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The Associated Press 

LOS ANGELES — A federal judge froze the assets of three businessmen and two companies accused by regulators of running a Ponzi scheme used to defraud elderly investors and others of at least $28.3 million. 

Regulators contend that TLC Entities promised to invest the money in distressed real estate, but used much of it to pay other investors, buy race horses or wired it overseas, the Securities and Exchange Commission said Thursday. 

Misuse of the money also included a $1 million donation that helped pay for a new football stadium at a high school attended by one defendant’s son, said Lisa Gok, assistant regional director in the SEC’s Los Angeles office. 

U.S. District Judge David O. Carter issued a temporary restraining order on Wednesday that froze TLC’s assets for 12 days pending a hearing. Carter also ordered TLC to make an accounting of its finances. 

“The pitch was that this was a great investment ... it was making 12 to 14 percent a year,” Gok said. In reality, she said, “this was never making any money. It was a Ponzi scheme.” 

A Ponzi scheme is a type of fraud in which early investors are paid off with money collected from subsequent investors. 

The judge’s order named Ernest F. Cossey and Gary W. Williams, both of Diamond Bar, and TLC as defendants. Thomas G. Cloud, of Atlanta, and his company, Cloud & Associates Consulting Inc., also were named. 

Calls to attorneys representing the defendants were not immediately returned. 

TLC raised $156 million from investors through solicitations that included recommendations made by Cloud in audio presentations posted on Christian-oriented Web sites, Gok said.  

Cloud claimed he was not paid to tout TLC investments, but in reality received more than $1 million in fees, Gok said. 

Cloud worked through his own Web site, Cloudassoc.com, which was linked to some Christian sites, Gok said.  

On Thursday a link connected Cloudassoc.com to Oneplace.com, a site featuring Christian audio programs, where Cloud was featured as a personal finance commentator. 

On a Oneplace.com page highlighting Cloud’s commentary, a written blurb urged visitors to combine their knowledge of scriptures with investing strategies. 

“You’ll ultimately learn how to shine brighter through biblically based financial stewardship,” it read. 

Cossey was accused by the SEC of misusing $1.55 million of investors’ funds by donating the money to Diamond Bar High School in Diamond Bar. 

About $1 million donated between 1998 and 1999 was used to build a new football stadium, Gok said. 

Carter’s order froze about $66 million in assets, including $2.2 million in cash, several race horses and real estate, Gok said. 

The SEC was seeking an order that would force the defendants to pay fines and give up any money gained as a result of fraud, she said.