Federal securities regulators said Thursday that they have sued a disbarred Atlanta attorney on allegations he defrauded two elderly women and misused money they invested with him.
The Securities and Exchange Commission said James S. Quay, 50, persuaded the women to invest $560,000 in what they thought was a limited partnership involved in a type of stock trading known as “covered calls.”
Instead, regulators said, Quay and his brother put the money into a trading account and used at least $180,000 of it for their own mortgage payments, fancy meals and a massage spa membership.
The SEC said James Quay has a track record of persuading retirees to invest in fraudulent investment opportunities and has used his credentials as an attorney to gain investors’ trust.
Regulators say Quay failed to disclose his conviction in 2005 for filing a false tax return, which resulted in his disbarment as a lawyer in Georgia and Texas.
The SEC alleges that Quay previously received commissions from selling interests in two metro Atlanta investment frauds halted by regulators. They include $1.1 million in earnings from steering investors into a mortgage-based Ponzi scheme operated by Marietta attorney Robert P. Copeland, who pleaded guilty to a criminal complaint and is serving a 10-year prison sentence.
In announcing the civil lawsuit, the SEC said Quay already settled the claims, though he neither admitted nor denied the allegations. The SEC said Quay agreed to repay profits of $1.4 million, in addition to interest and penalties totaling nearly $630,000, from the latest alleged scheme and funds he and related companies received in the earlier cases.
The lawsuit against Quay’s brother, Jeffrey A. Quay, 44, who is accused of assisting his brother in opening the trading account and making withdrawals, is pending, the SEC said.
Attempts to reach the Quays were not immediately successful.
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