Two Texas radio show hosts were charged by the SEC Monday with selling $4.3 million in life settlements after using their show to falsely claim they were federally insured and "as safe as CDs."
Christopher A. Novinger and Brady J. Speers, both residents of Mansfield, Texas, falsely told customers that their offerings were “guaranteed,” “safe as CDs” and “federally insured,” according to a lawsuit filed in U.S. District Court for the Northern District of Texas. The agency also sued their firm, Novers Financial.
The Securities and Exchange Commission also alleged in the complaint that the pair used a bogus “net worth calculator” that improperly qualified some investors for purchases by including income they hadn’t yet received, such as future pension and Social Security benefits, thus artificially inflating prospective clients’ assets.
One couple’s non-homestead assets falsely ballooned from $263,000 to nearly $1.5 million when the calculator included 20 years worth of anticipated Social Security and retirement payments, according to the SEC complaint.
“We allege that Novinger and Speers described speculative investments as safe and secure and were willing to manipulate investors’ financial information to make a sale,” David Peavler, associate director of the SEC’s Fort Worth Regional Office, said. “No matter what a salesperson tells you, interests in life settlements are never guaranteed, risk-free, or federally insured.”
Speers and Novinger host “The Retirement Experts Radio Show,” which is carried weekly by several Dallas/Forth Woth AM talk radio stations, according to the SEC. The SEC alleged that the pair "created phony, meaningless titles for themselves to create an air of legitimacy ... to decieve investors." The pair also marketed Novers Financial as the "largest non-risk investment consulting firm in the Southwest," a claim based solely on territory, not on the number of clients served or amount of assets it had under management, according to the complaint.
It's not their first run-in with securities regulators. In 2013, the Oklahoma Securities Department requested that Novers Financial cease doing business in the state after allegedly attempting to sell unregistered securities and operating without a license while portraying themselves as licensed consultants and strategists.
In 2005, another Speers and Novinger enterprise, Arlington, Texas-based Equal Access Health Inc., was the target of a lawsuit filed by the state's attorney general at the time, Greg Abbott, which alleged that the company falsely led consumers to believe a healthcare discount card was actually health insurance. In that same year, Equal Access Health was targeted by cease and desist orders from the states of Minnesota and California.
The SEC’s complaint alleges that between 2012 and 2014, the pair sold about $4.3 million in life settlement interests to 26 investors, obtaining commissions of up to $515,000.
The SEC also charged ICAN Investment Group LLC and Speers Financial Group LLC, companies formed by Novinger and Speers to collect commissions on the life settlement sales, for acting as unregistered broker-dealers, seeking injunctive relief, return of allegedly ill-gotten gains with interest, and financial penalties.