Investigation into Alleged Pennsylvania Ponzi Scheme
Green, Schafle & Gibbs has launched an investigation into the alleged Ponzi Scheme operated by Philadelphia-area stockbroker Paul W. Smith. Based in Wayne, PA, Smith operated a long-running Ponzi Scheme using purported investments in The Haverford Group, which costs a group of mostly retired and elderly investors approximately $2.35 million, according to the SEC.
SEC Complaint Describes Philadelphia-Area Stockbroker Ponzi Scheme
According to the SEC, from 1991 through October 2016, Smith raised approximately $2.35 million from approximately 30 investors by representing that he would invest their money in publicly traded securities through The Haverford Group ("Haverford"), a partnership that Smith formed to serve as a pooled investment vehicle.
Smith convinced some of his most trusting and vulnerable brokerage customers, many of them retired or elderly, to invest their money in Haverford while knowing the investment was not legitimate, that he would not use all of their money to purchase securities on their behalf as promised, and instead would use most of their money to repay other investors and for his own personal use.
Smith went to great lengths to conceal his scheme. He fabricated phony account statements that reflected fictitious account balances and gains, kept his and Haverford's activities and accounts hidden from his employers, and used money from investors to repay others, so as to avoid suspicion.
Smith's scheme collapsed in October 2016 when an investor he failed to repay complained to the police.
Recovering Losses Due to a Ponzi Scheme
In terms of litigation, it may be difficult to recover against the individual financial adviser who perpetrated or initiated an investor into the Ponzi scheme in the first place. However, advisers are oftentimes employed by a larger broker-dealer or firm who, if they had been properly supervising the adviser throughout these transactions, may have been able to spot the scam and protect investors.
PA & NJ Financial Misconduct Law Firm
If you or someone you love has been the victim of financial abuse or broker misconduct, please contact our team of securities attorneys toll-free at 215-462-3330 or via our online contact form.