SANTA ANA, CALIFORNIA – The founder and chief executive officer of a firm that solicited more than $5 million from victims who thought they were investing in “reverse life insurance” policies has been found guilty of fraud charges following a three-week trial, federal prosecutors announced Thursday
Daniel Christian Stanley Powell, 33, of San Diego, was convicted Monday of five counts of mail fraud and five counts of wire fraud, as well as three counts of obstruction of justice.
Powell is scheduled to be sentenced in March. He is facing up to 260 years in federal prison, officials said.
Powell spent victims’ funds on a luxury apartment on the west side of Los Angeles, Ferrari and Porsche automobiles, and a $35,000 donation to Usher’s New Look foundation, which got him a photograph with former President Bill Clinton that was used as part of Powell’s Los Angeles-based Christian Stanley’s promotional materials.
Powell, who also told some victims that their money would be invested in gold mines, claimed that investments were safe because his company already owned $1.9 billion in reverse life insurance policies in a mutual fund.
Contrary to his promises, however, the evidence demonstrated that Christian Stanley did not own any life insurance policies or any working mines and had earned only $31,250 in revenue since its inception.
The verdicts followed a three-week trial and prompted U.S. District Judge Josephine L. Staton to remand Powell into custody pending sentencing.
According to the evidence, Powell told investors that he would use their money to purchase life insurance policies from insured individuals, at which point the company would pay the monthly premiums and become the beneficiaries to the policies.
Powell claimed that Christian Stanley would profit by collecting the death benefits when the insureds died or by selling the policies on the life settlement market. Powell trademarked the term “reverse life insurance” and sought to take his company public by filing documents with the Securities and Exchange Commission.
In total, approximately 50 victims invested about $5.2 million. The victims, who were located throughout the United States, invested directly through Powell, other representatives of Christian Stanley, or their own financial advisors.
Victims lost approximately $4 million as a result of the scheme, which included funds that had been invested through individual retirement accounts.
Powell also used victims’ money to make Ponzi-scheme payments to some investors, to pay commissions to representatives who recruited investors, and to create promotional materials, which gave the appearance that Christian Stanley was a legitimate and successful business.
On September 2, 2011, the U.S. Securities and Exchange Commission filed a civil complaint against Powell and Christian Stanley
The evidence at the criminal trial showed that Powell knowingly drafted false affidavits to use in his defense to the SEC case and that he lied to the victims about his assets and promised to return their money if they signed the false affidavits. This criminal conduct led to the convictions on the obstruction of justice charges.
The FBI investigated this case.