LOS ANGELES (CN) - Pacific West Capital Group raised $100 million in a Ponzi scheme based on unregistered securitized life insurance policies, the SEC claims in court.
The SEC sued Pacific West and its sole owner, Andrew B. Calhoun IV, on Tuesday in Federal Court. It also sued Calhoun's son, five other associates and four other companies.
"Since Calhoun started Pacific West in 2004, they have raised approximately $99.9 million from over 3,200 investors who purchased life settlements in approximately 125 life insurance policies," the SEC says in the complaint. "Since at least 2012, Pacific West and Calhoun have perpetrated a scheme to defraud investors by using money received from investors from the sale of new life settlements to pay premiums on life settlement investments sold years earlier which had not matured and had exhausted the 'premium reserves' created by Pacific West and Calhoun to keep the policies in force."
Calhoun sold "life settlements," or fractional interests in universal life policies. The SEC claims he used new money to pay off old debts "to create the false appearance that the life settlements they structured and sold had minimal risk and would pay off within the expected period." It claims he also misrepresented what was going on in his company.
Defendants include his sales agents: Brenda Christine Barry, BAK West Inc., Andrew B. Calhoun Jr., Eric Cannon, Century Point LLC, Michael Dotta and Caleb Moody.
Calhoun IV lives in Beverly Hills. He graduated from UNC-Chapel Hill in 1992 with a degree in business administration.
The SEC seeks disgorgement, injunctions and penalties.
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