Federal regulators accuse two Texas companies and their leaders of defrauding elderly investors in a Ponzi scheme.
The Securities and Exchange Commission said Monday that it accused Clifton E. Stanley, 66, of Galveston, Texas; The Lifepay Group; Michael E. Watts, 62, of Sugar Land, Texas; and SMDRE LLC with violating securities-registration and antifraud laws.
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John Cossum, a Houston attorney for Watts, said his client denies the allegations. Stanley's lawyer did not immediately return a call for comment.
The SEC says from 2010 to 2017 Stanley lured at least 30 elderly victims in Texas and Louisiana to invest about $2.4 million in Lifepay by touting them as safe investments with returns up to 36 percent a year. The commission says he paid early investors with money from later ones.
The SEC also said in a civil complaint filed in federal district court in Houston that starting in 2015 Stanley and Watts convinced elderly people to invest about $1.4 million in SMDRE, an oil and gas company they controlled.
The SEC asked the court to force the men to give up any ill-gotten gains and pay civil penalties.