n April 9, 2018, the Securities and Exchange Commission (SEC) charged two Houston, Texas businessmen and the companies they control, with running an alleged Ponzi scheme which targeted elderly investors and bilked many of them out of their life savings.
The SEC sued MICHAEL EDWARD WATTS (CRD#: 1571364) and CLIFTON E. STANLEY in federal court in Houston for allegedly running a $2.4 million Ponzi scheme.
Clifton Stanley allegedly ran the Ponzi scheme through Lifepay Group, which is a Missouri City-based retirement-planning and real-estate investment company. Clifton Stanley, 66, allegedly lured approximately 30 elderly investors in Texas and Louisiana to invest their savings in his scheme from 2010 to 2017. The SEC stated that Stanley promised his investors, mostly in their 80s and 90s, that the investments were safe and Lifepay would use their money to fund new real estate projects.
According to the court records, Stanley kept the scheme going by paying his early investors with the funds from his later investors and he convinced his investors to reinvest. Stanley allegedly used $1.3 million from Lifepay for his own personal expenses. According to the SEC this included country club memberships, ocean cruises and spa treatments.
The SEC stated that three years ago Stanley began working with Michael E. Watts, 62, of Sugar Land, Texas, and together they launched a new offering involving SMDRE, an oil and gas company they both controlled. They raised $1.4 million selling promissory notes to elderly investors, promising safe, above-market investment returns buying oil and gas interests, according the SEC’s lawsuit. According to the SEC, Watts and Stanley devised phony transactions so they could allegedly misappropriate thousands of dollars in investors’ funds for their own personal use.
The SEC gave many examples of elderly investors losing their life savings. In one instance, according to the lawsuit, a couple in their 80’s had initially invested $25,000, but increased their investment to more than $700,000, which was everything they had from cashing out a refinery pension. Another elderly investor had suffered a stroke and initially invested $10,000, but the SEC stated that as he got payments which allegedly came from the new investors lured into the scheme, the investor then increased his investment to $600,000. Another investor appointed Stanley as trustee of her family trust and Stanley used $100,000 of her money for his own personal expenses and paid other investors, according to the SEC.
In the lawsuit, the SEC accuses Clifton E. Stanley and Michael E. Watts and their companies of violating the anti-fraud provisions of federal securities law and selling unregistered securities. The SEC seeks to permanently bar Watts and Clifton from ever selling securities, and to pay back the profits from Lifepay and SMDRE, and other unspecified damages.
According to FINRA’s BrokerCheck, which is available to the public on FINRA’s website, Michael E. Watts has been employed in the securities industry for 24 years and has been listed with 10 firms. He has been employed with the following firm since 12/12/2007:
SUNBELT SECURITIES, INC.
2700 Post Oak Blvd Ste 1700
Houston, TX 77056
If you or an elderly family member were victims of this fraud/Ponzi scheme allegedly run by Clifton E. Stanley or Michael E. Watts (who is currently with Sunbelt Securities of Houston, TX), in SMDRE or Lifepay, contact Soreide Law Group and speak to an experienced securities lawyer regarding the possible recovery of your financial investments through a FINRA arbitration at: 888-760-6552.
Soreide Law Group represents our clients nationally before FINRA. We operate on a contingency fee basis—no fee to you if no recovery. Let our experience work for you.