Assistant U.S. Attorney David Axelrod said that Stinson was such a consummate con man that he was able to "trick reputable businesses" into providing a "patina of legitimacy" for Life's Good's investment funds.
Axelrod said that Stinson duped the financial-data provider Morningstar Inc. into listing Life's Good STABL Mortgage Fund on its index of best-performing hedge funds.
The prosecutor said the endorsement was one of several "highly effective tools" that Stinson used to lure investors. (Three investors are now suing Morningstar, alleging that the firm didn't perform an adequate review of the fund. Morningstar is seeking dismissal of the lawsuit, saying that its own ratings are based on opinions protected by the First Amendment.)
Stinson used most of the money to invest in numerous unrelated businesses, including a talent agency, a recording studio, a health-care-consulting firm, a sports-marketing firm and an online TV station.
Federal Defender Stuart Patchen said that the companies "did real business" and that Stinson hoped that their success would help pay back his victims.
Stinson also lavished money on family and friends. He made interest payments to some investors.
Stinson said he was "so sorry" for hurting so many, but insisted, after almost a year in federal custody, that he was now a "changed" man. "My life is now dedicated to serving God," he said.
Axelrod said that an SEC receiver has recovered only about $580,000 of what Stinson stole.
"It is not possible to overstate the harm he has caused," the prosecutor said. "These [investors] weren't people who could stand to take the hit."
Contact Michael Hinkelman at 215-854-2656 or hinkelm@phillynews.com, or follow on Twitter @MHinkelman.
