The investments were billed as "risk free," and would-be customers were told that "you cannot lose a dollar."
The pair of self-described planners hosted a weekly radio show and used such bogus credentials as a "licensed retirement strategist" and "licensed financial strategist," regulators say.
Now the SEC has charged the two planners with making false claims and guarantees to clients in order to resell $4.3 million in life insurance policies to investors.
In selling the life settlement interest, authorities say that Christopher Novinger, 38, and Brady Speers, 45, essentially acted as brokers to 26 clients from 2012 to 2014: Someone sold their life insurance policy for a lump sum, and Novinger and Speers, acting as selling agents on behalf of another company, then sold those policies to investors.
In fact, authorities allege, the two co-founders of Novers Financial -- based in the Dallas suburb Mansfield, Texas -- "possess little to no training relating to securities and non-insurance related financial products, including life settlements."
Neither partner has been associated with a broker-dealer or RIA, although they hold licenses with the Texas Department of Insurance, according to the SEC complaint.
No one answered calls to Novinger, Speers or Novers Financial. Court documents do not show attorneys for the pair.
The two partners marketed Novers Financial as "the largest non-risk investment consulting firm in the Southwest," according to court documents. They also operate two associated companies, NFS Group and Safe Retirement Experts.
Their marketing efforts included a mailing campaign in which they sent out 23,000 letters to residents in the Dallas area, the documents say. The letters promised risk-free returns of "7-9% guaranteed" and claimed the investments were "as safe as CDs and federally insured," authorities say.
Novinger and Speers also host a weekly radio show dubbed the "Retirement Experts Radio Show," which airs Saturdays on Dallas AM radio stations, according to their website and court documents. "Have you heard our weekly radio show? Hear our take on safe money retirement strategies," the website says.
FAKING ACCREDITED INVESTORS?
The life settlement interests they sold were not registered as securities with the SEC, authorities say, and the two providers with whom they had selling agreements required investors to be accredited.
But Novinger, Speers and Novers Financial provided a net worth calculator to clients that inflated the clients' net worth by including the future anticipated value of certain assets and income, the SEC says -- giving the misleading appearance that the clients had sufficient net worth to be considered accredited.
According to the SEC filings, one couple's assets mushroomed from $263,000 to nearly $1.5 million after the calculator added in 20 years of anticipated future payments, such as Social Security and VA benefits.
That couple ended up using a fifth of their actual net worth to invest in life settlement interests through Novers, according to court documents.
According to an SEC warning to investors, life insurance companies can sometimes refuse to pay out the death benefit on the policy if the company believes it was sold under fraudulent circumstances.
"No matter what a salesperson tells you, interests in life settlements are never guaranteed, risk-free, or federally insured," David Peavler, associate director of the SECs Fort Worth Regional Office, said in a statement.
As part of the same filing, the SEC also charged two firms run by the partners, ICAN Investment Group and Speers Financial Group, with acting as unregistered broker-dealers.
The SEC asked the court for injunctive relief, return of ill-gotten games with interest and additional financial penalties.
This is not the first brush with regulators for Novinger and Speers, who became acquainted in the 1990s, according to the SEC complaint. "The Texas Attorney General, the FCC, and the State of California each took regulatory action against a prior company owned, managed, and directed by Novinger and Speers for the companys participation in a fraudulent scheme to mass-market discount health plans," the complaint says.
In February 2012, the SEC says, they began selling life settlement interests as independent contractors for Conestoga -- a San Juan, Puerto Rico-based financial services firm -- and by the end of the year they were operating as Novers Financial.
In early 2013, they began selling life settlement interests issued by another firm, EDU, earning a 13% commission, the SEC says. EDU terminated its contracts with Novinger and Speers later that year, the regulator says, after the firm began requiring sales agents to be licensed securities professionals.
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