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

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

  
  

  Litigation Release No. 24107 / April 10, 2018

  
  

  Securities and Exchange Commission v. The Lifepay Group, LLC, et. al., No. 4:18-cv-01098

  
  

  
  

  On April 6, 2018, 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 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 thirty 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. 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 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 charges Stanley, Watts, Lifepay, and SMDRE
  with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of
  1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange
  Act") and Rule 10b-5 thereunder, and seeks disgorgement of ill-gotten
  gains plus interest, penalties, and injunctive relief. Stanley was also
  charged with violating Section 15(a) of the Exchange Act for his role
  as an unregistered broker.

  
  

  The SEC's investigation was conducted by Tom Keltner and Carol
  Hahn and supervised by Scott F. Mascianica. The SEC's litigation will
  be led by Timothy S. McCole.

  
  

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