UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION

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1 1 PETER C. ANDERSON UNITED STATES TRUSTEE 2 JILL M. STURTEV A.~T, State Bar No ASSISTANT UNITED STATES TRUSTEE 3 KELLY L. MORRISON, State Bar No TRIAL ATTORNEY 4 OFFICE OF THE UNITED STATES TRUSTEE 725 South Figueroa Street, Suite Los Angeles, California ( telephone 6 ( facsimile Kelly.L.Morrison@usdoj.gov In re: 13 SEAN DAVID MORTON and 14 MELISSA ANN THOMSON, Debtors UNITED STATES TRUSTEE FOR THE CENTRAL DISTRICT OF CALIFORNIA, 17 REGION 16, 18 Plaintiff, 19 vs. 20 SEAN DAVID MORTON and MELISSA ANN THOMSON aka 21 MELISSA MORTON, 22 Defendants. UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION Case No.: 2:13-bk BB Chapter 7 Adv. No.: COMPLAINT FOR DENIAL OF DISCHARGE PURSUANT TO 11 U.S.C. 727(a(4 (Status conference to be set by the Court - See summons Plaintiff, United States Trustee for the Central District of California, Region 16, by th undersigned attorney, respectfully represents and alleges as follows: Ill Ill - 1 -

2 1 STATEMENT OF JURISDICTION AND VENUE 2 1. This Court has jurisdiction over this adversary proceeding pursuant to U.S.C (a and 1334, 11 U.S.C. 727, and Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule" (4. This adversary proceeding is a core proceeding pursuant to U.S.C. 157(b(2(J This adversary proceeding arises out of and relates to the now-pending Chapter 7 6 case ofln re: Sean David Morton and Melissa Ann Thomson, Case No. 2:13-bk BB, whic 7 commenced by the filing of a voluntary petition for relief under Chapter 7 of Title 11 of the Unite 8 States Code on June 27, 2013 (the "Petition Date". Therefore, venue is proper pursuant to 9 u.s.c The Bankruptcy Code at 11 U.S.C. 727(c(l provides that the United State 11 Trustee may object to the granting of a discharge under 11 U.S.C. 727(a. 12 PARTIES TO THE ACTION As of the commencement date of this action, Plaintiff is and was the United State 14 Trustee for the Central District of California, Region 16 ("Plaintiff" or "U.S. Trustee" Defendants and Debtors Sean David Morton (the "Debtor" and Melissa 16 Thomson (the "Joint Debtor", (collectively, "Debtors" or "Defendants" are the petitioners i 17 bankruptcy case no. 2: 13-bk BB, and their mailing address on the bankruptcy filin 18 identifies their residence as 2207 Hermosa Avenue, Hermosa Beach, California Plainti 19 will accordingly serve this complaint on Defendants at such residence address. 20 STATEMENT OF STANDING Plaintiff, as the United States Trustee for the Central District of California, Regia 22 16, has standing to bring this action under 11 U.S.C. 307 and GENERAL ALLEGATIONS Plaintiff hereby incorporates paragraphs 1 through 6 inclusive, as if fully set fo 25 herein The first chapter 7 341(a Meeting of Creditors ("Meeting of Creditors" was se 27 by the Court for July 25, 2013 and was continued to August 15, 2013 and then to September 6, It has not yet been concluded. - 2-

3 The deadline for filing a complaint under 11 U.S.C. 727 is September 23, Debtors are and have been represented by counsel, John A. Varley, during the pendency of the main bankruptcy case. Debtors' Undisclosed Liabilities 11. Pursuant to information obtained through the U.S. Trustee's investigation and th 6 Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is informed, and believes, an 7 thereon alleges that on February 11, 2013, approximately four months prior to the Petition Date, th 8 U.S. District Court for the Southern District ofnew York (the "USDC' entered default judgment 9 against Sean David Morton, a nationally recognized psychic who bills himself as "America' 10 Prophet" and the Debtor herein, in Securities and Exchange Commission v. Sean David Morton, 11 Vajra Productions, LLC, 27 Investments, LLC and Magic Eight Ball Distributing, Inc., defendants, 12 and Melissa Morton and Prophecy Research Institute, relief defendants, Civil Action No. 10-CV (SONY. In addition to ordering permanent injunctions from violating antifraud an 14 registration statutes and rules, each defendant was ordered to disgorge, jointly and severally, 15 $5,181,135.82, along with prejudgment interest of $1,171, and pay a penalty o 16 $5,181, for a total of$11,533, (the "SEC Judgment" Pursuant to information obtained through the U.S. Trustee's investigation and th 18 Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is further informed, and believes, 19 and thereon alleges that on February 11, 2013, four months prior to the Petition Date, the USDC 20 entered a disgorgement order against relief defendant Melissa Morton, the Joint Debtor herein, an 21 Prophecy Research Institute (collectively, the "SEC Relief Defendants". The SEC Relie 22 Defendants were ordered to disgorge $468,1 plus prejudgment interest of$105,847.23, for a total 23 of$574,1.23 (the "SEC Relief Judgment" Pursuant to information obtained through the U.S. Trustee's investigation and th 25 Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is further informed, and believes, 26 and thereon alleges that the Prophecy Research Institute is a nonprofit religious organizatio 27 operated by the Debtor and the Joint Debtor

4 1 14. Pursuant to information obtained through the U.S. Trustee's investigation and th 2 Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is informed and believes and 3 thereon alleges that Debtor Melissa Ann Thomson also uses the name Melissa Morton The Debtors did not disclose the SEC Judgment or the SEC Relief Judgment in thei 5 Schedules or Statement of Financial Affairs, number 4. The Debtors also did not disclose the 6 interest in the Prophecy Research Institute in their Schedules or Statement of Financial Affairs, 7 numbers Debtors' Undisclosed Businesses 16. Pursuant to information obtained through the U.S. Trustee's investigation and th Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is informed, and believes, an thereon alleges that within the six years immediately preceding the Petition Date, the Debtors, individually or jointly, held interests in the following businesses (collectively, the "Businesses": a. Delphi Investment Group aka Delphi Associates Investment Group; b. Vajra Productions, LLC; c. 27 Investments, LLC; d. e. f. Magic Eight Ball Distributing, Inc.; Prophecy Research Institute; Heaven & Earth, LLC; and g. a sole proprietorship dog walking business. Pursuant to information obtained through the U.S. Trustee's investigation and th 21 Debtors' sworn testimony at the Meeting of Creditors, Plaintiff is informed, and believes, an 22 thereon alleges that Heaven & Earth, LLC ("Heaven & Earth" is currently a debtor in a chapter 7 23 bankruptcy case filed in the Central District of California on August 24, 2013, In re Heaven & 24 Earth, LLC, Case No. 2:13-bk BR (the "Heaven & Earth Bankruptcy Case". According to 25 the bankruptcy documents filed in the Heaven & Earth Bankruptcy Case: a. b. c. Heaven & Earth's street address is the same as the Debtors; Melissa Morton is the managing member of Heaven & Earth; Melissa Morton holds a 25% interest in Heaven & Earth; - 4-

5 1 2 d. e. Sean Morton holds a 25% interest in Heaven & Earth; and Heaven & Earth is represented in its bankruptcy case by John A. Varley, th 3 same attorney represents the Debtors in their bankruptcy case Notwithstanding the Debtors' interests in the Businesses, the Debtors' Statement o 5 Financial Affairs, numbers are marked "none" Further, the Debtors' Schedule B, item numbers 13 and 14 are marked "none" On September 6, 2013, during questioning by the United States Trustee at th 8 continued Meeting of Creditors, the Debtors testified that the only businesses that they had 9 interest in were Vajra Productions, LLC, 27 Investments, LLC, Magic Eight Ball Distributing, Inc. 10 and Prophecy Research Institute. After being presented with the papers filed in Heaven & Eart 11 Bankruptcy Case, the Debtors initially refused to testify. However, after speaking to their attorney, 12 the Debtors admitted that they are members of Heaven & Earth. 13 FIRST CLAIM FOR RELIEF 14 [False Oath under 11 U.S.C. 727(a(4(A] Plaintiff hereby realleges and incorporates by this reference each and eve 16 allegation contained in paragraph 1 through 20, inclusive, as though fully set forth herein Pursuant to 11 U.S.C. 727(a(4(A, the Court shall not grant the debtor 18 discharge if "the debtor knowingly and fraudulently, in or in connection with the case-( A made 19 false oath or account." Under penalty of perjury, Debtors have attested to the truth, accuracy an 21 completeness of information contained in their bankruptcy petition and schedules for the instan 22 case by signing the voluntary petition, declaration concerning debtor's schedules, and declaratio 23 following the Statement offinancial Affairs Debtors testified under oath at the Meeting of Creditors that they read thei 25 bankruptcy petition and schedules carefully before they signed them and that they are true an 26 correct. In addition, the Debtors testified that they have listed all creditors and assets However, the Debtors' Schedules and Statement of Financial Affairs failed to disclose the Businesses, the SEC Judgment or the SEC Relief Judgment. - 5-

6 1 26. Plaintiff alleges that the Debtors' false oaths were knowing and intentional; th 2 Debtors concealed their interest in Heaven & Earth at their Meeting of Creditors and then refused to 3 testify about Heaven & Earth when questioned about Heaven & Earth. Only after speaking wit 4 their attorney did the Debtors admit that they are members of Heaven & Earth. Based on the 5 foregoing, Defendants have knowingly and fraudulently made false oaths and accounts during thei 6 Meeting of Creditors and in their Schedules and Statements in this bankruptcy case in violation o 7 11 U.S.C. 727(a(4(A Plaintiff further alleges that Debtors' false oaths during their Meeting of Creditors, and on the Schedules and Statement of Financial Affairs filed with the Court are material becaus they relate to the discovery of assets and existence or disposition of Debtors' property.. Accordingly, Debtors' requested discharge in the instant case should be denied as consequence of intentional concealment and knowing representation of numerous, on-going false oaths and accounts. WHEREFORE, Plaintiff prays for judgment as follows: ON ALL CLAIMS FOR RELIEF A. That Debtors' discharge be denied; and B. For such other and further relief as the Court deems just and proper Dated: September 11, 2013 Respectfully submitted,