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SEC Charges Texas Company, Principals in Multimillion Dollar Ponzi Scheme Targeting Seniors

Posted on April 9, 2018 at 7:20 PM

The SEC charged two Texas companies and their principals in a $2.4 million Ponzi scheme and in a related, $1.4 million offering fraud targeting retirees. The SEC's complaint alleged that, from 2010 to 2017:

  • Clifton E. Stanley ran a Ponzi scheme through his retirement planning and real estate investment business, 
  • The Lifepay Group, LLC. Stanley is alleged to have lured at least 30 elderly victims to invest approximately $2.4 million of their retirement savings with baseless promises and claims of outsized investment returns. 
  • He kept the scheme afloat for years by paying early investors with later investors' funds and by convincing investors to roll over their investments.  
  • Stanley pilfered from the estate of an elderly woman's family trust, diverting nearly $100,000 to fund the Lifepay Ponzi scheme. In addition, the SEC's complaint alleges that, beginning in 2015, 
  • Stanley and Michael E. Watts orchestrated a second offering fraud through a company they controlled, SMDRE, LLC. Stanley and Watts allegedly used a collection of misrepresentations and empty promises to convince a group of predominantly elderly victims to invest roughly $1.4 million in SMDRE.

Stanley is alleged to have used roughly $1.3 million of the Lifepay offering proceeds for personal expenses, including country club memberships, daily living expenses, travel, and entertainment expenses. In addition, Watts and Stanley allegedly engaged in shell game transactions so they could use the vast majority of SMDRE investor funds for personal expenses and to keep the Lifepay Ponzi scheme afloat.

The SEC's complaint charged Stanley, Watts, Lifepay, and SMDRE with violating the registration and antifraud provisions of the federal securities laws. Stanley was also charged for conduct stemming from his role as an unregistered broker.

Also today, the SEC's Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement’s recently-formed Retail Strategy Task Force (RSTF) jointly issued an Investor Alert to help seniors spot red flags of Ponzi schemes, such as promises of high investment returns with little-to-no risk.

Read More:

https/www.sec.gov/news/press-release/2018-63
http/www.sec.gov/litigation/complaints/2018/comp-pr2018-63.pdf
http/www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-ponzi-schemes-targeting-seniors



Categories: Fraud, Fair Dealing