An ex-broker from Wayne, Pa., has been sentenced to 63 months in prison for conducting a long-running $2.35 million scheme that defrauded 30 investors, the Securities and Exchange Commission announced Monday.
Paul W. Smith also was sentenced in Federal District Court in Philadelphia to one year of supervised release following his release from prison and ordered to pay $886,000 in restitution.
According to the SEC, which also filed a civil complaint against Smith in December, Smith told investors he would invest their money in publicly traded securities through The Haverford Group. However, Smith made very few securities investments and instead largely used investors' money to repay earlier investors and for his own personal use.
Between 2007 and 2016, Smith was a registered representative of Bolton Global Capital, based in Bolton, Mass. He operated his scheme through The Haverford Group, a partnership he formed to serve as a pooled investment vehicle. Smith misappropriated Haverford’s assets, falsely stated to investors that their money was being invested in securities, and mailed them false account statements and other documents, the SEC said.
In an earlier action, Smith, who no longer works for Bolton, plead guilty to mail fraud. The SEC barred him from the financial industry.