Secure Investment Services, Inc. et al.
On August 24, 2007, the SEC obtained a temporary restraining order, asset freeze and other relief against Donald F. Neuhaus, Kimberly A. Snowden, Secure Investment Services, Inc., American Financial Services, Inc. and Lyndon Group, Inc. The SEC alleged that the defendants fraudulently raised at least $25 million from over 500 investors, many of whom were elderly and invested their retirement savings, by selling investments in the form of fractional interests in life insurance policies known as “viatical settlements.”
According to the complaint, the defendants, among other things, promised to reserve funds to pay future policy premiums, yet they actually maintained no reserves and operated a “Ponzi” scheme that used new investor money to pay premiums on previously sold policies. The SEC alleged that the defendants misled investors by providing life expectancy estimates issued by a person (actually a convicted felon) pretending to be a physician. The SEC also alleged the defendants falsely claimed the investments were protected by bonding companies when, in reality, they were unlicensed companies with adverse regulatory histories. For more information about the SEC’s action, you can read Litigation Release No. 20255 (Aug. 24, 2007).
On August 22, 2007, in a related criminal action brought in the U.S. District Court for the Eastern District of California, Neuhaus and Snowden were indicted.
The Court also appointed Michael J. Quilling as Temporary Receiver over the three corporate defendants. If you have questions about the Receivership, you can call Mr. Quilling at (214) 871-2100 or visit his website.