“I have called ALL the highs and lows of the market giving EXACT DATES for rises and crashes over the last 14 years,” Mr. Morton claimed at one point, according to the documents filed in connection with the case.
Next to the Ponzi scheme orchestrated by Bernard L. Madoff, the Morton case might seem like little more than a footnote in the annals of financial fraud. But the story is so unlike the usual Wall Street fare — it touches on late-night talk radio, a company called Magic Eight Ball and the Dalai Lama — that even in this post-Madoff world it all seems a bit hard to fathom.
By his own reckoning, Mr. Morton is a modern-day Nostradamus. According to his Web site, delphiassociates.org, the Dalai Lama sent him to a monastery in Nepal, where a fusion of Eastern spirituality and Western psychic techniques helped him develop the “spiritual remote viewing” system.
He told The Los Angeles Times in 1991 that he grew up in Texas, the son of a public relations official for NASA. His dinner table companions, he said, were astronauts, who told him of their sightings of extraterrestrial life.
Mr. Morton’s reach was broad. He solicited investors through a newsletter with 20,000 subscribers, run through his Delphi Investment Group; his Web site; and his frequent appearances on radio shows like “Coast to Coast,” a late-night syndicated program focused on the paranormal. He and his wife, Melissa, created three unregistered vehicles for their investors. One was called Magic Eight Ball Distribution.
The S.E.C. named Mrs. Morton and a religious organization the couple founded as relief defendants, meaning that the regulator is seeking to retrieve profits from them but has not filed civil charges against either.
According to the S.E.C., Mr. Morton pledged to invest the money he collected with foreign currency traders, who would act according to his psychic revelations. The strategy purportedly earned returns as high as 117 percent over five-month periods.
The reality, the S.E.C. claims, was less impressive — and fraudulent. In court filings, the agency claims that Mr. Morton actually deposited only $3.2 million into the trading accounts. The rest was funneled to various entities, with $240,000 sent to the Prophecy Research Institute, a nonprofit religious group set up by the Mortons.
His predictions weren’t particularly accurate, either. On a Nov. 21, 2001, radio broadcast, Mr. Morton predicted that the Dow Jones industrial average would rise between April and June of 2002, cresting at “12,000 or so” by December of that year. According to the S.E.C., the index fell that year, ending at 8,341.
“Morton’s self-proclaimed psychic powers were nothing more than a scam to attract investors and steal their money,” George S. Canellos, the director of the S.E.C.’s New York regional office, said in a statement.
Neither of the Mortons could be reached for comment on Thursday. But as part of a 2009 lawsuit aimed at halting an S.E.C. investigation, the Mortons argued that they were the targets of “two (or more) dishonest and incompetent S.E.C. employees, who apparently need to justify a trip to California in order to visit Disneyland and eat In And Out Burgers at the taxpayers’ expense.”
A federal judge dismissed that lawsuit in December.
Diana B. Henriques contributed reporting.