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U.S. SECURITIES AND EXCHANGE COMMISSIONLitigation Release No. 21584 / June 29, 2010SEC v. Robert Stinson, Jr., et al., Civil Action No. 10-cv-3130-BMS (E.D. Pa.)SEC FILES EMERGENCY ACTION TO STOP ONGOING PHILADELPHIA BASED MULTI-MILLION DOLLAR FRAUDThe Securities and Exchange Commission today announced fraud charges, an asset freeze and other emergency relief against Robert Stinson, Jr., of Berwyn, Pennsylvania, and several Philadelphia-area entities he controlled, with perpetrating an offering fraud and Ponzi scheme in which at least $16 million was raised from more than 140 investors. According to the SEC's complaint, from at least 2006 through the present, Stinson, primarily through Life's Good, Inc. and Keystone State Capital Corporation, two companies he controlled, sold purported "units" in four Life's Good private real estate hedge funds. ("Life's Good Funds"). Stinson falsely claimed that the Life's Good Funds generated annual returns of 10 to 16 percent by originating more than $30 million in commercial mortgage loans, and other investment income gained on the sale of foreclosure and investment properties. In reality, the SEC's complaint alleges that Stinson has been stealing investor funds for his personal use, transferring money to family members and others, and using new investor proceeds to make payments to existing investors in the nature of a Ponzi scheme. The Honorable Berle M. Schiller, U.S. District Judge for the Eastern District of Pennsylvania, has issued an order granting a temporary restraining order, freezing assets, and imposing other emergency relief. The Court also froze the assets of five named relief defendants ¢" Susan L. Stinson, Christine A. Stinson, Michael G. Stinson, Laura Marable and First Commonwealth Service Company. The SEC's complaint alleges that Stinson, a securities fraud recidivist and convicted felon, targeted investors across the country in various ways, including using websites, Internet presentations, investor newsletters and e-mails that included offering documents. Many of the investors targeted had self-directed IRA accounts, and Stinson promised that investments in the Life's Good Funds were safe and risk-free. The complaint alleges violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief already obtained, the complaint seeks disgorgement of the defendants' ill-gotten gains plus prejudgment interest, civil penalties, and permanent injunctions barring future violations of the charged provisions of the federal securities laws. The complaint also seeks disgorgement from the relief defendants. The Commission's investigation is continuing. The Commission acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania, and the Federal Bureau of Investigation.
See Also: SEC Complaint |
