,38, and 41,were false or misleading.
54. The material misrepresentations and omissions were in connection with the purchase or sale ofsecurities.
55. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, each violated Section 10(b) ofthe Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
THIRD CLAIM FOR RELIEF Violations of Section 5(a) and 5(c) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
56. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
57. The investments through the Delphi Investment Group into Vajra, 27 Investment, and Magic Eight Ball as alleged herein constitute "securities" as defined in the Securities Act and the Exchange Act.
58. Morton, Vajra, 27 Investments, and Magic Eight Ball singly or in concert, directly or indirectly have made use ofthe means or instruments oftransportation or communication in interstate commerce, or ofthe mails, to offer and sell securities through the use or medium ofa prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.
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59. By reason of the foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated Sections 5(a) and 5(c) ofthe Securities Act [15 U.S.c. §§ 77e(a) and 77e(c)].
FOURTH CLAIM FOR RELIEF Unjust Enrichment (Melissa Morton and PRJ)
60. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
61. Melissa Morton and Morton had sole control ofthe Entities' accounts. Investor funds were diverted from these accounts to other third parties. PRI, owned and controlled by the Mortons, received at least $240,000 of investor funds invested in the Delphi Investment Group.
62. Melissa Morton and PRI obtained the funds alleged above as part, and in furtherance of, the securities violations alleged in paragraphs 1, 4-7, 21-34, 37-41, and under circumstances in which it is not just, equitable or conscionable for Melissa Morton or PRI to
retain the funds. As a result o f the foregoing, relief defendants Melissa Morton and PRI were unjustly enriched.
RELIEF SOUGHT WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently restraining and enjoining Morton, Vajra, 27 Investments, Magic Eight Ball, their agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice ofthe injunction by personal service or otherwise, and each ofthem, from violating Sections 5(a), 5(c), and 17(a) ofthe Securities Act [15 U.S.C. §§ 77e(a)
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and 77e(c) and 77q(a)], and Section 10(b) of the Exchange Act [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
II.
Ordering the Defendants, jointly and severally, to disgorge, with prejudgment interest, all ill-gotten gains derived directly or indirectly from the violations alleged in this Complaint.
III.
Ordering each of the Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.c. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
IV.
Ordering Melissa Morton and PRJ to disgorge all investor funds unlawfully diverted to them by the Defendants by which they were unjustly enriched, and to pay prejudgment interest thereon.
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V. Ordering each ofthe Defendants and each ReliefDefendants to file with this Court and
serve upon the Commission verified written accountings, signed by each of them under penalty ofpeIjury.
VI. Granting such other and further relief as the Court may deem just and proper.
Dated: March 4, 2010 New York, New York
O f Counsel:
Sanjay Wadhwa (wadhwas@sec.gov) Alexander M. Vasilescu (vasilescua@sec.gov) Bennett Ellenbogen (ellenbogenb@sec.gov) Amelia A. Cottrell (cottrella@sec.gov)
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03/05/2010 01:00 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Is this article legit or just more like opinion?


Highly legit. $6 Million plus alleged scam pulled off and Coast to Coast AM was a primary conduit mentioned in the filing.

I have a copy of the SEC's complaint filed in US District Court in NY.


GEORGE S. CANELLOS
Regional Director .JUDGECHIN Attorney for Plaintiff SECURITIES AND EXCHANGE COMMISSION New Y ork Regional Office
3 World Financial Center, Suite 400 New Y ork, New Y ork 10281-1022 (212) 336-1020
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------​ SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-against -
SEAN DAVID MORTON, V AJRA PRODUCTIONS, LLC, 27 INVESTMENTS, LLC, and MAGIC EIGHT BALL DISTRIBUTING, INC.,
Defendants,
- and-
MELISSA MORTON, and PROPHECY RESEARCH INSTITUTE,
Relief Defendants

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") for its Complaint against defendants Sean David Morton ("Morton"), Vajra Productions, LLC ("Vajra"), 27 Investments, LLC ("27 Investments"), and Magic Eight Ball, Inc. ("Magic Eight Ball") (the three entities are referred to herein as the "Entities" and Morton and the Entities, collectively, are referred to as the
"Defendants"), and relief defendants Melissa Morton and Prophecy Research Institute ("PRJ") (together, the "ReliefDefendants") alleges as follows:


SUMMARY

1. From the summer of 2006 to the end of 2007, Morton, a nationally-recognized psychic who bills himself as "America's Prophet," fraudulently solicited individuals to invest in the Delphi Associates Investment Group ("Delphi Investment Group"). 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. 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, 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 ofthe funds, and that the profits in the accounts were audited and certified.

2. All together, Morton fraudulently raised more than $6 million from more than 100 investors for the Delphi Investment Group.

3. Morton enticed investors through his monthly newsletter, The Delphi Associates Newsletter ("Newsletter"), his website, www.delphiassociates.org ("Website"), his appearances on a nationally syndicated radio show with an average audience of nearly three million listeners called Coast to Coast AM ("Radio Broadcast"),[b/] [i/] and at public events, including in New York City, to promote his psychic abilities.

4. In his Newsletter, on the Radio Broadcast, and at public events, Morton made numerous materially false representations relating to his psychic abilities in order to solicit investors for the Delphi Investment Group. For example, Morton wrote to potential investors in his Newsletter dated July 20,2006 that: "I have called ALL the highs and lows of the market,
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giving EXACT DATES for rises and crashes over the last 14 years." (emphasis in original.) This assertion, like others Morton made in soliciting investors, is false.
5. Morton, who did not seek accreditation status from the Delphi Investment Group investors, placed investor funds in the bank accounts o f the Entities, which were shell companies controlledbyMortonandhiswife,MelissaMorton. Mortonand/orMelissaMortoncommingled the investors' funds among the Entities' accounts.
6. While Morton promised investors that all oftheir funds would be used to trade foreign currencies, in fact, he invested only about half ofthe funds with foreign currency trading finns. Unbeknownst to the investors, instead ofinvesting all ofthe funds into foreign currency trading firms; Morton, and/or his wife, Melissa Morton, diverted some ofthe investor funds. For instance, the Mortons diverted at least $240,000 o f investor funds to their own nonprofit
religious organization, PRJ. 7. In raising more than $6 million from investors around the country, the Defendants
violated the registration provisions ofthe federal securities laws by failing to file a registration statementwiththeCommission. NoneoftheEntitieshasfiledregistrationstatementsforany offering of securities.
8. By virtue of the conduct alleged herein, each ofthe Defendants, directly or indirectly, singly or in concert, engaged in acts, practices, transactions, or courses ofbusiness that violated Sections 5(a), S(c) and 17(a) ofthe Securities Act of 1933 ("Securities Act") [15 U.S;C. §§ 77e(a), 77e(c), and 77q(a)];and Section 10(b) ofthe Securities ␣ ␣ ␣ ␣ ␣ ␣ ␣ Act of 1934 ("Exchange Act") [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 c.P.R. § 240.10b-5].
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9. Unless each of the Defendants is permanently restrained and enjoined, they will again engage in the acts, practices, transactions, or courses ofbusiness set forth herein and in acts, practices, transactions, or courses ofbusiness ofsimilar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 10. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) ofthe Securities Act [15 U.S.c. § 77t(b)] and Section 21(d) ofthe Exchange Act [15 U.S.c. § 78u(d)], and seeks to permanently restrain and enjoin Morton, Vajra, 27 Investments, and Magic Eight Ball from future violations o f Sections 5(a), 5(c) and 17(a) o f the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)], and Section 10(b) ofthe Exchange Act [15 U.S.c. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.lOb-5]. The Commission also
seeks a final judgment ordering the Defendants to disgorge their ill-gotten gains and pay . prejudgment interest thereon on a joint and several basis,· and to pay civil monetary penalties
pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)], and Section 21 (d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. The Commission further seeks a final judgment ordering the Relief Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon, and ordering the Defendants and Relief Defendants to provide a verified accounting. Finally, the Commission seeks all other just and appropriate relief.
JURISDICTION AND VENUE 11. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
.22(a) ofthe Securities Act [15 U.S.c. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
12. Venue lies in this District pursuant to Section 22(a) ofthe Securities Act [15 U.S.c. § 77v(a)], and Section 27 ofthe Exchange Act [15 U.S.C. § 78aa]. The Defendants,
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directly or indirectly, have made use ofthe means or instrumentalities of, or the means or ' instruments oftransportation or communication in, interstate commerce, or ofthemails.in connection with the transactions, acts, practices, and courses ofbusiness alleged herein. Certain o f these transactions, acts, practices, and courses o f business occurred within the Southern DistrictofNewYork. Forinstance,MortonsolicitedinvestorsfortheDelphiInvestmentGro​up at a "New Life Expo" held in New York City in October 2006 (the "New York Expo"). Morton
provided investors and potential investors, including investors residing in New York, with a letter titled "RE: Foreign Exchange Trading with The Delphi Associates Investment Group" (the "Offering Letter"), which described the three investment vehicles -- Vajra, for investments of $5,000 - $25,000; 27 fuvestments, for investments of$25,001 - $50,000; and Magic Eight Ball, for investments of greater than $50,000.
DEFENDANTS 13. Morton is 51 years old and resides in Hermosa Beach, California. Morton is the
founder, writer and publisher ofthe Newsletter, and was a regular guest on the Radio Broadcast. Morton is a co-owner and officer ofVajra, 27 Investments, and Magic Eight Ball. Morton is also a co-owner and managing trustee ofPRl. Morton is currently a defendant in two pending private civil actions: Dunn v. Morton, etal., No. 021136/07 (NY. Civ. Ct. 2007), and Saunders v. Morton, et aI., No. 2:09-cv-00125 (D. Ct. Vt. 2009). Morton was also a defendant in Bassv.
Morton, et aI., No. CV-08-253-EFS (B.D. Wa.) in which the court entered final judgment against all defendants, including Morton, and held Morton jointly and severally liable for more than $217,000 plus prejudgment interest, attorneys fees and other costs. fu all three ofthese cases, an investor in the Delphi fuvestment Group has alleged that Morton, Vajra, 27 Investments, Magic
Eight Ball, and other individuals conducted a fraudulent investment scheme.
5.
14. Vajra is a Nevada New Mexico registered limited liability company, with a registered address of 14290 Freshwater Avenue, Burbank, California 91502. During the summer of2006 to the end of2007, investor correspondence for Vajra was addressed to Morton and sent toMorton'sresidentialaddress. Vajrahasnotfiledaregistrationstatementinconnectionwith thesecuritiesofferedintheDelphiInvestmentGroup. Vajrawasnamedadefendantinallthree
o f the actions listed in paragraph 13. 15. 27 Investments is a New Mexico registered limited liability company, with a
registered address of3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for 27 Investments was addressed to Morton and sent to Morton's residential address. 27 Investments has not filed a registration statement in connection with the securities offered in the Delphi Investment Group. 27 Investments was named a defendant in all three o f the actions listed in paragraph 13.
16. Magic Eight Ball is a California registered corporation, with a registered address of 3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for Magic Eight Ball was addressed to Morton and sent to Morton's residential address. Magic Eight Ball has not filed a registration statement in connectionwiththesecuritiesofferedintheDelphiInvestmentGroup.​ MagicEightBallwas
named a defendant in all three ofthe actions listed in paragraph 13.
RELIEF DEFENDANTS 17. Melissa Morton is 42 years old and resides in Hermosa Beach, California:
Melissa Morton and Morton had sole access to the funds deposited with the Entities described above. Melissa Morton is a co-owner ofVajra, Magic Eight Ball, 27 Investments, and PRI. Melissa Morton was named a defendant in all three of the actions listed in paragraph 13.
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18. PRI is a nonprofit religious organization set up pursuant to Internal Revenue Code § 501(c)(3). Morton's Newsletter is published through PRI. PRJ's address is the same as the Mortons' residential address. The Mortons are the owners and sole directors ofPRI.
FACTS A. Morton Solicited Investors for the Delphi Investment Group
19. Beginning in or around the summer of2006, Morton solicited individuals to invest in the Delphi Investment Group which was not an actual company but was simply a moniker Morton used for the group. Morton represented to investors that the Delphi Investment Group would use the pooled investor funds to trade in foreign currencies and would distribute
pro rata the trading profits among the investors. 20. Morton solicited investors through mailings as well as on the Radio Broadcast, at
public conferences, inCluding the New York Expo, and at a retreat which took place from September 7 through September 10, 2007 at the Mount Shasta Resort, Mount Shasta, California ("Mount Shasta Retreat"). Morton also listed the Delphi Investment Group on his Website and directed investors to email him at his email address.DAIG888@aol.com.
21. Morton's Newsletter is a paid subscription-only periodical sent out on an approximatelymonthlybasistoapproximately20,000subscribersworl​dwide. IntheNewsletter, MortonsolicitedinvestorsbytoutingthesuccessoftheDelphiInvestm​entGroup. Forexample, in a July 20, 2006, Newsletter, Morton wrote that the Delphi Investment Group had already been extremely successful: "[W]e are averaging 3 to 5% PER DAY, and in the last month we have
had gains of 12%, 19% and 26% in a single day." (emphasis in original.) 22. On the Radio Broadcast, Morton also touted the success of the Delphi Investment
Group. For instance, during a February 27,2007 Radio Broadcast, Morton stated that his
7
psychic advice and management had proven to be extremely profitable: "We started with about $35,000 and right now we're managing, I'm actually managing four separate funds that are worth about $4.5 million total. .. "
23. At the New York Expo, Morton solicited attendees to invest in the Delphi . Investment Group by claiming that everyone of the current investors had already received huge
profits and that investing in the Delphi Investment Group would also bring about spiritual happiness and promote good works. And, at the Mount Shasta Retreat, Morton held "financial' surVival" workshops, and solicited attendees by telling them that the Delphi Investment Group was the best investment they could make, and that he could make the investors "piles of money" but that they should act quickly.
24. MQrton also solicited investors in his Offering Letter, where Morton explained that he would use so-called psychic techniques to make his investment projections. The Offering Letter further states that Morton would then create a chart ofhis projections, which he would send to his trader, who was to rely on the charts to "place[] ... positions based on [Morton's] analysis and projections."
25. The Offering Letter also states that Morton and the investors will share in the profits from the investments in the foreign currencies and divide the returns on the investments as a "50/50 SPLIT ofPROFITS ONLY!" and that the process will "be completely TRANSPARENTandTOTALLYONTHEUPANDUP!"(emphasisinorigina1.). Mortonalso falsely assured his investors that "the Feds can't look over our shoulder, interfere or regulate any ofit."
26. In one-on-one correspondence with potential investors, Morton was even more aggressive in his solicitation. For example, on October 7,2006, Morton wrote to a potential
8
investor, Investor G, in two separate emails: "The more [money] you get me the MORE 1 can make for you" and "[g]ive ME enough money to help YOU! Give me enough so that the average profits will make a DIFFERENCE in your life." (emphasis in original.) In a subsequent email, after Investor G had already invested with the Delphi Investment Group, Investor G told Morton that he would like to invest in other types o f investments such as the stock market. .
Morton replied, "for RIGHT NOW you will make the most with [the Delphi Investment Group].
Once the DOLLAR starts to DROP, which will happen soon, we are set to make a FORTUNE!"
(emphasis in original.)
B. Morton Made Material Misrepresentations to Investors in the Delphi Investment Group
i. Misrepresentations Concerning Past Predictions of the Market
27. Morton knowingly, or with reckless disregard, made materially false representations about the accuracy o f his past market predictions to solicit investors for the Delphi Investment Group. For example, in his July 20, 2006 Newsletter, Morton falsely wrote that: "I have called ALL the highs and lows ofthe market, giving EXACT DATES for rises and·· crashes over the last 14 years." (emphasis in original.) Morton repeated this false claim in the Offering Letter, which stated, among other things, that: Morton "gave EXACT DATES and
NUMBERS for various highs of gold and silver." (emphasis in original.) 28. Similarly, Morton's Website falsely states that the "ASTONISHING PSYCHIC
HITS" Morton has made in his Newsletter include "The EXACT dates for prices of GOLD" from 2004 to 2007 (emphasis in original) and that Morton "predicted exact dates for the post- 90's decline ofthe [DJIA] and NASDAQ, and has given the exact levels - and timing - oftheir subsequentriseandfall." TheserepresentationsaboutMorton'spriorpredictionsaboutthe
market, like the ones in Morton'sOffering Letter and in the July 20,2006 Newsletter, are false,
9
as shown by the following examples summarizing some ofMorton's false representations and the actual market activity that took place:
Mortons' False Representations Predicted in an October 20,2000 Newsletter that "around October 31... [a] serious plunge in the market will come directly before the elections .... [M]id February will be the next abject bottom, as once again the market will continue to go up and bounce providing [a] sucker's rally. Feb/March 2001 will see the abject floor of 8000.... "
Predicted in an April 13, 2001 Newsletter that the NASDAQ "should hit 2000" in mid-May, "zig zag" between 2000 and 2395.03 all summer, "plummet" down to 1034.51 and then 701.78, before "skyrocket[ing]" in 2002 to 4100 and beyond to 7321.74 in 2003 "or at least 6035."
Predicted during a November 21,2001 Radio Broadcast: "I'llgiveyoutheexactdate... April2002.... etweenAprilandJuneof 2002 [the DJIA] is going to be the steady rise
.in the market. That's where it's going to really pickupandpickupstability. ByDecemberof next year, ... it'll be back up into the realm [of] high 11,000, 12,000 or so...."
Actual Market Activity From October 30, 2000 through November 17, 2000, the DJIA was steady; with a high closing price of 10,977.21 on November 6, and a low closing price of 10,517.25 on November 13. From October 31, 2000 through the end ofthe year, the DJIA moved generally within the mid 1O,000's. Prices remained relatively steady through mid-February 2001, and there was no "bottom," as the market moved within the 1O,900's and the 1O,400's throughout February. In February and March, 2001, the DJIA never hit the lower reaches of9,000, let alone 8,000.
The NASDAQ: (a) first closed above 2000 in mid-April, just days after Morton's prediction, not in mid-May; (b) did not reach a high of 2395.03 during the summer; (c) did not plummet in 2001 to anywhere close to 1,034, instead staying above 1,387 all year; and (d) did not skyrocket to anywhere near 4,100 in 2002 or 6,035 in 2003, instead staying under 2,100 during those two years.
From April through June, 2002, the DJIA . generallytrendeddownwardfromahighof 10,381.73onApril10,2002toalowcloseof 9,120.11 on June 26, eventually closing the year at 8,341, nowhere near 11,000.
!
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Urged in a June 23, 2000 Newsletter: "Buy GOLD! RIGHT NOW! A T $290 per oz. by the end ofthis year that will be a STEAL!..." Gold will "skyrocket. .. to upwards of around $350 over the summer, and $375 and above by the fall." (emphasis in original).
Stated in an October 17,2002 Newsletter: "Forget about gold. It's going NOWHERE." (emphasis in original).
Goldin fact did not "skyrocket" during the summer of 2000 or reach $375 per ounce by the fall. In fact, gold prices never hit $300 per ounce during this period: After peaking at just over $292, it trended downward during the summer to the low $270's before moving back to the upper $270's in late August, and then trending slightly downward through September
to the mid-$270's.
Gold, which was trading around $311 per ounce at the time ofthis Newsletter, rose over 10% to almost $350 per ounce by the end of 2002, and almost 20% to over $415 per ounce by the end of2003.
ii. Misrepresentations Concerning the Use of Investor Funds
29. Morton knowingly, or with reckless disregard, made material misrepresentations to investors concerning the use of the funds they invested with the Delphi Investment Group. For example, in the Offering Letter, Morton assured investors that the investor funds will "be used EXCLUSNELY for FX trading. ANY OTHER USE OF THE FUNDS IS STRICTLY PROHIBITED, IS MISAPPROPRIATION and a CRIMINAL ACT." (emphasis in
original.) In the Offering Letter, Morton also told investors that their funds would be placed into accounts with Bank of America "and are then directly transferred to the corresponding accounts with [the foreign exchange trading firm] to be used for trading on the Foreign Exchange markets." However, between June 2006 and November 2007, investors invested approximately $6 million with the Delphi Investment Group, and only about $3.2 million ofthe $6 million
raised was deposited into the foreign exchange trading accounts.
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30. Instead ofbeing deposited into foreign exchange trading accounts, some investor funds were transferred directly to various individuals or other entities - including approximately $240,000 to PRJ, a nonprofit religious organization set up and owned by the Mortons.
31. In the Offering Letter, Morton knowingly, or with reckless disregard, falsely told investors that their funds would be placed into one ofthree investment accounts: Vajra (for investments of$5,000 - $25,000); 27 Investments (for investments of$25,001 - $50,000); or Magic Eight Ball (for investments ofgreater than $50,000). Morton also explained to investors in the Offering Letter that only he and his wife, Melissa Morton, had access to the funds
deposited in any of the Entities. 32. However, the investor funds were not always deposited into the accounts held in
thenameofeachoftheEntities. Instead,attimes,andunbeknownsttotheinvestors,the investor funds were deposited into one o f the other Entity accounts.
33. Furthennore, while Morton maintained a separate account at Bank of America for each of the Entities, he controlled all of the accounts, and unbeknownst to the investors, transferredfundsbetweentheaccountstherebycomminglingtheinvest​orfunds. Forinstance, from December 2006 through March 2007, Morton transferred at least $185,000 from the 27 Investments account to the Magic Eight Ball account, and at least $178,000 from the Vajra
accounttotheMagicEightBallaccount. InAprilandJuly2007,Mortontransferredatotalof $25,000 from the Magic Eight Ball account back to the Vajra account. In August 2006, Morton also transferred more than $350,000 from the Vajra account to the 27 Investments account, and . in April 2007, Morton transferred at least $150,000 from the 27 Investments account back to the Vajra account.
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iii. Misstatements Concerning an Audit of Delphi Investment Group
34. Morton knowingly, or with reckless disregard, also made material misrepresentations concerning alleged audits performed by PricewaterhouseCoopers for the Delphi Investment Group. During a February 27,2007 Radio Broadcast, Morton falsely stated: "we've had a Pricewaterhouse audit actually on the accounts that shows from ... the first ofJune through November 15t\ a 117% profit on those accounts." Similarly, in a January 27,2007 email responding to a potential investor's inquiries about investing with Morton, Morton falsely
. stated: "Recently we had the accounts audited by PRlCE-W A TERHOUSE who gave us their certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) In fact, these accounts were never audited by PriceWaterhouseCoopers, and no auditors "certified and verified" profits in any of the Entities' accounts.
iv. Investors Found Morton's Misrepresentations to be Material
35. More than 100 people from numerous states invested over $6 million in the DelphiInvestmentGroup. ManyinvestedwithMortonafterhearingMortonontheRadio Broadcast; reading his Newsletter; attending the New York Expo; attending the Mount Shasta Retreat; and/or after learning about Morton from another potential investor.
36. Many investors did not have a pre-existing relationship with Morton, but invested in the Delphi Investment Group based upon Morton's representations in the Newsletter, the
. Radio Broadcast, and/or the New Y ork Expo or Mount Shasta Retreat. 37. For instance, Investor S first learned through the Newsletter - which he
subscribed to - that Morton was seeking investors for the Delphi Investment Group. Investor S emailed Morton inquiring about the Delphi Investment Group, and, in response, received the OfferingLetter. InvestorS'sdecisiontoinvestwasinfluenced,inpart,bytheOffering​Letter
13
and the July 20,2006 Newsletter discussed above, including Morton's statement in both documents that he "called ALL the highs and lows ofthe market, giving EXACT DATES for rises and crashes over the last 14 years." Investor S initially invested $5,000 in Vajra in April 2007. Based on several accounting statements he received which indicated that his investment
was profitable, and the claims made by Morton in the Offering Letter and the July 20, 2006 Newsletter, Investor S invested an additional $130,000 in Vajra in July 2007. Although Investor S subsequently sought to redeem his investment, to date, Investor S has not received any of his funds.
38. Investor M heard Morton discuss the Delphi Investment Group on the Radio Broadcast on January 1, 2007 and contacted Morton, requesting information on investing with theDelphiInvestmentGroup. OnJanuary27,2007,MortonrespondedtoInvestorM'srequest in an email stating that he had "already turned down some very big money firms wanting to use myuniqueabilities...." Withknowledgeorrecklessdisregard,Mortonalsofalselywrotethat "[r]ecently we had the accounts audited by PRICE-WATERHOUSE who gave us their . certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) Morton further wrote to Investor M that the Delphi Investment Group began with $35,000, and
that the accounts were then worth "about$3.5 million with about 70 investors" and that, despite the "GLOBAL MELTDOWN ofthe US dollar... we have STILL averaged about 10% per month." .(emphasis in original.) Morton attached the Offering Letter to his email. Based on Morton's discussion on the Radio Broadcast, and the correspondence, including the misrepresentations in the Offering Letter discussed above, on or around February 23,2007,
InvestorMinvested$10,000withtheDelphiInvestmentGroup. Subsequently,InvestorM sought to redeem his investment, but, to date, he has not received any ofhis funds.
14
C. Morton Sold Unregistered Securities in Non-Exempt Transactions 39. Despite pooling all ofthe investor fimds for the alleged purpose ofinvesting in the foreign currency market, infonning investors that they were to share in the profits and that
they would receive pro rata distributions ofthe profits made from the efforts ofMorton's trading team, none ofthe Entities has filed with the Commission registration statements for any offering o f securities.
40. Morton did not take steps to ensure that his investors were accredited or sophisticated.
41. In fact, Morton disregarded evidence that certain investors were not accredited or sophisticated. For instance, on March 1,2007, Investor B - who had already invested $80,000- emailed Morton and told him she was considering investing an additional $90,000, plus another $125,000 for her 91 year-old mother. Investor B told Morton, "both my mother and I would need to withdraw the earnings quarterly or semi-annually as we are both living offthe earnings
ofthese fimds." Morton responded that "[t]he fimds are liquid, so OF COURSE we can do payouts on a regular basis." (emphasis in original.) Investor B invested her additional $90,000 . but when she hesitated investing her mother's fimds, Morton stated that a major investor was coming on board, "which means higher margins, more security and bigger profits for everyone."
As a result, Investor B's mother invested $125,000. The so-called "major investor" never made this investment in Morton's entetprise.
FIRST CLAIM FOR RELIEF Violations of Section 17(a) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
42. The Commission reallegesand incotporates by reference paragraphs 1 :- 41, as though fully set forth herein.
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43. From at least 2006 through 2007, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, by use ofthe means or instrumentalities of interstate commerce, or ofthe mails, in connection with the offer and sale, ofsecurities, knowingly or recklessly: (a) employed devices, schemes and artifices to defraud; (b) obtained
money or property by means of, or otherwise made, untrue statements ofmaterial fact or omitted to state material facts necessary in order to make statements made, in light ofthe circumstances under which they were made, not misleading; and/or (c) engaged in transactions, acts, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon purchasers of securities offered and sold by the Defendants and upon other persons.
44. As part and in furtherance ofthe violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, employed the deceptive devises, schemes, artifices, contrivances, acts, transactions, practices, and courses of
. business and/or made misrepresentations and/or omitted to state the facts alleged above. 45. The false and misleading statements and omissions made by Morton, Vajra, 27
Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
46. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions more fully described above in paragraphs 1-6,21-34,37,38, and 41, were false or misleading.
47. The material misrepresentations and omissions were in connection with the offer or sale of securities.
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48. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated, Section 17(a) ofthe Securities Act [15 U.S.c. § 77q(a)].
SECOND CLAIM FOR RELIEF Violations of Section lOeb) of the Exchange Act and Rule IOb-S
(Morton, Vajra, 27 Investments, and Magic Eight Ball)
49. The Commission realleges and incorporates by reference paragraphs 1 through 41, as though fully set forth herein.
50. From at least 2006 through 2007, Morton, Vajra, 27 fuvestments, and Magic Eight Ball, directly or indirectly, singly or in concert, by use of the means or instruments of transportation or communication in, or the means or instrumentalities of, interstate commerce, or by the use of the mails, inconnectionwiththepurchaseorsaleofsecurities,knowinglyorreck​lessly: (a)employeddevices, schemes, or artifices to defraud; (b) obtained money or property by means of, or otherwise made, untrue
statements ofmaterial fact or have omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, transactions, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon the purchasers of the securities offered and sold by the Defendants and other persons.
51. As part and in furtherance ofthis violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball, directly or indirectly, singly or in concert, employed the deceptive devices, schemes, artifices, contrivances, acts, transactions, practices, and courses ofbusiness and/or made misrepresentations and/or omitted to state the facts alleged above in paragraphs 1-6,21-34,37,38, and .. 41.
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52. The false and misleading statements and omissions made by Morton, Vajra,.27 Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
53. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions, more fully described above in paragraphs 1-6, 21- 34,37,38, and 41,were false or misleading.
54. The material misrepresentations and omissions were in connection with the purchase or sale ofsecurities.
55. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, each violated Section 10(b) ofthe Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
THIRD CLAIM FOR RELIEF Violations of Section 5(a) and 5(c) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
56. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
57. The investments through the Delphi Investment Group into Vajra, 27 Investment, and Magic Eight Ball as alleged herein constitute "securities" as defined in the Securities Act and the Exchange Act.
58. Morton, Vajra, 27 Investments, and Magic Eight Ball singly or in concert, directly or indirectly have made use ofthe means or instruments oftransportation or communication in interstate commerce, or ofthe mails, to offer and sell securities through the use or medium ofa prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.
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59. By reason of the foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated Sections 5(a) and 5(c) ofthe Securities Act [15 U.S.c. §§ 77e(a) and 77e(c)].
FOURTH CLAIM FOR RELIEF Unjust Enrichment (Melissa Morton and PRJ)
60. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
61. Melissa Morton and Morton had sole control ofthe Entities' accounts. Investor funds were diverted from these accounts to other third parties. PRI, owned and controlled by the Mortons, received at least $240,000 of investor funds invested in the Delphi Investment Group.
62. Melissa Morton and PRI obtained the funds alleged above as part, and in furtherance of, the securities violations alleged in paragraphs 1, 4-7, 21-34, 37-41, and under circumstances in which it is not just, equitable or conscionable for Melissa Morton or PRI to
retain the funds. As a result o f the foregoing, relief defendants Melissa Morton and PRI were unjustly enriched.
RELIEF SOUGHT WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently restraining and enjoining Morton, Vajra, 27 Investments, Magic Eight Ball, their agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice ofthe injunction by personal service or otherwise, and each ofthem, from violating Sections 5(a), 5(c), and 17(a) ofthe Securities Act [15 U.S.C. §§ 77e(a)
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and 77e(c) and 77q(a)], and Section 10(b) of the Exchange Act [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
II.
Ordering the Defendants, jointly and severally, to disgorge, with prejudgment interest, all ill-gotten gains derived directly or indirectly from the violations alleged in this Complaint.
III.
Ordering each of the Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.c. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
IV.
Ordering Melissa Morton and PRJ to disgorge all investor funds unlawfully diverted to them by the Defendants by which they were unjustly enriched, and to pay prejudgment interest thereon.
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V. Ordering each ofthe Defendants and each ReliefDefendants to file with this Court and
serve upon the Commission verified written accountings, signed by each of them under penalty ofpeIjury.
VI. Granting such other and further relief as the Court may deem just and proper.
Dated: March 4, 2010 New York, New York
O f Counsel:
Sanjay Wadhwa (wadhwas@sec.gov) Alexander M. Vasilescu (vasilescua@sec.gov) Bennett Ellenbogen (ellenbogenb@sec.gov) Amelia A. Cottrell (cottrella@sec.gov)
 Quoting: Anonymous Coward 805053


Sorry about the format issue on copy, it was not easy to pull over off PDF.
:)
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03/05/2010 01:05 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
I guess Goldman-Sachs is glad the SEC has its priorities right.
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
I wonder if George Noory is going to comment on this tonight.

In its charges filed in US Dist Court in NY, the SEC SPECIFICALLY mentions Coast to Coast AM several times as a primary conduit for the alleged multi-million dollar fraud.

It even quotes EXACT show dates with Noory.......


This could get ugly quickly.
 Quoting: Anonymous Coward 805053


noory is a coward
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Is this article legit or just more like opinion?


Highly legit. $6 Million plus alleged scam pulled off and Coast to Coast AM was a primary conduit mentioned in the filing.

I have a copy of the SEC's complaint filed in US District Court in NY.


GEORGE S. CANELLOS
Regional Director .JUDGECHIN Attorney for Plaintiff SECURITIES AND EXCHANGE COMMISSION New Y ork Regional Office
3 World Financial Center, Suite 400 New Y ork, New Y ork 10281-1022 (212) 336-1020
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------​ SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-against -
SEAN DAVID MORTON, V AJRA PRODUCTIONS, LLC, 27 INVESTMENTS, LLC, and MAGIC EIGHT BALL DISTRIBUTING, INC.,
Defendants,
- and-
MELISSA MORTON, and PROPHECY RESEARCH INSTITUTE,
Relief Defendants

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") for its Complaint against defendants Sean David Morton ("Morton"), Vajra Productions, LLC ("Vajra"), 27 Investments, LLC ("27 Investments"), and Magic Eight Ball, Inc. ("Magic Eight Ball") (the three entities are referred to herein as the "Entities" and Morton and the Entities, collectively, are referred to as the
"Defendants"), and relief defendants Melissa Morton and Prophecy Research Institute ("PRJ") (together, the "ReliefDefendants") alleges as follows:


SUMMARY

1. From the summer of 2006 to the end of 2007, Morton, a nationally-recognized psychic who bills himself as "America's Prophet," fraudulently solicited individuals to invest in the Delphi Associates Investment Group ("Delphi Investment Group"). 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. 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, 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 ofthe funds, and that the profits in the accounts were audited and certified.

2. All together, Morton fraudulently raised more than $6 million from more than 100 investors for the Delphi Investment Group.

3. Morton enticed investors through his monthly newsletter, The Delphi Associates Newsletter ("Newsletter"), his website, www.delphiassociates.org ("Website"), his appearances on a nationally syndicated radio show with an average audience of nearly three million listeners called Coast to Coast AM ("Radio Broadcast"),[b/] [i/] and at public events, including in New York City, to promote his psychic abilities.

4. In his Newsletter, on the Radio Broadcast, and at public events, Morton made numerous materially false representations relating to his psychic abilities in order to solicit investors for the Delphi Investment Group. For example, Morton wrote to potential investors in his Newsletter dated July 20,2006 that: "I have called ALL the highs and lows of the market,
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giving EXACT DATES for rises and crashes over the last 14 years." (emphasis in original.) This assertion, like others Morton made in soliciting investors, is false.
5. Morton, who did not seek accreditation status from the Delphi Investment Group investors, placed investor funds in the bank accounts o f the Entities, which were shell companies controlledbyMortonandhiswife,MelissaMorton. Mortonand/orMelissaMortoncommingled the investors' funds among the Entities' accounts.
6. While Morton promised investors that all oftheir funds would be used to trade foreign currencies, in fact, he invested only about half ofthe funds with foreign currency trading finns. Unbeknownst to the investors, instead ofinvesting all ofthe funds into foreign currency trading firms; Morton, and/or his wife, Melissa Morton, diverted some ofthe investor funds. For instance, the Mortons diverted at least $240,000 o f investor funds to their own nonprofit
religious organization, PRJ. 7. In raising more than $6 million from investors around the country, the Defendants
violated the registration provisions ofthe federal securities laws by failing to file a registration statementwiththeCommission. NoneoftheEntitieshasfiledregistrationstatementsforany offering of securities.
8. By virtue of the conduct alleged herein, each ofthe Defendants, directly or indirectly, singly or in concert, engaged in acts, practices, transactions, or courses ofbusiness that violated Sections 5(a), S(c) and 17(a) ofthe Securities Act of 1933 ("Securities Act") [15 U.S;C. §§ 77e(a), 77e(c), and 77q(a)];and Section 10(b) ofthe Securities ␣ ␣ ␣ ␣ ␣ ␣ ␣ Act of 1934 ("Exchange Act") [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 c.P.R. § 240.10b-5].
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9. Unless each of the Defendants is permanently restrained and enjoined, they will again engage in the acts, practices, transactions, or courses ofbusiness set forth herein and in acts, practices, transactions, or courses ofbusiness ofsimilar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 10. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) ofthe Securities Act [15 U.S.c. § 77t(b)] and Section 21(d) ofthe Exchange Act [15 U.S.c. § 78u(d)], and seeks to permanently restrain and enjoin Morton, Vajra, 27 Investments, and Magic Eight Ball from future violations o f Sections 5(a), 5(c) and 17(a) o f the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)], and Section 10(b) ofthe Exchange Act [15 U.S.c. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.lOb-5]. The Commission also
seeks a final judgment ordering the Defendants to disgorge their ill-gotten gains and pay . prejudgment interest thereon on a joint and several basis,· and to pay civil monetary penalties
pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)], and Section 21 (d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. The Commission further seeks a final judgment ordering the Relief Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon, and ordering the Defendants and Relief Defendants to provide a verified accounting. Finally, the Commission seeks all other just and appropriate relief.
JURISDICTION AND VENUE 11. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
.22(a) ofthe Securities Act [15 U.S.c. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
12. Venue lies in this District pursuant to Section 22(a) ofthe Securities Act [15 U.S.c. § 77v(a)], and Section 27 ofthe Exchange Act [15 U.S.C. § 78aa]. The Defendants,
4
directly or indirectly, have made use ofthe means or instrumentalities of, or the means or ' instruments oftransportation or communication in, interstate commerce, or ofthemails.in connection with the transactions, acts, practices, and courses ofbusiness alleged herein. Certain o f these transactions, acts, practices, and courses o f business occurred within the Southern DistrictofNewYork. Forinstance,MortonsolicitedinvestorsfortheDelphiInvestmentGro​up at a "New Life Expo" held in New York City in October 2006 (the "New York Expo"). Morton
provided investors and potential investors, including investors residing in New York, with a letter titled "RE: Foreign Exchange Trading with The Delphi Associates Investment Group" (the "Offering Letter"), which described the three investment vehicles -- Vajra, for investments of $5,000 - $25,000; 27 fuvestments, for investments of$25,001 - $50,000; and Magic Eight Ball, for investments of greater than $50,000.
DEFENDANTS 13. Morton is 51 years old and resides in Hermosa Beach, California. Morton is the
founder, writer and publisher ofthe Newsletter, and was a regular guest on the Radio Broadcast. Morton is a co-owner and officer ofVajra, 27 Investments, and Magic Eight Ball. Morton is also a co-owner and managing trustee ofPRl. Morton is currently a defendant in two pending private civil actions: Dunn v. Morton, etal., No. 021136/07 (NY. Civ. Ct. 2007), and Saunders v. Morton, et aI., No. 2:09-cv-00125 (D. Ct. Vt. 2009). Morton was also a defendant in Bassv.
Morton, et aI., No. CV-08-253-EFS (B.D. Wa.) in which the court entered final judgment against all defendants, including Morton, and held Morton jointly and severally liable for more than $217,000 plus prejudgment interest, attorneys fees and other costs. fu all three ofthese cases, an investor in the Delphi fuvestment Group has alleged that Morton, Vajra, 27 Investments, Magic
Eight Ball, and other individuals conducted a fraudulent investment scheme.
5.
14. Vajra is a Nevada New Mexico registered limited liability company, with a registered address of 14290 Freshwater Avenue, Burbank, California 91502. During the summer of2006 to the end of2007, investor correspondence for Vajra was addressed to Morton and sent toMorton'sresidentialaddress. Vajrahasnotfiledaregistrationstatementinconnectionwith thesecuritiesofferedintheDelphiInvestmentGroup. Vajrawasnamedadefendantinallthree
o f the actions listed in paragraph 13. 15. 27 Investments is a New Mexico registered limited liability company, with a
registered address of3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for 27 Investments was addressed to Morton and sent to Morton's residential address. 27 Investments has not filed a registration statement in connection with the securities offered in the Delphi Investment Group. 27 Investments was named a defendant in all three o f the actions listed in paragraph 13.
16. Magic Eight Ball is a California registered corporation, with a registered address of 3600 Cerillos, Suite 714C-899, Santa Fe, New Mexico 87507. During the summer of2006 to the end of2007, investor correspondence for Magic Eight Ball was addressed to Morton and sent to Morton's residential address. Magic Eight Ball has not filed a registration statement in connectionwiththesecuritiesofferedintheDelphiInvestmentGroup.​ MagicEightBallwas
named a defendant in all three ofthe actions listed in paragraph 13.
RELIEF DEFENDANTS 17. Melissa Morton is 42 years old and resides in Hermosa Beach, California:
Melissa Morton and Morton had sole access to the funds deposited with the Entities described above. Melissa Morton is a co-owner ofVajra, Magic Eight Ball, 27 Investments, and PRI. Melissa Morton was named a defendant in all three of the actions listed in paragraph 13.
6
18. PRI is a nonprofit religious organization set up pursuant to Internal Revenue Code § 501(c)(3). Morton's Newsletter is published through PRI. PRJ's address is the same as the Mortons' residential address. The Mortons are the owners and sole directors ofPRI.
FACTS A. Morton Solicited Investors for the Delphi Investment Group
19. Beginning in or around the summer of2006, Morton solicited individuals to invest in the Delphi Investment Group which was not an actual company but was simply a moniker Morton used for the group. Morton represented to investors that the Delphi Investment Group would use the pooled investor funds to trade in foreign currencies and would distribute
pro rata the trading profits among the investors. 20. Morton solicited investors through mailings as well as on the Radio Broadcast, at
public conferences, inCluding the New York Expo, and at a retreat which took place from September 7 through September 10, 2007 at the Mount Shasta Resort, Mount Shasta, California ("Mount Shasta Retreat"). Morton also listed the Delphi Investment Group on his Website and directed investors to email him at his email address.DAIG888@aol.com.
21. Morton's Newsletter is a paid subscription-only periodical sent out on an approximatelymonthlybasistoapproximately20,000subscribersworl​dwide. IntheNewsletter, MortonsolicitedinvestorsbytoutingthesuccessoftheDelphiInvestm​entGroup. Forexample, in a July 20, 2006, Newsletter, Morton wrote that the Delphi Investment Group had already been extremely successful: "[W]e are averaging 3 to 5% PER DAY, and in the last month we have
had gains of 12%, 19% and 26% in a single day." (emphasis in original.) 22. On the Radio Broadcast, Morton also touted the success of the Delphi Investment
Group. For instance, during a February 27,2007 Radio Broadcast, Morton stated that his
7
psychic advice and management had proven to be extremely profitable: "We started with about $35,000 and right now we're managing, I'm actually managing four separate funds that are worth about $4.5 million total. .. "
23. At the New York Expo, Morton solicited attendees to invest in the Delphi . Investment Group by claiming that everyone of the current investors had already received huge
profits and that investing in the Delphi Investment Group would also bring about spiritual happiness and promote good works. And, at the Mount Shasta Retreat, Morton held "financial' surVival" workshops, and solicited attendees by telling them that the Delphi Investment Group was the best investment they could make, and that he could make the investors "piles of money" but that they should act quickly.
24. MQrton also solicited investors in his Offering Letter, where Morton explained that he would use so-called psychic techniques to make his investment projections. The Offering Letter further states that Morton would then create a chart ofhis projections, which he would send to his trader, who was to rely on the charts to "place[] ... positions based on [Morton's] analysis and projections."
25. The Offering Letter also states that Morton and the investors will share in the profits from the investments in the foreign currencies and divide the returns on the investments as a "50/50 SPLIT ofPROFITS ONLY!" and that the process will "be completely TRANSPARENTandTOTALLYONTHEUPANDUP!"(emphasisinorigina1.). Mortonalso falsely assured his investors that "the Feds can't look over our shoulder, interfere or regulate any ofit."
26. In one-on-one correspondence with potential investors, Morton was even more aggressive in his solicitation. For example, on October 7,2006, Morton wrote to a potential
8
investor, Investor G, in two separate emails: "The more [money] you get me the MORE 1 can make for you" and "[g]ive ME enough money to help YOU! Give me enough so that the average profits will make a DIFFERENCE in your life." (emphasis in original.) In a subsequent email, after Investor G had already invested with the Delphi Investment Group, Investor G told Morton that he would like to invest in other types o f investments such as the stock market. .
Morton replied, "for RIGHT NOW you will make the most with [the Delphi Investment Group].
Once the DOLLAR starts to DROP, which will happen soon, we are set to make a FORTUNE!"
(emphasis in original.)
B. Morton Made Material Misrepresentations to Investors in the Delphi Investment Group
i. Misrepresentations Concerning Past Predictions of the Market
27. Morton knowingly, or with reckless disregard, made materially false representations about the accuracy o f his past market predictions to solicit investors for the Delphi Investment Group. For example, in his July 20, 2006 Newsletter, Morton falsely wrote that: "I have called ALL the highs and lows ofthe market, giving EXACT DATES for rises and·· crashes over the last 14 years." (emphasis in original.) Morton repeated this false claim in the Offering Letter, which stated, among other things, that: Morton "gave EXACT DATES and
NUMBERS for various highs of gold and silver." (emphasis in original.) 28. Similarly, Morton's Website falsely states that the "ASTONISHING PSYCHIC
HITS" Morton has made in his Newsletter include "The EXACT dates for prices of GOLD" from 2004 to 2007 (emphasis in original) and that Morton "predicted exact dates for the post- 90's decline ofthe [DJIA] and NASDAQ, and has given the exact levels - and timing - oftheir subsequentriseandfall." TheserepresentationsaboutMorton'spriorpredictionsaboutthe
market, like the ones in Morton'sOffering Letter and in the July 20,2006 Newsletter, are false,
9
as shown by the following examples summarizing some ofMorton's false representations and the actual market activity that took place:
Mortons' False Representations Predicted in an October 20,2000 Newsletter that "around October 31... [a] serious plunge in the market will come directly before the elections .... [M]id February will be the next abject bottom, as once again the market will continue to go up and bounce providing [a] sucker's rally. Feb/March 2001 will see the abject floor of 8000.... "
Predicted in an April 13, 2001 Newsletter that the NASDAQ "should hit 2000" in mid-May, "zig zag" between 2000 and 2395.03 all summer, "plummet" down to 1034.51 and then 701.78, before "skyrocket[ing]" in 2002 to 4100 and beyond to 7321.74 in 2003 "or at least 6035."
Predicted during a November 21,2001 Radio Broadcast: "I'llgiveyoutheexactdate... April2002.... etweenAprilandJuneof 2002 [the DJIA] is going to be the steady rise
.in the market. That's where it's going to really pickupandpickupstability. ByDecemberof next year, ... it'll be back up into the realm [of] high 11,000, 12,000 or so...."
Actual Market Activity From October 30, 2000 through November 17, 2000, the DJIA was steady; with a high closing price of 10,977.21 on November 6, and a low closing price of 10,517.25 on November 13. From October 31, 2000 through the end ofthe year, the DJIA moved generally within the mid 1O,000's. Prices remained relatively steady through mid-February 2001, and there was no "bottom," as the market moved within the 1O,900's and the 1O,400's throughout February. In February and March, 2001, the DJIA never hit the lower reaches of9,000, let alone 8,000.
The NASDAQ: (a) first closed above 2000 in mid-April, just days after Morton's prediction, not in mid-May; (b) did not reach a high of 2395.03 during the summer; (c) did not plummet in 2001 to anywhere close to 1,034, instead staying above 1,387 all year; and (d) did not skyrocket to anywhere near 4,100 in 2002 or 6,035 in 2003, instead staying under 2,100 during those two years.
From April through June, 2002, the DJIA . generallytrendeddownwardfromahighof 10,381.73onApril10,2002toalowcloseof 9,120.11 on June 26, eventually closing the year at 8,341, nowhere near 11,000.
!
10
Urged in a June 23, 2000 Newsletter: "Buy GOLD! RIGHT NOW! A T $290 per oz. by the end ofthis year that will be a STEAL!..." Gold will "skyrocket. .. to upwards of around $350 over the summer, and $375 and above by the fall." (emphasis in original).
Stated in an October 17,2002 Newsletter: "Forget about gold. It's going NOWHERE." (emphasis in original).
Goldin fact did not "skyrocket" during the summer of 2000 or reach $375 per ounce by the fall. In fact, gold prices never hit $300 per ounce during this period: After peaking at just over $292, it trended downward during the summer to the low $270's before moving back to the upper $270's in late August, and then trending slightly downward through September
to the mid-$270's.
Gold, which was trading around $311 per ounce at the time ofthis Newsletter, rose over 10% to almost $350 per ounce by the end of 2002, and almost 20% to over $415 per ounce by the end of2003.
ii. Misrepresentations Concerning the Use of Investor Funds
29. Morton knowingly, or with reckless disregard, made material misrepresentations to investors concerning the use of the funds they invested with the Delphi Investment Group. For example, in the Offering Letter, Morton assured investors that the investor funds will "be used EXCLUSNELY for FX trading. ANY OTHER USE OF THE FUNDS IS STRICTLY PROHIBITED, IS MISAPPROPRIATION and a CRIMINAL ACT." (emphasis in
original.) In the Offering Letter, Morton also told investors that their funds would be placed into accounts with Bank of America "and are then directly transferred to the corresponding accounts with [the foreign exchange trading firm] to be used for trading on the Foreign Exchange markets." However, between June 2006 and November 2007, investors invested approximately $6 million with the Delphi Investment Group, and only about $3.2 million ofthe $6 million
raised was deposited into the foreign exchange trading accounts.
11
30. Instead ofbeing deposited into foreign exchange trading accounts, some investor funds were transferred directly to various individuals or other entities - including approximately $240,000 to PRJ, a nonprofit religious organization set up and owned by the Mortons.
31. In the Offering Letter, Morton knowingly, or with reckless disregard, falsely told investors that their funds would be placed into one ofthree investment accounts: Vajra (for investments of$5,000 - $25,000); 27 Investments (for investments of$25,001 - $50,000); or Magic Eight Ball (for investments ofgreater than $50,000). Morton also explained to investors in the Offering Letter that only he and his wife, Melissa Morton, had access to the funds
deposited in any of the Entities. 32. However, the investor funds were not always deposited into the accounts held in
thenameofeachoftheEntities. Instead,attimes,andunbeknownsttotheinvestors,the investor funds were deposited into one o f the other Entity accounts.
33. Furthennore, while Morton maintained a separate account at Bank of America for each of the Entities, he controlled all of the accounts, and unbeknownst to the investors, transferredfundsbetweentheaccountstherebycomminglingtheinvest​orfunds. Forinstance, from December 2006 through March 2007, Morton transferred at least $185,000 from the 27 Investments account to the Magic Eight Ball account, and at least $178,000 from the Vajra
accounttotheMagicEightBallaccount. InAprilandJuly2007,Mortontransferredatotalof $25,000 from the Magic Eight Ball account back to the Vajra account. In August 2006, Morton also transferred more than $350,000 from the Vajra account to the 27 Investments account, and . in April 2007, Morton transferred at least $150,000 from the 27 Investments account back to the Vajra account.
12
iii. Misstatements Concerning an Audit of Delphi Investment Group
34. Morton knowingly, or with reckless disregard, also made material misrepresentations concerning alleged audits performed by PricewaterhouseCoopers for the Delphi Investment Group. During a February 27,2007 Radio Broadcast, Morton falsely stated: "we've had a Pricewaterhouse audit actually on the accounts that shows from ... the first ofJune through November 15t\ a 117% profit on those accounts." Similarly, in a January 27,2007 email responding to a potential investor's inquiries about investing with Morton, Morton falsely
. stated: "Recently we had the accounts audited by PRlCE-W A TERHOUSE who gave us their certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) In fact, these accounts were never audited by PriceWaterhouseCoopers, and no auditors "certified and verified" profits in any of the Entities' accounts.
iv. Investors Found Morton's Misrepresentations to be Material
35. More than 100 people from numerous states invested over $6 million in the DelphiInvestmentGroup. ManyinvestedwithMortonafterhearingMortonontheRadio Broadcast; reading his Newsletter; attending the New York Expo; attending the Mount Shasta Retreat; and/or after learning about Morton from another potential investor.
36. Many investors did not have a pre-existing relationship with Morton, but invested in the Delphi Investment Group based upon Morton's representations in the Newsletter, the
. Radio Broadcast, and/or the New Y ork Expo or Mount Shasta Retreat. 37. For instance, Investor S first learned through the Newsletter - which he
subscribed to - that Morton was seeking investors for the Delphi Investment Group. Investor S emailed Morton inquiring about the Delphi Investment Group, and, in response, received the OfferingLetter. InvestorS'sdecisiontoinvestwasinfluenced,inpart,bytheOffering​Letter
13
and the July 20,2006 Newsletter discussed above, including Morton's statement in both documents that he "called ALL the highs and lows ofthe market, giving EXACT DATES for rises and crashes over the last 14 years." Investor S initially invested $5,000 in Vajra in April 2007. Based on several accounting statements he received which indicated that his investment
was profitable, and the claims made by Morton in the Offering Letter and the July 20, 2006 Newsletter, Investor S invested an additional $130,000 in Vajra in July 2007. Although Investor S subsequently sought to redeem his investment, to date, Investor S has not received any of his funds.
38. Investor M heard Morton discuss the Delphi Investment Group on the Radio Broadcast on January 1, 2007 and contacted Morton, requesting information on investing with theDelphiInvestmentGroup. OnJanuary27,2007,MortonrespondedtoInvestorM'srequest in an email stating that he had "already turned down some very big money firms wanting to use myuniqueabilities...." Withknowledgeorrecklessdisregard,Mortonalsofalselywrotethat "[r]ecently we had the accounts audited by PRICE-WATERHOUSE who gave us their . certification and verified our profits at 117% from June 1 to Nov. 15." (emphasis in original.) Morton further wrote to Investor M that the Delphi Investment Group began with $35,000, and
that the accounts were then worth "about$3.5 million with about 70 investors" and that, despite the "GLOBAL MELTDOWN ofthe US dollar... we have STILL averaged about 10% per month." .(emphasis in original.) Morton attached the Offering Letter to his email. Based on Morton's discussion on the Radio Broadcast, and the correspondence, including the misrepresentations in the Offering Letter discussed above, on or around February 23,2007,
InvestorMinvested$10,000withtheDelphiInvestmentGroup. Subsequently,InvestorM sought to redeem his investment, but, to date, he has not received any ofhis funds.
14
C. Morton Sold Unregistered Securities in Non-Exempt Transactions 39. Despite pooling all ofthe investor fimds for the alleged purpose ofinvesting in the foreign currency market, infonning investors that they were to share in the profits and that
they would receive pro rata distributions ofthe profits made from the efforts ofMorton's trading team, none ofthe Entities has filed with the Commission registration statements for any offering o f securities.
40. Morton did not take steps to ensure that his investors were accredited or sophisticated.
41. In fact, Morton disregarded evidence that certain investors were not accredited or sophisticated. For instance, on March 1,2007, Investor B - who had already invested $80,000- emailed Morton and told him she was considering investing an additional $90,000, plus another $125,000 for her 91 year-old mother. Investor B told Morton, "both my mother and I would need to withdraw the earnings quarterly or semi-annually as we are both living offthe earnings
ofthese fimds." Morton responded that "[t]he fimds are liquid, so OF COURSE we can do payouts on a regular basis." (emphasis in original.) Investor B invested her additional $90,000 . but when she hesitated investing her mother's fimds, Morton stated that a major investor was coming on board, "which means higher margins, more security and bigger profits for everyone."
As a result, Investor B's mother invested $125,000. The so-called "major investor" never made this investment in Morton's entetprise.
FIRST CLAIM FOR RELIEF Violations of Section 17(a) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
42. The Commission reallegesand incotporates by reference paragraphs 1 :- 41, as though fully set forth herein.
15
43. From at least 2006 through 2007, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, by use ofthe means or instrumentalities of interstate commerce, or ofthe mails, in connection with the offer and sale, ofsecurities, knowingly or recklessly: (a) employed devices, schemes and artifices to defraud; (b) obtained
money or property by means of, or otherwise made, untrue statements ofmaterial fact or omitted to state material facts necessary in order to make statements made, in light ofthe circumstances under which they were made, not misleading; and/or (c) engaged in transactions, acts, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon purchasers of securities offered and sold by the Defendants and upon other persons.
44. As part and in furtherance ofthe violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball directly or indirectly, singly or in concert, employed the deceptive devises, schemes, artifices, contrivances, acts, transactions, practices, and courses of
. business and/or made misrepresentations and/or omitted to state the facts alleged above. 45. The false and misleading statements and omissions made by Morton, Vajra, 27
Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
46. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions more fully described above in paragraphs 1-6,21-34,37,38, and 41, were false or misleading.
47. The material misrepresentations and omissions were in connection with the offer or sale of securities.
16
48. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated, Section 17(a) ofthe Securities Act [15 U.S.c. § 77q(a)].
SECOND CLAIM FOR RELIEF Violations of Section lOeb) of the Exchange Act and Rule IOb-S
(Morton, Vajra, 27 Investments, and Magic Eight Ball)
49. The Commission realleges and incorporates by reference paragraphs 1 through 41, as though fully set forth herein.
50. From at least 2006 through 2007, Morton, Vajra, 27 fuvestments, and Magic Eight Ball, directly or indirectly, singly or in concert, by use of the means or instruments of transportation or communication in, or the means or instrumentalities of, interstate commerce, or by the use of the mails, inconnectionwiththepurchaseorsaleofsecurities,knowinglyorreck​lessly: (a)employeddevices, schemes, or artifices to defraud; (b) obtained money or property by means of, or otherwise made, untrue
statements ofmaterial fact or have omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, transactions, practices, and courses ofbusiness which operated or would have operated as a fraud or deceit upon the purchasers of the securities offered and sold by the Defendants and other persons.
51. As part and in furtherance ofthis violative conduct, Morton, Vajra, 27 Investments, and Magic Eight Ball, directly or indirectly, singly or in concert, employed the deceptive devices, schemes, artifices, contrivances, acts, transactions, practices, and courses ofbusiness and/or made misrepresentations and/or omitted to state the facts alleged above in paragraphs 1-6,21-34,37,38, and .. 41.
17
52. The false and misleading statements and omissions made by Morton, Vajra,.27 Investments, and Magic Eight Ball, more fully described above in paragraphs 1-6,21-34,37,38, and 41, were material.
53. Morton, Vajra, 27 Investments, and Magic Eight Ball knew, or recklessly disregarded, that these material misrepresentations and omissions, more fully described above in paragraphs 1-6, 21- 34,37,38, and 41,were false or misleading.
54. The material misrepresentations and omissions were in connection with the purchase or sale ofsecurities.
55. By reason ofthe foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, each violated Section 10(b) ofthe Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
THIRD CLAIM FOR RELIEF Violations of Section 5(a) and 5(c) of the Securities Act (Morton, Vajra, 27 Investments, and Magic Eight Ball)
56. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
57. The investments through the Delphi Investment Group into Vajra, 27 Investment, and Magic Eight Ball as alleged herein constitute "securities" as defined in the Securities Act and the Exchange Act.
58. Morton, Vajra, 27 Investments, and Magic Eight Ball singly or in concert, directly or indirectly have made use ofthe means or instruments oftransportation or communication in interstate commerce, or ofthe mails, to offer and sell securities through the use or medium ofa prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.
18
59. By reason of the foregoing, Morton, Vajra, 27 Investments, and Magic Eight Ball, singly or in concert, directly or indirectly, violated Sections 5(a) and 5(c) ofthe Securities Act [15 U.S.c. §§ 77e(a) and 77e(c)].
FOURTH CLAIM FOR RELIEF Unjust Enrichment (Melissa Morton and PRJ)
60. The Commission realleges and incorporates by reference paragraphs 1 - 41, as though fully set forth herein.
61. Melissa Morton and Morton had sole control ofthe Entities' accounts. Investor funds were diverted from these accounts to other third parties. PRI, owned and controlled by the Mortons, received at least $240,000 of investor funds invested in the Delphi Investment Group.
62. Melissa Morton and PRI obtained the funds alleged above as part, and in furtherance of, the securities violations alleged in paragraphs 1, 4-7, 21-34, 37-41, and under circumstances in which it is not just, equitable or conscionable for Melissa Morton or PRI to
retain the funds. As a result o f the foregoing, relief defendants Melissa Morton and PRI were unjustly enriched.
RELIEF SOUGHT WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently restraining and enjoining Morton, Vajra, 27 Investments, Magic Eight Ball, their agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice ofthe injunction by personal service or otherwise, and each ofthem, from violating Sections 5(a), 5(c), and 17(a) ofthe Securities Act [15 U.S.C. §§ 77e(a)
19
and 77e(c) and 77q(a)], and Section 10(b) of the Exchange Act [15 U.S.c. § 78j(b)] and Rule lOb-5 thereunder [17 C.F.R. § 240.lOb-5].
II.
Ordering the Defendants, jointly and severally, to disgorge, with prejudgment interest, all ill-gotten gains derived directly or indirectly from the violations alleged in this Complaint.
III.
Ordering each of the Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.c. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
IV.
Ordering Melissa Morton and PRJ to disgorge all investor funds unlawfully diverted to them by the Defendants by which they were unjustly enriched, and to pay prejudgment interest thereon.
20
V. Ordering each ofthe Defendants and each ReliefDefendants to file with this Court and
serve upon the Commission verified written accountings, signed by each of them under penalty ofpeIjury.
VI. Granting such other and further relief as the Court may deem just and proper.
Dated: March 4, 2010 New York, New York
O f Counsel:
Sanjay Wadhwa (wadhwas@sec.gov) Alexander M. Vasilescu (vasilescua@sec.gov) Bennett Ellenbogen (ellenbogenb@sec.gov) Amelia A. Cottrell (cottrella@sec.gov)
 Quoting: Anonymous Coward 805053


perhaps you could have just highlighted the section (3) that was relevant.

like this


please don't quote the bible
Anonymous Coward
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03/05/2010 01:12 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
PIN this, in light of his interview on C2C.

Sad to read how he scammed people like this.

His accuracy as a psychic doth surely suck, yet having seen him once in NYC at the Expo, he can really charm an audience. An absolutely phenomenal speaker even if what he says IS utter BS. Very charismatic and confident when he speaks.

I wouldn't want his karma. Oh no, no. Ouch, ouch, ouch. I hope he turns it around before it's too late for him.
Anonymous Coward (OP)
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03/05/2010 01:17 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
PIN this, in light of his interview on C2C.

Sad to read how he scammed people like this.

His accuracy as a psychic doth surely suck, yet having seen him once in NYC at the Expo, he can really charm an audience. An absolutely phenomenal speaker even if what he says IS utter BS. Very charismatic and confident when he speaks.

I wouldn't want his karma. Oh no, no. Ouch, ouch, ouch. I hope he turns it around before it's too late for him.
 Quoting: Anonymous Coward 888780



Did you all here what George Noory said?
Anonymous Coward (OP)
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03/05/2010 01:28 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
DIRECTLY FROM THE SEC'S COMPLAINT:

NAILS C2C THIS IS SERIOUS FOR NOORY:

All together, Morton fraudulently raised more than $6 million from more than 100 investors for the Delphi Investment Group.

3. Morton enticed investors through his monthly newsletter, The Delphi Associates Newsletter ("Newsletter"), his website, www.delphiassociates.org ("Website"), his appearances on a nationally syndicated radio show with an average audience of nearly three million listeners called Coast to Coast AM ("Radio Broadcast"), and at public events, including in New York City, to promote his psychic abilities.


4. In his Newsletter, on the Radio Broadcast, and at public events, Morton made numerous materially false representations relating to his psychic abilities in order to solicit investors for the Delphi Investment Group.

22. On the Radio Broadcast, Morton also touted the success of the Delphi Investment Group. For instance, during a February 27,2007 Radio Broadcast, Morton stated that his psychic advice and management had proven to be extremely profitable: "We started with about $35,000 and right now we're managing, I'm actually managing four separate funds that are worth about $4.5 million total. .. "

34. Morton knowingly, or with reckless disregard, also made material misrepresentations concerning alleged audits performed by PricewaterhouseCoopers for the Delphi Investment Group. During a February 27,2007 Radio Broadcast, Morton falsely stated: "we've had a Pricewaterhouse audit actually on the accounts that shows from ... the first ofJune through November 15t\ a 117% profit on those accounts."

iv. Investors Found Morton's Misrepresentations to be Material

35.More than 100 people from numerous states invested over $6 million in the Delphi Investment Group. Many invested with Morton after hearing Morton on the Radio Broadcast; reading his Newsletter; attending the New York Expo; attending the Mount Shasta Retreat; and/or after learning about Morton from another potential investor.

36. Many investors did not have a pre-existing relationship with Morton, but invested in the Delphi Investment Group based upon Morton's representations in the Newsletter, the Radio Broadcast,
and/or the New York Expo or Mount Shasta Retreat.
Anonymous Coward (OP)
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03/05/2010 01:35 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
THE SEC HAS REALLY BEEN GOING AFTER "CO-CONSPIRATORS OR PEOPLE WHO WERE RECKLESS IN HELPING TO "KNOWINGLY OR UNKNOWNINGLY" FACILITATE FRAUD", NOORY IS IN HOT WATER FOLKS.

NOORY MADE NO DISCLAIMERS ON THE STOCK PREDICTIONS AS REQUIRED BY LAW. *IF* NOORY INVESTED IN ANY OF THESE WITHOUT DISCLOSURE, YOU ALL HAVE NO IDEA HOW MUCH DEEP DOO - DOO HE IS IN.

C2C ROCKS, BUT TPTB COULD USE THIS TO SHUT THEM DOWN. NOT KIDDING.

TRIN OR OTHER MOD, CAN YOU CLEAN UP MY COPY ND PASTE OF THE COMPLAINT POST? SORRY ABOUT IT.

I AM VERY FAMILIAR WITH THE SEC, THIS IS VERY SERIOUS.
Real N' Raw

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03/05/2010 01:56 AM

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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Yes he is a scam artist.


Now he calls his retreats a ministry.

I bought a video of his yrs. ago titled lighting to enlightenment or some bullshit like that.

It was horribly produced couldn't hear most of it.

But all it was listening to the fat windbag talk about himself.
Then he shows a bunch of truck drivers yoga poses which he couldn't do himself.

It was just disgusting. I threw it away. did not even try to get my money back.

Last Edited by Real N' Raw on 03/06/2010 09:21 PM
"While it is true that the ALL is all, It is equally true that the ALL is within all."
-The Kybalion-

Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense.
-(The Buddha)
humbird

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03/05/2010 07:16 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Karma's a bitch! I always thought this guy Morton was a bs artiste, so I did some research, years ago. His whole biography was fictional. A researcher contacted his parents (divorced) and read them their son's claims, and his own dad laughed his butt off and said it was tall tales.


Actually, he always reminded me of Deagle.
Aside from the small band of Forteans scattered around the world, nobody seems to notice all aspects of this phantasmagoria.(John A. Keel)
Anonymous Coward (OP)
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03/05/2010 07:38 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Karma's a bitch! I always thought this guy Morton was a bs artiste, so I did some research, years ago. His whole biography was fictional. A researcher contacted his parents (divorced) and read them their son's claims, and his own dad laughed his butt off and said it was tall tales.


Actually, he always reminded me of Deagle.
 Quoting: humbird


Apparently, George Noory could not throw Morton under the bus fast enough last night at the beginning of the show. That despite having Morton on as the very first feature of Norry's Predictions DVD in 2006 and also a very frequent guest on C2C.

Seeing another side of Noory now too.
Anonymous Coward (OP)
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03/05/2010 08:44 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Also, Noory made money off of SDM stock pics live on the air made for Noory and other items in the past.

By law Noory is required to make on air disclosure. Noory Refused.

This is just beginning.

Read how many times it links SDM's alleged $6 million fraud from listeners, et al in the actual court filed SEC complaint to Coast to Coast AM as being a "facilitator" for the multi-million dollar fraud.

It also specifically mentions that these people had no other connection with SDM, or way to hear his "pitch" to defraud them other than Coast to Coast.

That is HUGE.

Check out what recently happend to Matthew Brown, who ran a stock chat sight investorshub.com

The FEDS nailed him on several counts of Conspiracy to defraud, commit securities fraud, et al. Brown plead out last month and he is going away for a long time at 26 years old.

There have also been SEVERAL radio talk show hosts who have been busted of late by the SEC and DOJ for fraud, stock manipulation, ect. all for non-disclosure, ect.


PIN THIS.
dookie stain
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03/05/2010 08:48 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Karma's a bitch! I always thought this guy Morton was a bs artiste, so I did some research, years ago. His whole biography was fictional. A researcher contacted his parents (divorced) and read them their son's claims, and his own dad laughed his butt off and said it was tall tales.


Actually, he always reminded me of Deagle.


Apparently, George Noory could not throw Morton under the bus fast enough last night at the beginning of the show. That despite having Morton on as the very first feature of Norry's Predictions DVD in 2006 and also a very frequent guest on C2C.

Seeing another side of Noory now too.
 Quoting: Anonymous Coward 805053


Wonder how much George had invested with him?????
Anonymous Coward
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03/05/2010 09:13 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Apparently, George Noory could not throw Morton under the bus fast enough last night at the beginning of the show. That despite having Morton on as the very first feature of Norry's Predictions DVD in 2006 and also a very frequent guest on C2C.

Seeing another side of Noory now too.
 Quoting: Anonymous Coward 805053


Noory mentioned that he had received emails from listeners asking why SDM hadn't been on the show the past couple of years and then directed listeners to the ny post story. He then directed listeners to SDM email which is posted on the C2C site. Noory then said that's all he was going to say about the matter and that was it.
Elias

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03/05/2010 11:35 AM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
bump
“The higher we soar, the smaller we appear to those who cannot fly.”
-Friedrich Nietzsche
Anonymous Coward
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03/05/2010 01:07 PM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
ok this surprised me then it didn't about a second later

anonstoner
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03/05/2010 02:31 PM
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Re: SEC CHARGES FREQUENT C2C GUEST SEAN DAVID MORTON WITH SECURITIES FRAUD
Also, Noory made money off of SDM stock pics live on the air made for Noory and other items in the past.

By law Noory is required to make on air disclosure. Noory Refused.

This is just beginning.

Read how many times it links SDM's alleged $6 million fraud from listeners, et al in the actual court filed SEC complaint to Coast to Coast AM as being a "facilitator" for the multi-million dollar fraud.

It also specifically mentions that these people had no other connection with SDM, or way to hear his "pitch" to defraud them other than Coast to Coast.

That is HUGE.

Check out what recently happend to Matthew Brown, who ran a stock chat sight investorshub.com

The FEDS nailed him on several counts of Conspiracy to defraud, commit securities fraud, et al. Brown plead out last month and he is going away for a long time at 26 years old.

There have also been SEVERAL radio talk show hosts who have been busted of late by the SEC and DOJ for fraud, stock manipulation, ect. all for non-disclosure, ect.


PIN THIS.
 Quoting: Anonymous Coward 805053

You all are going to look back on this post at some point in the future and go "Wow" when everything comes to light. Its not necessarily Noory, either so please don't single him out. Their are a lot of people involved with C2C.

News