SEC v. The Lifepay Group, Clifton E. Stanley and Michael E. Watts (ponzi schemes, 2018)

Settled

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In April 2018 the SEC sued The Lifepay Group, Clifton Stanley, SMDRE and Michael Watts in the Southern District of Texas over alleged note-based Ponzi and offering frauds aimed at elderly investors. Stanley consented to a judgment in February 2019, Watts consented to one in December 2022, and the court dismissed the SEC's remaining monetary claims against Stanley, Lifepay and SMDRE in February 2023.

The record

What was ordered

Civil penalty

—

Disgorgement

$1m

Prejudgment interest

$62.1k

Total relief

$1.1m

Alleged gain

—

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The complaint, filed April 6, 2018, alleges that from 2010 to 2017 Stanley persuaded at least 30 elderly investors to put in about $2.4 million, kept the scheme going by paying early investors with later investors' money and rolling over investments, and diverted nearly $100,000 from the estate of an elderly woman's family trust. A second offering began in 2015 through SMDRE.

At the filing stage the allegations were unproven and nothing had been ordered. The record listed one entity with "et. al."

This library tags the matter as ponzi schemes because the document describes payments to earlier participants made from later participants' money. The tagging is ours, not the regulator's: agencies charge statutory provisions, not technique names.

The later court and SEC documents show how the case ended for all four named defendants. On 14 February 2019 the court entered a consent judgment enjoining Stanley from further violations, and in September 2019 the SEC barred him, by consent, from the securities industry and from penny stock offerings. On 19 December 2022 the court entered a consent final judgment against Watts, without admission or denial, that enjoined him and permanently restrained him from taking part in securities offerings. It set disgorgement of $1,014,116.75 and prejudgment interest of $62,097.55, both deemed satisfied by a restitution and forfeiture order in a separate criminal case in the Eastern District of New York, and imposed no civil penalty because of his conviction there. On 23 February 2023 the court granted the SEC's motion to dismiss its remaining disgorgement, interest and penalty claims against Stanley, Lifepay and SMDRE, so no monetary figure is recorded for them. The money fields here therefore reflect the Watts judgment only. We did not see the 2019 Stanley judgment itself, only the SEC order describing it.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Ponzi schemes — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2018-04-10 Litigation release published
2. 2019-09-26 SEC order bars Stanley from the securities industry and penny stock offerings (describing a 14 February 2019 consent judgment)
3. 2022-12-19 Final consent judgment entered against Michael Watts
4. 2023-02-23 Court dismisses remaining monetary claims against Stanley, Lifepay and SMDRE

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC litigation release
• SEC administrative order against Clifton Stanley
• Final judgment as to Michael Watts
• Order dismissing remaining claims against Stanley, Lifepay and SMDRE

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 10, 2026. submit a correction.