No, it's not the Polka King of Pennsylvania but something far more prosaic. Last week, according to complaint released by the Securities and Exchange Commission (SEC), a former stockbroker based in Wayne, PA has been sentenced to more than 5 years in prison for operating a $2.35 million ponzi scheme that involved 30 investors.
Preying on the Elderly and Retired with Ponzi Scheme
Paul W. Smith, the ex-broker in question, appears to have been formerly registered with Bolton Global Capital based in Bolton, MA when he operated an outside partnership called The Haverford Group, which he used to defraud dozens of clients - many of them elderly and/or retired - out of millions.
According to the complaint, Mr. Smith's Ponzi scheme took the classic form of collecting new investments to pay existing investors; he made very few actual investments. He also fabricated account statements with fictitious balances to deceive his victims.
Last year, Mr. Smith was barred from the securities industry for failing to cooperate with an inquiry by its regulatory arm, the Financial Industry Regulatory Authority (FINRA). In addition to his five years in prison, Mr. Smith will be forced to pay almost $700,000 in restitution to his victims.
Investment Returns Were Too Good To Be True
Mr. Smith's Ponzi scheme was successful largely because he promised - and delivered - steady returns on investments to his elderly and retired clients. In hindsight, these investments were too good to be true. But with so many frauds and schemes hitting the market these days - even with movies to dramatize them - investors should always be skeptical about investment pitches that sound "too good to be true."