A former Dayton, Ohio-area financial advisor was sentenced to five years in prison after he was convicted of 128 counts of felony securities fraud in a Ponzi-like scheme.
John Gregory Schmidt, who operated in Washington Township, Ohio, as a Wells Fargo advisor under the name Schmidt Investment Strategies Group, was sentenced on Tuesday in the Montgomery County Common Pleas Court.
In April, Schmidt pleaded no contest to 124 counts of forgery, two counts of theft from an elderly or disabled adult in an amount over $150,000, one count of telecommunications fraud and one count of fraud or deceit by an investment advisor.
According to a concurrent civil complaint brought by the U.S. Securities and Exchange Commission, between 2003 and October 2017 Schmidt sold securities belonging to at least seven of his retail brokerage clients without their knowledge, transferring over $1.16 million of the proceeds of those sales to at least 10 other clients to cover shortfalls in their accounts in a Ponzi-like scheme.
Schmidt allegedly falsified financial statements and other materials for his clients to avoid detection.
Over the course of the scheme, the SEC claims that Schmidt received over $230,000 in commissions from clients who were the source or recipient of misappropriated funds.
The SEC alleged that most of Schmidt’s victims were elderly, vulnerable and had “little-to-no financial expertise.”
As part of his sentence on criminal charges, Schmidt will also have to pay $35,446 in restitution.
In March, Schmidt consented to a final judgment in the SEC’s civil case. In that decision, Schmidt was ordered to pay a $864,301 civil penalty, $235,614 to disgorge allegedly ill-gotten gains and $35,049 in pre-judgment interest.