The Securities and Exchange Commission has charged two Texas companies and their principals with running a $2.4 million Ponzi scheme and defrauding seniors in a related, $1.4 million stock offering.
The SEC's complaint alleges that from 2010 to 2017, Clifton E. Stanley ran a Ponzi scheme through his retirement planning and real estate investment business, The Lifepay Group of Houston. The agency claims that Mr. Stanley 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," according to
the SEC release.
The SEC said Mr. 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, Mr. Stanley and Michael E. Watts orchestrated a second offering fraud through a company they controlled and persuaded a group of mostly elderly investors to invest roughly $1.4 million based on misrepresentations and empty promises.
Mr. Stanley used roughly $1.3 million of the Lifepay offering proceeds for personal expenses, the SEC said, adding that he and Mr. Watts appear to have engaged in shell game transactions so they could use the vast majority of investor funds from the offering for personal expenses and to keep the Lifepay Ponzi scheme afloat.
The SEC's complaint charges Mr. Stanley, Mr. Watts, Lifepay and SMDRE, the second company they controlled, with violating the registration and anti-fraud provisions of federal securities laws. Mr. Stanley also was charged for conduct stemming from his role as an unregistered broker.
