Stephen Blankenship, based in Danbury, CT, allegedly persuaded around a dozen customers to withdraw deposits from other brokerage firms and invest with his firm, Deer Hill Financial Group, which was acting as an unregistered broker.

He claimed the money would be used for traditional securities such as publicly-traded mutual funds, but actually just transferred the money straight over to his bank account and used it for such everyday expenses as groceries, travel and his mortgage, the SEC said. He also made some business and Ponzi-type payouts to clients. To conceal his affairs, he created fake account statements.

As has been the case before with such schemes, Blankenship targeted people like churchgoers and senior citizens, according to David Bergers, director of the SEC's Boston regional office.

Beginning in 2002, Blankenship targeted investors that had been brokerage clients of his in the past, when he had been affiliated with Syndicated Capital and later Vanderbilt Securities. He promised them a greater return by investing through Deer Hill. Some had been his customers for up to two decades, the SEC said.