The Securities and Exchange Commission 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 alleges that, from 2010 to 2017, Clifton 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 outsize investment returns, according to the SEC. He kept the scheme afloat for years by paying early investors with later investors’ funds and by persuading investors to roll over their investments.
“Fraudulent conduct targeting the most vulnerable among us is reprehensible,” Shamoil Shipchandler, director of the SEC’s Fort Worth Regional Office, said in a statement. “As the U.S. population ages, financial exploitation of seniors is an increasing and serious problem.”
The SEC further alleges that 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 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.
Watts and Stanley also 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 charges 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.
In response, the SEC also 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.
— Check out ‘Hamilton’ Ticket Ponzi Schemer Sentenced to 6 Years in Prison: Enforcement on ThinkAdvisor.