Those Dead People Are Worth Money
COLUMBIA, S.C. (CN) - A father and son made $6.5 million from a fraudulent investment program that profited illegally from the deaths of terminally ill people, the SEC claims in court.
The SEC sued Benjamin Sydney Staples, 62, and his son Benjamin Oneal Staples, 28. Also sued, as a relief defendant, is Brian Staples, 25, who allegedly got $400,000 from the scheme. All the defendants live in Lexington, S.C.
The Staples called their scheme an "Estate Assistance Program."
They made their ill-gotten swag "by lying about the ownership interest in bonds they purchased in joint brokerage accounts opened with people facing imminent death who were concerned about affording the high costs of a funeral," the SEC said in a statement. "The Stapleses recruited the terminally ill individuals into their program by offering to pay their funeral expenses if they agreed to open the joint accounts and sign documents that relinquished their ownership rights to the accounts or any assets in them."
The Staples used their victims' money to buy discounted corporate bonds with a "survivor's option," which allowed them to redeem the bonds for the full principal if the joint owner died before maturity, the SEC says in the 12-page complaint.
After each sick person died, the Staples wrote to the brokerage firm and demanded the survivor's option, the SEC says. But in doing so, "the Staples misrepresented that the deceased participant was an 'owner' of the bonds, when in fact the deceased had relinquished all ownership interest in the bonds," according to the lawsuit.
The SEC adds: "These misrepresentations and omissions were material and as a result of them, the Staples profited at least $6.5 million from the deaths of their Program participants."
It seeks disgorgement and penalties for securities fraud and unjust enrichment.