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Five Years in Prison and Massive Restitution Penalty for Swindling FA

May 9, 2018

A former Pennsylvania broker has been sentenced to more than five years in prison and ordered to return close to $900,000 to the victims of his alleged 25-year-long fraud, according to InvestmentNews.

Paul Smith, who was discharged from Bolton Global Capital in Wayne, Pa., in February 2017, allegedly raised around $2.35 million from around 30 investors from 1991 to 2016, according to an SEC case brought against him in December 2017, the publication writes.

Smith allegedly told investors, some of whom were his brokerage clients, he would put their money toward publicly-traded securities through an outside partnership that he didn’t disclose to Bolton, InvestmentNews writes. But Smith allegedly made few investments, instead using the money he raised to cover personal expenses and to repay other investors, according to the publication. The criminal case against the former broker was parallel to the SEC’s civil case, InvestmentNews writes. Smith was sentenced to 63 months in prison and ordered to pay back $886,214 in restitution, InvestmentNews writes.

Smith pled guilty in January to one count of mail fraud and one count of securities fraud before the U.S. District Court for the Eastern District of Pennsylvania, according to an SEC administrative proceedings order. The SEC barred him from the industry on Monday, according to the order.

He had been in the industry since 1982 and has a dozen customer disputes dating back to 1985, starting with a claim of unsuitable options trading, according to his BrokerCheck profile.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.